# CapitaLand Investment Limited — 1H 2024 Financial Results Briefing

- Event: 1H 2024 Financial Results Presentation & Analyst Q&A
- Date: 14 August 2024
- Kind: automated speech recognition (ASR) transcript, unverified, no speaker labels
- Source webcast: https://www.youtube.com/watch?v=ALxJ0igUGTs
- Duration: 01:24:38 (~13,989 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)

[00:00:03] Good morning everyone. Thank you for joining us at Seattle eyes first half 2024 financial results briefing I'm Grace Chan head of investor relations a very warm welcome to our analysts members of the media Our finances here at Capital Tower as well as those joining us via webcast now if you had time to look at our announcement this morning You will know that our team in China and our team in the USA have been working really really hard They've been racing just like the atlix ideal Olympics team USA team China Bring us good news this morning. So without further ado our invites our group COO To share opening remarks and to share what the teams have been up to Andrew, please

[00:00:58] Thanks Grace good morning everyone. Thanks for joining us again Banking partners capital partners stakeholder's value partners all around first half 2024 briefing When we started the year if you remember for those of you who were with us at the start of the year We outlined three priorities and they're all concerned capital first of the priorities was capital formation The second priority was capital recycling and the third priority was capital rebalancing So I'll use a few minutes this morning before I turn it over to Paul to take you through the performance numbers to just run through Where we think we are on these three priorities at the halfway point for 2024 So first off capital formation

[00:01:46] It's been a tough year capital raising all around I was looking in at the PRE numbers for first half globally. It's the lowest since 2012 so over 10 years of capital raising tracking data. This is the lowest in 12 years globally is about 60 billion Dollars and all that Asia is about five billion allocated for Asia If you compare it to where we were Where we are this year today. We're about 10% of that five billion allocated So Not bad. Okay. We are punching. I would say add or slightly above our weight. I just wanted to give you some context on Capital raising is a whole If you think about Where that money is going

[00:02:32] 90% of the capital raise globally is going into two sectors living and industrial And off the different strategies the majority of the capital is going to value add and this understandable right So I think back again to what we've been doing this first six months of the year Four of the five funds that we accepted and raised are in these strategies so Setting the context We are listening to investors And I think and we are confident that we are doing everything we can to punch at or above our weight In terms of capital formation Not understanding the fact that this is very difficult challenging environment. We're still in 12 years If I look across the

[00:03:20] other fee earning verticals that we have and Paul will take you through this in a few minutes I think we're doing okay Platforms are doing well Loging management stronger on your growth high single digit commercial management stronger on your growth sink high single digit Public funds flat Cause by event driven which I think again understandable given where rates are and the challenge for core product in particular To formulate capital and go on raise capital and deploy But I think things are turning the corner. I think we all agree widely consensus view is that rates have peaked And if they start to now moderate back down to a higher for longer but a more moderate normalized rate That should open the window for core product to begin to

[00:04:07] Go out and formulate capital again and deploy So overall capital formation. I think our fee income business 4% Padme growth year and year Was that right? I think about 4% I think that's a credible number In the context of what I've shared Let's turn to number two which is capital recycling. Okay. This one. We were very clear. I think at the start of the year We came out to say We want to prioritize capital recycling over potentially Making sure we sell at the absolute highest point of the asset value because we appreciate the importance of capital recycling in this context Why is capital recycling important? We want dry powder for what we think is coming?

[00:04:55] We want to see new product. We want to pay down expensive debt and we want to potentially buy back shares So for these four reasons capital recycling takes priority Maximizing portfolio gain and again if you look at our first-time results as Paul will share with you We are roughly two X of where we were same time last year So I think we're just over 1.5 billion in total value gross value recycle So we passed the half way mark of our annual three billion target and I think we are confident We'll get there by the end of the year. So this is a marked improvement from where we were last year when Literally the marketplace was dead Right, so that's again another promising sign that we are starting to get back to our run rate

[00:05:44] Where we switch we have set for ourselves Lastly, let's look at capital rebalancing Our story to our stakeholders has always been we want to be a diversified capital manager We see value in being diversified and Asia is a heterogeneous Marketplace and that's where I think our strengths really come to the fore When we set ourselves out we have three core markets India China Singapore The way capital land has evolved over time. We have two of those three markets are large China and Singapore We find ourselves currently in this de globalized multi polar system that I think is going to stick around for a while

[00:06:32] It just drives from the fact that diversifying our business is even more important these days You can't rely on any one market To give you Supernormal or the types of returns that you may have been used to in the past because things evolve so quickly The world is is incredibly uncertain and if you put all your eggs or too many eggs in one basket you run a This proportionate risk that you may get yourself into trouble So it only serves to drive home our priority. We want to increase the diversification of our portfolio and our business And again if I go back to the point of Looking about two core markets where we have a higher than I would say in normal exposure. They're Singapore and China

[00:07:23] If I ask for a show of hands which one concerns you guys more. I don't think We need to do that right? So with China, I think we're clear we Want to better we achieve a better balance in our exposure to China Now you can do this in two ways you can directly reduce the China exposure Or you can raise everything else outside of China. So Asia ex-China. Let's call it Of these two strategies we much prefer the latter Okay, that's and we have a specific strategy for China which I will touch on slightly and I think most of you know it already And that is China for China But for China for Asia ex-China It is I would say priority number one for us now

[00:08:10] We've acknowledged that we are underway in key Asian markets like Japan, South Korea, Australia And so going forward And Chikun would touch on this in a bit in a minute It is incredibly important that we execute on on this in order to achieve better capital rebalancing otherwise We will fail in our commitment to assure all this Again, it is illustrative that four of the five new funds that we accepted first half are all in these markets Right Korea Southeast Asia Japan Hopefully there will be more to come in other markets around Asia such as Australia So the priority on capital rebalancing is absolutely to grow Asia ex-China

[00:08:56] and I don't want to say definitively but senior management is 100% focused on this In terms of China per se the strategy is a bit complicated because it involves a pivot a lot of our legacy Chinese product is US dollar High on capital employee right our stakes and our funds are high stakes in our some of them are still on balance sheet So in order to achieve this we need to do three things we need to reduce The capital employee by reducing our share of the balance sheet into China we need to pivot from US dollar to RMB in order to Get to a China for China product and then keep FUM (Funds Under Management) and fee earning

[00:09:43] Hopefully at the same levels as they are today. Otherwise, we will suffer loss in fee income earnings so this is a delicate dance to accomplish with illiquid real estate and limited number of capital partners and lots of pressure from everybody We're not going to cut off our nose To spite our face. We want to do this in a disciplined way. We're gonna do this in a correct way and I think the announcement yesterday of what we managed to do is Exactly the kind of business that we want to do where we accomplished the same three things We sold down balance sheet asset We created a few m and We switched into RMB

[00:10:29] And we did we did it in a way that was not addressed in any way shape of form. In fact, we recognized good portfolio gain in the process So It's no coincidence. We released that announcement yesterday because we wanted this to serve as a Template for those of you who are looking to us to do more of this and I'm sure there are many of you out there the stock prices Indicative I think of the impatience of the market and we acknowledge this By is it the stock price is a way where it is right now. I don't think it does It's an acknowledgement of the impatience perhaps of the street and the desire to see much more of what we were able to Do yesterday So I first want to take a minute to ask your son to stand down and take a bow

[00:11:18] Please Yes, he's not been doing much bowing lately except to say sorry But this is a very important moment to acknowledge the efforts of the China team where we were able to accomplish all three things We will not always be able to do this So sometimes we have to take a commercial call that we check two or three boxes or we check one of three boxes But it's important to demonstrate that this is something the street needs us to do. We will do it And we want to do much more of this hopefully in the next second half of the year But absolutely going forward as you see the capital employee into China reduce But the funds under management hopefully stay where it is So we maintain our growth in fee income

[00:12:06] But we reduce the quote-unquote exposure to China in a sensible way So I hope you guys can understand the subtlety of And the nuance of what we're trying to accomplish in China It's not just a hot cut or a reduction It's a smart way to pivot But it takes time because we're dealing with an illiquid asset class And there are not that many people are there who Will encounter parties or are able to take on what we want to do so quickly So we have to be measured and And Targeted in who we talk to to be our counterparties yesterday's Institutional and named institutional investor was one such counterpartie and there others out there whom we are talking to were confident We can produce similar results for staying holders

[00:12:55] Okay, so these three things I leave with you surrounding capital They should not be of surprise. This is who we are. We are disciplined be Absolutely execution focused Are we Doing it as quickly as we would like? No, there's a function of markets function of uncertainty function of Changing priorities by our stake holders etc etc There's a lot to navigate through so We also very careful. We don't make mistakes We don't want to go down a blind alley And then have to turn back again and apologize to everybody So we will be disciplined. We will be patient It is probably taking longer than you guys would have liked but trust us. We know what the issues are We know what we need to solve for

[00:13:42] Okay, so I think that's enough heavy duty stuff to start the day Let me turn it over to Paul to take you through numbers. Thank you very much Thanks, Andrew It's Andrew Andrew told us he needed four minutes Okay Good morning, everyone. It was this year But Andrew covered a lot of I think what's important for us This quarter or this first half So I'm just gonna run through very quickly Some of our numbers. I'll skip straight to this So I think two things for us this quarter One was really the divestments which puts us on track for future growth The second is the change in profile not necessarily how we wanted it to come about

[00:14:29] But we continue to see growth in the fee related business which is the intended part of the pivot Growth there was slightly slower than we wanted And the real estate investment business has come down as a proportion This was always the intended direction of travel. Unfortunately growth on the top has not been as fast as we would like But it is still growth and then on the bottom obviously we've been facing a little bit of challenges around interest rates But we would expect this direction of travel to continue Whenever going to be a hundred percent zero But you know from 63 over the second half of the year It'll rebalance a little bit but you know 60 to 80 percent Fee related earnings is probably about right for us So first half numbers first half was a little bit challenging for us We are hoping to make that up in the second half But if you look on the left-hand side you'll see our total profit numbers down slightly

[00:15:17] Or our operating profit numbers down slightly The dang blue at the bottom that is our fee related income and you can see that up 8 million Seven odd million. It's a little bit slower than we had wanted It's a 8% growth for us on the top line for the fees We would like to get to double digit growth. That's always sort of being the intention On the top part where you can see that big drop off is our real estate investment business So this is how stakes in our roots our funds and balance sheet assets So we took a little bit of a hit on the interest rate side interest cost was higher We are hopeful that second half of this year That starts to reverse it a little bit and next year. Hopefully that comes down. So This impact the impact of interest costs which was the biggest swing for us. Hopefully comes down

[00:16:05] We also had a little bit of FX impact on the foreign exchange side due to the strongest $6 a lot of our currencies flowing back Some of the account receivables that we have in denominated in Japanese yen Started to come down and infected affected us as well So hopefully we have a little bit lesser impact there as well and I'll spend a little bit more time talking through our real estate investment business Portfolio gains largely minimal so we announced as of yesterday 1.7 billion worth gross divest asset divestment One by 1.6 billion effective That's not fully reflected in this number So this is really just divestment up till 30 of June Which is really just about the sort of 600 million or so so you don't see the full impact But I would say in general on our divestments

[00:16:52] We're divesting just a little bit above book on average Probably 1 to 3% above book on average some slightly below some slightly higher So we don't expect portfolio gains this year necessarily for the previous divestments to be a big contributor Depending on how the second half goes potentially we get some gain But our main focus is really on improving the operating numbers And then on the right hand side you can sort of see the total summation there And year on for first half down 6% hopefully we can try and make that up So on the fee revenue business you can see here the four different verticals that we run by on the left-hand side I'll listed division which is generally our strongest contributor both in terms of On the funds the revenue side but more importantly from a profit contributors the best margins for us

[00:17:41] Down slightly and this was really driven by Slow activity among the six routes in the first half Again for this one hopefully if interest rates do start to turn We hopefully are we're hopeful that in the next few months. We'll see a pickup of activity there And see at least Certain degree of growth Obviously even if you look at year on year First half was slow last year first half was actually slow on an in a normal year of Activity is actually usually about double Of what we have seen here. So we do expect this pace to pick up On the private fund side we had a little bit of a nice uplift We got some performance fee from one hour of our country funds That outperformed and received quite a fair bit of carry

[00:18:26] So we saw an uplift there and the private funds management Recurring as you can see moved from 46 to 48 so slight growth there We think we'll continue to see slight growth on the recurring side Again slightly slower pace than we would like But with the 1.1 billion of funds raised that should take up slightly too Loging management. I think from a top line number at 4% was slower than expectations But that was also because we had a little bit of one-offs over the last year first half If you look at the recurring component which is released sort of our base on the management contracts It was up more about 16 to 17% And we expect that pace Still manageable going forward So you would see ideally lodging management growth pick up as well

[00:19:15] Commercial management a nice step up here That is partly due to some of the restructuring on fees which I think we mentioned for those of you dialed in for the first quarter briefing Those of you also follow CICT This is just a restructuring some of the what was originally done as reimbursables got moved into the revenue line to be in line with the other five Ritz But still it is still high single digit growth on the normal base performance So across up 8% overall funds fees largely stable 80 bips and 46 just for the funds 80 bips overall margin has improved And on the margin side we are making efforts as a group as well To relook our costs base and we are trying to optimize costs So that even though the top line growth may not be as fast as you would like

[00:20:03] Or we expect to trim a little bit of costs and improve our margins So this is just a little bit more on the activity Over the for the four verticals Maybe just a highlight two on the listed fund side While they have not been a lot of Investments and divestments we expect that activity will pick up over the next six to 12 months We have been very active on the AEI components So actually if you look at our six ritz there's almost a billion dollars worth of asset enhancement going on And this is important for us Also as this improvement on the income also contributes to our real estate investment business So the ritz has still been active on their front. We expect that activity to pick up on the private fund side We did raise 1.1 post yesterday's China business park fund

[00:20:50] so As Andrew has mentioned we are investing outside of China fair bit 1.7 billion of the fund investments have really been focused on I think core markets for us. We look going forward to grow outside about three So southeast Asia Japan South Korea we expect Japan Australia India to be markets that we will continue to see growth over the next six to 12 months in particular And then just on the lodging side We have seen actually while revenue growth has not been as strong as we would have liked As you can see from the number of units signed and units opened this actually outpacing last year Which means that as these start to kick in contributions we should see that uptake as well

[00:21:39] So that is our fee business now 63% on the other 37% that's our real estate ownership business So on the left is just the breakdown for operating and non-operating e-bida Maybe let me just give you the color on the split so in the middle is the split by geography So what you would see is from and this is so this is before interest cost So it doesn't see the impact of the high interest rates But starting at the bottom you can see that it's Singapore for us Singapore and southeast Asia This has come down slightly Whether it's assets on balance sheet or Through the written funds we had a slight Decline and contribution which is on a slight dip China has actually held steady from an NPI perspective We have this is not has some divestments included

[00:22:27] But generally the numbers have actually been all right on the China side Retail on a same store basis actually improves slightly though logistics and office was down For other Asia and non-Asia impact here has been largely where the foreign exchange movements and the Divested assets have been so obviously we divested a handful of lodging assets Outside in the region and that has contributed to the drop You can see it a little bit more on the right hand side chart The right hand side chart shows our breakdown by how we classify our three groups of real estate investment business Where we have the money deployed you can see the ritz which is the bottom 40 to 3 49 that is our Ownership and as the ritz have actually improved on performance from an NPI perspective

[00:23:14] You can see that uplift Private funds which actually is a fair bit of that is China has actually performed all right in its health steady The big drop for us came on the balance sheet investments and this partly as mentioned due to divestments But it was also where I think we felt the bulk of the interest rate and FX movements is some of these Assets or year mark for divestments so some of these one floating rates and they felt a little bit more impact So as we divest assets you'll see this proportion In this shape and that 98 which is the balance sheet investments over time We expect that can potentially come down as we divest more assets This is just to give you color on the different markets as mentioned. I won't spend too much time in this

[00:24:01] I think most of you know a Singapore continues to do very well cic t release results yesterday Very strong positive reversions office and retail high single digits middle double digits that continues to be the case for Singapore India continues to do very well And Sanju if and gallery. I think also released very strong results for Clint so you would have seen that China I would say we have seen Retail on a same-store basis as mentioned performs slightly better even though as you can see at the bottom most tenon sales down slightly But football has improved So while the market still has its struggles if you look at the part on top on the NPI The minus 1.6 is actually in renmin p and the minus 5.6 percent on the NPI is in sing dollars

[00:24:51] So on a China basis the portfolio has actually performed about flat down slightly Aware the impact has been for us as a group has really been on on currency translation as the sing dollar continues to strengthen So hopefully as US interest rates come down sing up or dollar if we get a little bit of weakening against our other currencies That will actually improve Divestments so this part has been positive for us. We're up to 1.6 billion of effective divestments 1.7 billion gross divestments So a lot of this has been balance sheet exiting out We expect to comfortably hit our three billion by year end. We would be expect to be on track Then we'd be very disappointed. We did not beat that number This is allowing us potential for growth

[00:25:38] And this is where we think over the next several months. We will be able to redeploy whether it is new funds M&A and we'll be able to grow from that point So this part is important to us We expect this continue to see divestments out of China out of the US And potentially some of the other assets we have on balance sheet as a group So this is just to give you a sense of what is left on this So this ties to those three buckets on our real estate investment business if you look at the top left You can see our carrying value of other different effective stakes The one I want to highlight is obviously just on the top left This is what we have on balance sheet and its potential pipeline into funds or rates or selling to the party From last year from one year ago. We dropped from 9.5 to 7.9

[00:26:26] If you include the announcements that we made as of today, which includes yesterday We're actually at 6.8 billion left on balance sheet. So we're still expecting to make more progress on this About half of this is still China Obviously Key assets that we also have here besides we still have US multifamily We have a business park in the UK. We have ION Orchard all contribute to the 6.8 Over time the intent is to divest out of this over the next three years And we do see a Options or we do see opportunities for redeployment in the coming six months Private funds largely stable This has been current some currency issues for us like decline in value and then for the listed funds We expect this number will fluctuate up and down a little bit

[00:27:13] It's gone up slightly because we've decided given where the ritz war to invest a little bit behind some baritz and we took up the distribution reinvestment Reinvestment program the DRPs for a couple of our ritz So we do this on occasion If we feel they need to support some of our ritz so that number moved up slightly So over time though from an overall viewpoint what we have on balance sheet We expect this will reduce as we commit more behind the fee side of the business And then maybe just the last slide is really just on our capital management as Andrew mentioned we are doing a China for China strategy on the equity side But also increasingly on the debt side. We issued our second trench Thank you to some of the banks that are here who helped us with that We did a second one billion dollar in the trench of panda bonds

[00:28:02] In China we expect over time to do more as well in the market And that had the benefit of bringing down interest costs, but also rebalancing Our exposure a little bit The other thing to mention is share buybacks. So we've bought back about 300 million worth of shares This is less than So it's likely complicated because our mandates are not on calendar years. They are from eGM to AGM But effectively that would be 40% or less than half of our typical annual mandate I think we look at a share buybacks on two fronts. One is I think as Andrew mentioned we do think our shares undervalued So that is one reason for buybacks. The second is on a longer term basis We think it makes sense to optimize our equity base to a certain degree

[00:28:49] As we divest a lot of assets the key is to sponsor new funds Swans and new ritz help our ritz grow and do M&A But when we look at all of the numbers given the rate of divestment and the amount of divestments we can potentially do We believe there is room for us to shrink our equity base as well Which is why you see us active and I think we lead the tally At least among most of the corporates this year for share buybacks And then the last thing on this slide is on the bottom right is our interest cost 4.1% This is up about 20 basis points from same time last year We think this should be about the peak for us We think this will come down particularly as potential cuts and as we start looking at our refinancing numbers We think we shouldn't see

[00:29:36] Any more increase we should be about this number of not moving downwards From an interest cost perspective so that will also help our P&L going forward And with that this is the last slide This is similar side that we've been showing for the last couple of quarters Just really on where our priorities are and this ties to exactly what Andrew mentioned And so with that I'm going to stop here and buy it She couldn't an entry to come up for Q&A And if she can run this here a few words Thank you Thank you Paul She could what you like to start with a few words Okay, thank you Andrew and Paul Actually there given such a good summary

[00:30:23] Of what I wanted to see Maybe I just covered two two points Earlier Andrew mentioned about building a more balanced and diversified portfolio That's a key focus and key priority that we will be doing Well essentially I mean just to Guide the market You know outside of Singapore We do not envisage that any of the markets should take more than 20% Of our capital allocation So that we can build a more balance and well diversified portfolio going forward Okay, there are two ways we're going to do this. We're going to do this through Active capital recycling And a more active growth

[00:31:09] Through the process that we have recycled from the assets in seeking new opportunities to grow The presence and capabilities in markets Initial focus was still I want to highlight on Asia per survey I think there are things that we need to do in Australia There are things that we need to do in Japan and Korea And I hope you know we will be able to share some good news with you in the coming months The idea is to make sure that we are strong in Asia pack first Before we look at broader capabilities in Europe and US As a management business is really about building people capabilities People who can find good deals people who can execute If you can do that well the money will flow It's not just about expanding presence everywhere And you in the end cannot deliver the returns for the investors

[00:31:58] Okay, so I just want to leave that point with you on the balance and diversified portfolio The second point I want to make is that The environment operating environment has been challenging I mean with the higher for longer interest rates and You know, there are many things unexpected things have happened this year Nobody has expected UK to call for election. Nobody expected France to have an election Nobody I didn't expect the outcome of the India election I also didn't expect you know The changes that's going to come out in the US election many uncertainties The reason market volatility is there happened in Japan I mean, it shows up many many uncertainties in what we want to do fundraising has been tough

[00:32:44] In fact many private funds players have found difficulties in trying to find liquidity So I must at least commend the team Who have worked tirelessly in trying to find liquidity for Many of the assets that we are seeking for Of course, we know we hope you know, we always wanted to make sure that you know, we can If life is perfect We want to be able to share a lot more good news whether it is new partnership formations new acquisitions New M&A But life is not perfect. We can't time it all in just by the first half results to share things with you But I want to show you that the team is working extremely hard and we'll share good news with you when we are ready But having that ability to recycle the proceeds

## Analyst Q&A Session

[00:33:32] Give us a lot of flexibility To deploy and to grow fee income and to capitalize on I would say Some of the dislocations that we are starting that we are actually seeing But the question is whether you can Buy at the price and execute it well and get a financing done I mean, there are many deals available on the market today. The question is are you happy? Is it going to be a creative is it going to be strategic? Is it going to be a long-term Enterprise value for for the company and for shareholders So I just want to leave that with you and we can open for Q&E Thanks Thank you Chikun Before we take the first question just to viewers online you can also send us your questions by posting it in the questions tab and

[00:34:18] With that I'll start with Marvin his hands up always the fastest Marvin, please We have a mic Thanks Grace My friend from jv Morgan. Yeah, anyway, she couldn't congrats on Making a business more I said lighter so different progress terms of percentage of income company coming from the fee business Maybe start off your key priorities this year, which is growing the career Japan and Australian businesses Those markets we do have bigger more established players strong competition For those drug fees do we need to hire more people

[00:35:05] acquire more acquire platforms to make a material improvement those are fundraising those markets So we need some comments on progress on that Then second question terms of capital management Obviously we discuss about you know, striking the equity base over time Assuming you successfully execute the investments from on balance. Yes, that's what next three years There are target terms of annual share buybacks Is 12 cents sustainable in the meeting some given dropping come from the investment properties things sure Thanks, Marvin. I see you have gotten grace to let you ask the first question again well done So on the capital based side

[00:35:54] We do internally we do have a target. I think at this juncture together the shy share buybacks I don't think we're ready to announce a specific program Though I do think going forward We probably will be able to I would just say at this juncture I mean if you look at our mandate our mandate allows us to buy back 5% of the base and 5% of the base equates to Probably about six seven hundred million So that is limits on less we change our mandate externally But if you look at earnings and you know how gold to get to a double digit ROE right ideally we want to get You know historically we've been more 800 1 billion plus type profits Which is a fairly good goal But if you're at a 1 billion 1 billion odd profits It means your equity base can only be about 10 billion to get to a double street ROE

[00:36:43] So I would say we we will happily share with a market. I think a more detailed plan When we're inappropriate But I think you know from a framework and I think in point of view We kind of look at those as boundaries. So we're currently at 14 billion equity So we certainly have room and I think I flexibility to bring that down In terms of the dividend we do think our 12 cents cash dividend is quite sustainable If you look at it from two fronts if you look at our Running cash flow and cash operating cash flow and I didn't mention this earlier But operating cash flow looks lower this first half because we took the DRP From CLCT and CICT so that brought down the cash component So we have a little bit of flex there But generally the cap operating cash flow is actually stronger

[00:37:28] Which allows us to cover the 12 cent dividend Going forward on Whether it's 12 cents obviously we did the distribution in species a couple of Times over the last three years I think there is a component that we may continue to consider a mix But certainly 12 cents Or even up to where we want that 18 cents we think is quite manageable for us On the new markets opportunities I think we will look at MNE of Platforms we may look at the lifting teams doing core GP type arrangements Capitalize them with some seat GP money help them to raise money And so that there's a greater ownership and there's a lot more entrepreneurship

[00:38:17] I think there are different ways to grow a UM It is a them vertical and we can live a team of people that we think are highly entrepreneurial We have done that in India Logistics It is a core GP arrangement between us and the team that we lifted And today we are the second or third largest logistics player in India So actually we are The entire model of CRIs business has changed very drastically In terms of compendium Uh-sanition because we uh we want to create a lot more entrepreneurs in the markets that are deep They can build good deep insights They can find uh assess to good use

[00:39:04] They can raise money And you know we do core investments that's uh Carry and essentially that's the way we want to do to create more more growth in the different verticals Okay, um Ruben you're good Go with Derek next I think thanks Grace I'm Monika Derek from DBS just two questions for me My first question is on the entire fundraising environment I'm just wondering whether going forward right given where interest rates are gonna be is real estate Sector that's too attracting the most amount of capital i.e Let's say for example, you could raise 10 billion previously now is your partners willing to just give you another 10 or is it gonna be a five

[00:39:50] So that's one thought around the fundraising environment The second question around that would be uh for your existing investors in your private funds when this funds were to end I'm not sure whether that's any good end in the next couple of years Are these two willing to roll with you into a new fund or do they want to reduce their capital? So just one question around it. Can I just one more? The last question I have is on cost right remember Paul you mentioned that margins of 50% I thought it's quite decent. You still wanted to bring it higher is there target and I think they're always you need to invest to grow right so What are avenues they can cut so this are around my question. Thank you Okay, thanks Derek. I know your strategy. You choose to sit next to Melvin So you are assured of the second question or questions It's working so let me let me take the first couple of Simon. I'll also invite you to comment if you like

[00:40:43] Broadly allocations to real estate have come down. I'd say it is an interest rate sensitive asset class Does that mean the pie is too small for us to Grow our business absolutely not I think it's important to recognize perhaps where in the real estate space allocations are coming down and where allocations are perhaps still very Interesting for us to play into so if you think about the new products we've raised and accepted They're all in the matrix generally the matrix and strategies like value at and this is where I think investors are still Interested to deploy Maybe your cause and your Call pluses are more challenged right now, but precisely for the reason you mentioned rates are high

[00:41:32] so your Your spreads to borrowing costs that you could get with other products potentially even credit No longer as compelling as they once were okay. Let's remember that things go in cycles and I think if we agree that rates have peaked The pendulum will swing back because core has wonderfully strong benefits of its own right? You're obviously lower down your risk return, but you have less risk So if you're going to the matrix that have longer play longer runways wellness living Digitalization disruption logistics all of these are still highly topical highly relevant lots of interest Let me talk to investors And again consistent with the type of product that we are looking to manufacture and put out there so again all of our products Excuse me four of our five new funds this year are in those

[00:42:20] Demantics so I say yes broadly, but No, we're near to the extent where we would be concerned about not reaching off our growth targets It's all about putting out what is relevant and what your capital partners are asking for Those question one question to any Rolza The as Paul has mentioned before the bulk of our legacy product is China US dollar So this is where the complexity. I talked about comes in right you we if we have to we will let it go Because we are very clear about the mission But what would be ideal is your role convert and sell down at the same time which is what we did yesterday with with

[00:43:10] I hub So is there a risk that the US dollar product falls off? Yes, and we don't replace with this with the role. Yes But the challenge therefore for the team not least of which is under to young in China is how do we replace that? ideally dollar for room and be or room and be for dollar to keep the FUM (Funds Under Management) where it needs to be With the requisite fee structures the requisite Different capital partners were onshore in China maintaining our presence getting more capital like achieving our greater diversification all of these very important Goals that you need to sort of solve Simultaneously so it's not not easy, but can be done as you saw yesterday

[00:43:57] Just quickly with Simon anything you like to add Simon on I Think in good morning everybody. I think Andrew summarized it very well I think the high-level comments is that Private markets continue to grow in terms of investors wallet Right, so it's grown over the last decade from 25 to now like 30 33 percent So that's a good overall trend given that we're in the real assets space and even if Traditional real estate is quite stagnant at the moment that might free up as interest rates come down globally and the US uncertainties start to receive with the recession But we are pushing into and making good progress in other nieces sectors in addition to the selfish Asia wellness sectors in markets like data centers and credit

[00:44:46] So I think that's a space to watch carefully and that's where we built really nice capa buildings and The difference we have still in this market where all gps are under pressure Is that we have this on the ground footprint where we're in all of that deep markets? Where we've got people on the ground and seeing the first signs of deal flow starting to free up a little bit I think that's a very encouraging sign I always like to avoid talking about that but maybe just on the perpetual or the fun life as well and you know grace team does a good job of putting the materials together in the slight pack of the bank We have the breakdown by capital types We only have 16 percent coming up in the next five years

[00:45:34] So there's not a lot. I think that we're worried about rolling 72 percent of our capital is perpetual And so we are not particularly worried about that role coming off I think the big push for us is growing that and So that's our real focus on the cost side. Yes 50 percent margins is good this this first half That is partly driven by the performance fees that we receive from the private funds So we are not at 50 percent on a run rate I think we would like to be closer to that on a running basis We are still hiring and investing behind for growth. So in the sectors That we are looking to grow in some of the areas of the private funds or in lodging We are still hiring but I think with any big organization that has gone through a transformation like hours There are pockets of Maybe inefficiency or less

[00:46:20] Relivance in the new model for the business for us than before and so I think our teams our Business unit heads our department heads are all relooking their organizations to see how we really built for the future And I think as we do that we will find opportunities to use technology or streamline processes Cut down reports in order to try and streamline the amount of one we have to do and if we can do that I do think that we'll be able to see some cost reduction Okay, Brenda next city Hi morning Morning, you can just three quick questions right the first one would be on your first and you comment that I know no other Markets are like Singapore is going to be more than 20 percent So I assume that includes China. So if so

[00:47:08] When do you think we could see that number? Hanging out. That's my first question. The second would be saw a very nice data center chart In the deck So what's the strategy that? Do you intend to acquire more? Develop more or what is any target? Megawars that you're looking at that's my second question. The third one would be on your Reads so basically I think we have seen quite a lot of sponsors of late giving more support to get reads whereas in terms of Supporting in the prevention offering or you're looking at more redevelopment join redevelopment activities You know things like that. So is that something which you're looking at? If that's it a higher for longer interest rate environment continues

[00:47:57] Thanks I'll take the data center question So in capital land I think we have developed our data center business quite significantly in the last Three years we had four data centers in 2019 when capital and much with a certain a sing bridge and today we have about 26 27 data centers In different stages either completed or under construction So we because we have got different capital pools

[00:48:47] We are business model agnostic So it makes sense we acquire portfolios of completed assets And that's what we did in europe We acquired a portfolio of 11 data centers and then added on one more so we have 12 operating data centers in europe some of them are under master lease some are co-location and the good thing is that We are one of the few institutional investment managers that have The capacity to design develop as well as operate data centers So we are not just we are not just owners of the assets. We can also operate assets So I think that's a very unique capability that we have and that gives us the flexibility

[00:49:37] to The talk to customers and depending on their needs we provide the solution So it can be as I said existing data centers that we acquire Develop new data centers greenfield data centers As well as built to suit special data centers Depending on the customers needs So in India we are currently developing four data centers Very sizable ones and we are in very interesting discussions with customers on that We have got three data centers in China to a greenfield under development And we are very actively Looking at development opportunities in japan Korea

[00:50:23] Those are the markets that we feel have have the most Interesting Returns profile for us People ask us about Malaysia So I'm not saying no At the end of the day we cannot act like kids in a toy store We will only do developments where Where it makes sense where we are confident about managing the risks Obviously AI is the most used word in the world today So of course AI is going to Drive strong demand for data centers But we also realistic that we have to observe where all these goes But I also do want to make the point that

[00:51:11] Even before AI came The demand for data center capacity Especially in the Asia-Pacific region was already huge Just driven by cloud players and Enterprises requiring more data So AI is an add-on So I think I just want to make the point that we want to grow But we also want to grow in a disciplined manner And what differentiates us is that we have got capabilities across the whole data center value chain Thank you On the point specifically around China The idea I think I mentioned earlier There are two things that we only need to do The one is capital recycling and the second thing we need to do is to step up in terms of growth

[00:51:59] And capital deployment in other markets We have a bus strategy coming up thing in terms of timeline Maybe we'll share with you at the investor day That we'll be having in November I think then it will be fair for me to give you what is the timeline that we are looking at But I want to take some time to just talk about the China issue I mean China is a very big market as huge pools of capital in China If you look at what we have done since 2020-2021 The Xian and his team in China has raised almost 50 billion remaining be worth of capital To grow up China business Is the reassessed sector today a bit more challenge today? Definitely it is

[00:52:48] I mean there's a big macro challenges and stuff The team has strong operating capabilities sweating the assets Trying to make sure that you know every property that they have is running a better occupancy getting better runs than the other competitors They have a strong team and I say that because we went in a lot earlier than other people locations Generally are superior relative to the others. So put them in a good state Do we want to continue to attempt on growing running being with very little of our balance You exposure to growth income? I think that's something that we want to continue to do And I think that the team is committed to do so I just want to make sure that you know people don't miss Understand I think there's a lot of capabilities that we want to continue to build to tap domestic capital

[00:53:38] To build a much stronger fee-income business in China Yeah, and the spend time we want to reduce our capital Allocation So I just want to make sure that communicate this point very clearly to the to the To the people here On REIT We are major sponsors and I will say that we are very responsible sponsors. We want to make sure that other REITs do well continue to do NPI growth If there are good assets that we can acquire jointly with them, we can do joint development with them that we can support in terms of even selling them assets to allow them to drive the income Sorry to drive the dpu and for us the fee income. We'll be perfectly happy and prepared to do that

[00:54:24] I think to be sponsors and to continue to to to Underwrite to be a good sponsor. I think we need to be able to do that because I think I mentioned to this to I've said this many times We want to make sure that we can deliver consistent high quality earnings to our re-union holders to our CRI investors and also to our LP's in their private funds. That's the business that we are in if we cannot do that We won't be able to raise capital Okay You see Dexter from Bloomberg? Hi, Monet. Next up from Bloomberg Few questions. technical questions first Is there a reason why you guys have stopped breaking out Singapore alone in terms of AM,

[00:55:13] FM and all that and can you just clarify a bit on what percentage that takes up now? On the China point I take your point on China I That you you say that you guys are you say what you want to say on China, but I Know that you actually increase from one queue. This is about the 5% of the AM now for real estate so In terms of being candid about what you want to in China can you be give us a bit of sense or how much the scouts or are you willing to accept deep discounts especially in terms of this Property crisis that we are having right now in China and it's ongoing Or are you prepared to continue going along this fund trying to Upload your assets to funds and all that is that the strategy going forward?

[00:56:04] I have one more question, but I'll leave before later Yeah, maybe just in the first one on the reason for grouping Singapore with the rest I mean part of that is because we now are making a bigger push into do more in Southeast Asia And we now have Southeast Asian funds So it's a little bit easier for us to just group it together We have a Southeast Asia logistics fund. We have a Southeast Asia wellness fund We find that as a bucket it is easier for us to group together because we raise the money and it's not necessarily deployed in any Injours in Singapore We show in our charts Southeast Asia is about 42% the bulk of that is Singapore about 40 almost 41% of that is Singapore And that's really driven by Capital and integrated commercial trust and capital and us industry those are our large ownership blocks in Singapore So over time that composition will change we expect we will grow more in Malaysia in Thailand

[00:56:55] And Vietnam and then that portion for Singapore will come down, but right now it's the bulk of that Thanks, thanks for the good question I think of the first thing I want to say is We are custodians for the capital that we manage So boring a term that Andrew said we have to be sensible What we're doing right now is we are recalibrating our playbook for China Pivoting to remain be trying over China. So all that has been mentioned. I think that's Fundamentally important to us if we are just going to answer a question How soon you want to bring it down to whatever the number is?

[00:57:42] In terms of equity exposure I would say from the from the eyes of the capital markets Perhaps the answer is yesterday. I everyone wants one's there Um, you know, I used to go to bed and I thinking tomorrow morning. I'll eat carrot cake or batch on me But these days and there's only two words in my mind R and R Right one is recycling Otherwise, how to recap Yeah, because you know, I don't know what is a blessing but when your group CEO calls you every other night You know the intensity. Yeah, so I think the message is we know what the capital markets are Hoping to see but we have to be sensible. You know, we are not distressed. We look for opportunities

[00:58:30] If you look to look at the last three deals that we did Recapping or divesting our assets to the parties all into our new form funds They all follow the same track of thought here. We are very responsible A bit of our assets in China on balance sheet. They're we have a bit more say But a lot of it as as Andrew and Paul said they are in funds where we have a fiduciary duties to our LPs to deliver what is optimum and efficient So again Pressure's on we understand where we need to go to and we need to what we need to do We need to do it responsibly. Yeah, I wish it was yesterday You know, but I'll give us a bit of time. We will get there

[00:59:20] Can I just follow up quickly on The China divestments you have done so far has do you have a number in terms of the premium or It's gone to book value that you have made and On a small point. It's been about three years since the restructuring obviously and Obviously your stock prices where it is right now. I'm just curious like in terms of your vision like are you're still looking to? That those likes of real in the leaks of Next stone and is this things that you all have done differently in terms of the last three years? Yeah, so just on the China side so all our Divestments are listed in the the appendix. You can see the list of divestments We haven't disclosed the specific premiums or discounts for the sales

[01:00:07] We do not necessarily intend to but I can tell you that for the China assets that we have divested We have divested all the recent assets of have all been above book value So we don't think that will necessarily always be the case for Any of our assets in any geography because we are committed to the capital recycling On average we are above book but for specifically for the China assets we have sold all above book recently on your first question the capital and went through a major restructuring the last few years first with the send this thing bridge and then to split between CR and CLD to where we are today The few of us we sat down last week

[01:00:53] We reflected and say if we hadn't you know done first with the senders in bridge merger that give us Capabilities across different asset classes deeper asset management capabilities And if we hadn't done the restructuring Actually today the original capital and listed today. We think that We'll have a very different conversation with the investors today So I just want to say that being The management and the board here. I mean we have been responsibly in thinking of how to make sure that we create Business model that we think it's Last thing that can help to create the enterprise value. I think you know going asset like building an asset management platform Is what we want to do we commit to do we will get there the restructuring happened in September 2021

[01:01:41] Is it the best timing If we delay a few months later, we probably couldn't have done it because the market wouldn't have been there But if we didn't do it today, you know I think we will feel the pain You know of many of the legacy issues that we have to deal with But even then after the restructuring, you know, we deal with war and certain these are done spies in terms of interest rates Those are things that we can't control But does that change what we want to do in terms of the vision that we have that we set out to do Dancer is no we want to continue to do that Yes, then harms on the road. We just have to be nimble. We just have to pivot But we are not going to take the eyes of The final picture that we have which is consistent. It's not just at the management level is at the

[01:02:27] Board level because we believe That if you build up enough capabilities to find good views to create value Happy the way we'll come because if you can consistently deliver to a 15-18% for investors And you have a pool of do you put money in the bank or do you put money with investors? I can deliver you consistent earnings good try record good try a good reputation I think that that business model is lasting and we do it right You can actually build very strong enterprise value by growing the fee income for the business That's our commitment and we want to make sure that we can deliver Okay, I promise our Allow all of you to ask questions I got lost. I will start with you. Can first

[01:03:17] I am you can from C LSA. I have three questions. First one is on your Mention on Japan career Australia was the strategy there because some of the peers have Obviously divested out of Australia, but recently went back in and in terms of which asset class We would like to know and in Japan obviously the macro is a little bit different Currency is moving slide in the opposite direction rates. I also moving in opposite directions So what are the interesting asset classes that you are deploying that career also give us more color is it just data centers? That's the first question second question is on the words your 100b FUM (Funds Under Management) target would you consider infrastructure as a Something that is

[01:04:05] Together with the complementary to real estate And then the third question is that you mentioned that you have 1.6b divestments 600 million was Recognizing first half and about one to 3% above boom was recognized So can I assume that second half you recognize about 30 million divestment gains again That's all Thanks you can let me take the first two and the tough one I'll give to Paul so the Strategies for countries Broadly, okay, so Australia. What do we see that's interesting? There's a structural Opportunity in credit and I think you see a lot of players entering into the Australian credit space is it

[01:04:54] Too crowded. No, are we too late? No, but we need to be again Careful and target about how we enter The other area that's used interesting in Australia is lodging and Logistics has been very good to us in the last three to five years. I think psych From a cycle perspective. I think we're entering to appear perhaps where it will normalize out Those of you who probably listen into Clares update will will have gotten that from from William and his team So that that I think are the opportunities we see in Australia And so far as Japan is concerned. It should be no surprise lodging is

[01:05:41] Highly sought after highly desirable. We've been investing into that through various vehicles Logistics is a is also an interesting one Although that is a crowded space. We're very careful about how we deploy and not overpay into that and then data centers as Mano mentioned Korea office is Great Air office remains highly sought after. It's chronically under supply. It's interesting It's one of the few markets where great ACB the office still commands high rates and Yes, we have to be careful about again overpaying particularly with high construction costs and High interest rates, but there is absolutely no drop-off in demand. None that we can see thus far so I would say

[01:06:28] the Korea data centers CBD office Credit in Korea. There's another structural gap appearing in Korea So we're also looking hard into credit in in Korea. So to specifically answer your question on markets I hope that addresses that What was your second question? Brody we won't rule it out. There are as you can guess adjacencies to Real estate that involve Infra right different types of real assets can be adjacent to just your old-fashioned real estate so that's something we will absolutely look at But we also mindful that you've you know told us before please don't get distracted don't don't chase too many things

[01:07:17] Focus on what we do what we do well And and what you don't want to see is us getting carried away and running off in lots of different directions so we hear you on that you want to be measured and at the right time and the right opportunity in the right country in the right type of adjacent infrastructure We we will we are absolutely willing to to invest into that if we can see how they can be synergistic together with our core business Which is real estate? Thanks you can just on the question on portfolio gains It's I would say on a general basis Yes, or if we diverse a billion you would recognize between 10 to 30 million potentially in portfolio gains The first half which we put in the results. I mean it's 35 million

[01:08:07] That had a number of factors to it There was a degree of completion gains from some of the stuff that ended end of last year So we had some adjustments there. We had a slight markup from some of the DRP programs for our roots Which is why the number doesn't necessarily tie to one to three percent of just pure divestment I would say for the second half of the year We will see the gain on the assets that we have divested in that range But as mentioned we hope to hit our 3b target and hopefully we exceed that so while we think of portfolio gains and some of the And fair value movements less critical to us than growing the core operating pet me We still will expect portfolio gains to contribute more than More the certainly more than

[01:08:52] The 10 to 30 million assuming that we're able to hit our divestment targets by year Okay We'll have tension and then joy and then we'll move to bill senior Everybody to answer the question every time you can remember Shit Hi morning So first question is on margins for the fund business If I look at FRB margins is down slightly for management margin is up The step-min lodging might management Margent is down and can you share more colors on that? Second question is on pet me So at a group level what we have seen is that fee income

[01:09:39] Businesses growing, but that's not Enough to offset the REIB drop-off How should we think about the inflection point where we will start to see overall bottom line growth? Thank you Join one Also, I'll still do questions. Okay Joy from HSBC so to question from me One on fund strategy. We've not seen development or redevelopment and fun for a while And if you look at opportunities in this interest rate environment developments actually looking very interesting Can we expect that to sort of reappear and how should we think about the collaboration between yourself and CLD? That's one and second question. Sorry to go back to China You know your you have been trying to do RNR together basically

[01:10:29] Recycle and also rebalance to your R&B fund I guess that Strategy is good for your bottom line, but it also takes longer Do you think that sort of Return on a time-adjusted basis is worthwhile Or is there you know other alternative? Maybe just share some thoughts on it. Thank you Actually, maybe we just stopped there for a moment Yeah, okay, so on the margins question Yes, so fund management margins for the private funds up due to performance fees listed side largely flat though down slightly because of the drop in income

[01:11:19] Logging actually did fine lodging imagines actually up slightly Year on year other decline actually came from a property management margins and that was actually more driven by the reclass Because we move the cost reimbursables to revenues It just affected the margin came down correspondingly So from a profitable profit viewpoint even for the commercial management business it went up just the margin came down because the top line growth On the question on inflection point on the pat me you know, it's something that we're absolutely focused on you know We can see that the FRB has to grow faster We think the FRB will get a pickup as we do M&A as well as when the listed funds Start seeing more event driven fees both of that will help grow the FRB business

[01:12:06] It is something that we do need to accelerate to make up for the drop-off in REIB That is something that we're pushing very hard on Okay, so joy your questions if I remember development funds and then time adjusted return Okay, so development funds yes We also share your view. It's an interesting product particularly in this Environment of higher required returns right your straight-up core stuff is tough to get across the line On the flip side of that the complexity with development is Construction costs Supply chain disruptions etc etc so you really are talking about moving up the risk curve here

[01:12:54] So you got to be careful about Over-promising and understanding your environment So is this an advantage for us? I think in certain markets. It is you know particularly our core markets in their Single-ball China where we can have more control exercise more control Over the development chain and our suppliers. We have more of a presence there and that is absolutely useful Are we looking to do more with CLD? We are We don't have anything Announce this year thus far that is pure development, but there is stuff in the pipeline that hopefully you'll come out second half of here To your second question about Time adjusted return. That's

[01:13:41] Really the number of the issue right the Asians that the market has to allow us to see the Plan A through right and the plan is Ideal and what we did yesterday's ideal, but it does take time You got a lineup all your ducks and you're not going to always have that ability to do so It also links into the question on portfolio gain Sometimes we may not always sell above book value in order to achieve that speed of pace of capital recycling right So at some point we need to make a call It is of I think it's a moving target The street will tell us whether we are on pace whether they're happy whether they're not happy By the stock price right now. They're in nobody's happy

[01:14:28] So we know we what we need to do The ever evolving geopolitical macroeconomic environment will also be a strong signal It could get worse. It could get better And that also then impacts and informs what that Risk adjusted time base return could be right if things get better. We got more time You know if if China comes out with a major policy move that gives market comfort all of a sudden Pressure can be much less What is the probability of that happening? I don't know So a lot of things are moving targets I don't want to pin down to say as she couldn't say you know we hit No less than no more than 20 in the next two to three years because it could be faster

[01:15:14] It could be long You could take longer and also again function of where the market is in terms of giving us that time to do so so I think the best Reassurance I can give to you is that we're very receptive to the indicators around us Whether it's our stakeholders whether it's what the market is allowing us to do And then we need to constantly Assess to whether we need to cross correct or calibrate speed up more time to execute plan A etc etc Invest a day will be a good one I think because I think it will allow us to more fully articulate What we think that strategy should be or can be in the next 12 to 24 months Based on our assessment of the current Environment as we see it and what it allows us to do But it's a very relevant question. I think it's how

[01:16:02] The senior management is going to sort of have to Figure out in the next 12 to 18 months constantly because it's a very important question Sorry, just I don't know which running short time But just to add to that So if the question is for some of these we are selling it to funds some of the China assets We are selling to third party for some of these which is going to sell to third party I think this young is a very clear asset by asset plan not everything needs to go into a fund We we expect divestments will happen just straight out Okay, we'll go to Wilson next I'm morning Wilson from Morgan Stanley just two quick questions Firstly following up on the China RNR Your minus again while your

[01:16:48] Investment targets for China this year was it a billion two billion last quarter. They were those mentioned And I'm very eager to date and second is just a follow up on data centers and Growth conditions for CLI Based on the slide looks like six billion out of the 100b Affirm is from data centers Where could that get to if you to get to a 200 billion Let me touch on the divestments one first I think a last quarter and year-end what we talked about is we are trying to get the at least three billion Divestments for a total asset base I think if you look at our balance sheet We would like to achieve a billion worth of China assets divestments to help bring down So obviously with the most recent one where 200 odd million

[01:17:36] We would hope to make more progress towards that over the course of the next few months On the data center growth ambition as you from the so from the slide and it is a very lovely slide in the back That shows our 27 data centers You know it currently forms from a completed asset basis is about six billion out of a hundred billion Funds on the management. We are intending over the next few years to hopefully we will see at least one or two more data center funds Focused on India and potentially regionally as well So we think you know the six billion can scale up potentially if we're looking at coming tears could get to 10 10 plus billion But it is one of our focus areas. We're also pushing very hard behind living and lodging The Kevin's team and obviously logistics. So we are expecting all of the different pieces to contribute

[01:18:25] So I mean data centers as you can see it is scaled up nicely at six B Can we get this to double digit? Yes, we are confident that over time we can but it's only one of the growth engines that we're looking We have time for two more questions. Cooler. Yes, please. Yes, thanks. Thanks for taking my question. Thank you You know connect can you just ask in terms of your capital structure and its returns What's what's more important? Is it a double digit ROE or shrinking your capital and Being moved out of the MSCI indices So well, we hope not to move out of any of the MSCI index So we if we so our expectation is between the two components of our business And you know the analysts please correct me if I'm wrong

[01:19:14] But most folks will attribute a double digit multiple on the earnings that we get from the fee management business right just say we get 15 times on the fee management business For the real estate investment business most folks measure us two ways They measure us one on a price to book for what we have on balance sheet And then for most of our listed funds they measure us based on a target price or the market price of the listed As we shift our exposure and we reduce our equity base We expect that if we're able to grow the fee and come business Our market capitalization should actually increase Because the multiple we should get from that recurring income stream Which is much more valuable than the income we get from the real estate ownership business Will balance out so our actual expectation is we should grow in weightage on the MSCI

[01:20:01] Even as we reduce our equity base And if we can reduce our equity base and improve our ROE We expect the market will look at us more favorably Any final questions from anyone? Yes, don't know I don't know from a big of a couple of questions A lot of focus on China but I wonder about us about divestments that non-China assets You mentioned that you're prioritizing divestments and recycling On the other hand you also want to lighten China Capital allocation in a specific market no more than 20% So is it the case that you need to at this point in time buy asset buy things first before you can sell non-China assets

[01:20:49] Because as we go along You gradually you will start having no enough non-China assets to type there already Right I'll go into the next 12 months. So I just just wanted to see what's the view there On non-China. That is the first question second question is for for Andrew You mentioned on Australia you're looking at credit and lodging And living as the sectors lodging and leaving are you looking thinking about BTR or Service apartment hotels and it is BTR Would a returns be adequate for you to be looking at at this point. Thanks. Thanks. Thanks. No, I'll maybe ask Kevin Share his views on lodging in Australia and then I'll take on the question around

[01:21:39] balance between What I think you're referring to is a few embers as capital Into the country which is an important distinction to me But perhaps Kevin can I was actually expecting the question why Chelsea, but okay, I'll talk about Australia Australia I think we've been Investing but more in the service apartments and co-living space BTR I think the numbers at this point in time probably still are not stacking up As well as we like it to I think you look at the taxes look at different states you look at The construction cost labor costs some of these things have not a bit as much as you want to so I think that is a market That is demand But we just need to make sure that we enter the right time And but we do see

[01:22:24] quite good Traction on the service apartment as well as a coal-living friend because I think Australia is very attractive market for travel for Copper it's got a strong domestic economy with got good brand presence in quest 200 properties across the museum in Australia. We have good distribution capabilities So I think Australia is a place where we think we can play well in the service apartment and co-living space Thanks, I should also I should have mentioned self storage Something we're looking at in Australia as well, which is a mandate under pets fund So to your question about What would we prioritize? I think the answers that we will not We will prioritize capital recycling because I think that's number one It accomplishes a lot of the things that we talked about earlier today

[01:23:13] So if in the short term I sell out I have to sell down like we did with Multifamily this this this half we will do so Because it accomplishes again more important objectives And if it takes us a bit more time than to address the rebalance Then so be it so the short answers that But there's a difference between funds under management and capital Right so the capital is what she couldn't be referring to If you bring the capital down but you increase your FUM (Funds Under Management) in China I don't think that's a bad thing in fact we think that's with the right product with China for China You are de-risking our business as a whole so it's important to make that distinction So if I've got more FUM (Funds Under Management) but less capital employed because

[01:23:58] Previously I was all on balance sheet or my funds were 50% GP state now I've got very little balance sheet or but bigger FUM (Funds Under Management) but my fund stakes are 5 10% That's a good place to be in FUM (Funds Under Management) number bigger headline China bigger but capital exposure and much Go over I would say overall risk and better diversification for CLI's so it's important I think to make that distinction between capital and funds under management which is what we all about Okay, we've come up come to the end of the session. Thank you all for joining The next time we see you will be at our full year results and we'll look forward to ending the year strong