FY 2023 Full-Year Financial Results Briefing

Good morning. Welcome to Cabrohap. The newly renovated home for capital land investment. I'm Grace Chen, head of investor relations for CLI. Very good to see all of you this morning. Lots of things happening this week. We're entering March guys this Friday. And the number of companies reporting earnings results, but most important of all. Taylor Swift has arrived in Singapore. So we have our CEO, retail workspace over here, Chris Chong. He might have some tickets. Why? You know that we are managing the retail portion for the Singapore sports hub, right?

Not free, because we need to generate fee and come. But if you stay to the end, who knows, right? I think that speaks to Chris Chong. I've only got one job, actually. So without further ado, I'm just going to invite Andrew Lynn, our group COO for opening remarks. Please welcome Andrew. Thanks, Grace. Good morning to everyone. Thank you for coming. I'll just make my Preface the meat of the presentation, which is my pleasure to hand over to Paul these days to take you through the nuts and bolts of our fiscal 23. But in terms of our, if I look back, I had to remind myself that actually CLI, it's in its reporting.

It's only its second full year of financial results. And so as Chikun reminds us, we are in the midst of a journey that we started two and a half years ago. It does have to say seem a lot longer than two years. And I think as an organization, we feel we have grown a lot in this relatively short period of time. A lot has happened more than we perhaps would have wished for last year, geopolitically, macroeconomically, environmentally, digitally, all the LYs that you can think of pretty much happened last year. And I think you see that reflected in our results. So let me just run through a few of the highlights and some of the challenges we faced and no doubt they are both.

In terms of execution and the management team, again, very committed to walking the talk that we set out for everyone and delivering on execution. So let's look at the four, let's start with the four verticals, okay? Our fee income verticals. I hope you're familiar with them by now. The REITs core product, challenge, challenging environment for REITs. As you, I'm sure you all know with interest rates where they are. We managed to raise a billion dollars of equity. The REITs had a, I would say, executed themselves and discharged their duties incredibly in a very difficult environment. The highlight I'd like to leave with you is in terms of capital recycling and raising, we remain very disciplined.

And I think that was a message that our unit holders, as well as our stakeholders, gave to us, right? Don't raise capital unnecessarily for the sake of it. I'm not sure everyone on the street listened to that advice from their unit holders. We certainly tried to do that. And we raised capital when we needed to demonstrate an important acquisition that was useful and beneficial for unit holders. And we tried to sell well. And I think across the REIT family, you can see evidence of that. So I think that I would like to start with that and it's an important touch point. On the PE side, Simon will tell you that the last year was incredibly challenging for capital raising.

I think Simon, the hardest you've seen in 30 years. Okay, that's a long time. So as a new capital, private equity player on the block, relatively new, these things are harder for us who are new. And despite this, I think we raised north of 3.4 billion. There was a 42% increase in year and year in capital raised. Which I think is again credible in light of the circumstances. We are starting to be noticed on the street as a serious player. We didn't enter into this previously. We entered in this with purpose and a plan. If you look at the products that are on the shelf now, I think both from a thematic perspective.

Where we are looking at wellness, we're looking at self storage, we're looking at specialist logistics. We've done some DC. We're looking at other thematic products that LPs are telling us are interesting for them, particularly in Asia. So the thematic shelf space is starting to be populated with products that we firmly believe in. And we can invest into thematically and not be standing where the cycle is. And then from a tactical standpoint, we've got our opportunistic products and we're raising money for value at funds. So I think from the way we are designing the product equity platform, it is with purpose. It is with design, it is with logic. We just have to work through this difficult environment of capital raising.

And I think the signs are starting to turn. And as I mentioned, we are starting to become noticed and make a difference in this very, very competitive space. But I will be the first to say that much more needs to be done. And I think you can see that again in our results. Third vertical is lodging. Lodging had a great year. Coming from a very difficult time at COVID, lodging is now one of our style performance. We I think signed 14,000 keys last year open close to 10 delivered record fee income. And importantly, the margins are starting to resemble or show the benefits of scale, which we've talked about. We hit 160,000 keys ahead of time and through the form we set ourselves an ambitious target in terms of doubling system revenue.

And speaking of ambitious targets, I'm sure you have lots of questions on our latest one, which she couldn't be happy to run through in great detail. So lodging again, key fee income driver for us. And I would say an important differentiator for CLI today. Very few other capital managers have what we have. And I think I would hope that you agree that this deserves to be part of CLI and the philosophy of fee income is consistent with other parts of fund management business. And then last but certainly not least is commercial management. Now call markets, this is an important enabler. Chris has wrote written the back of a healthy commercial retail workspace environment to deliver very strong leasing property management support.

We are now venturing beyond the CL ecosystem to manage third party assets for important customers, such as sports hub, such as every announced the second one Chris. So there's another one come. Sorry, this is not choreographed. But the sports hub is an important indication of what we are prepared to do. We now want to take the secret source outside the CLI ecosystem because we believe it can add value and it's incredibly capital efficient. No equity. And so I think when markets where we have competitive advantages, which are core markets. Singapore where boots on the ground, China, we are boots on the ground, India where we are boots on the ground. We can bring the secret source to our own products.

Your C-Paul talked to you about combined FRE (Fee-Related Earnings) FUM (Funds Under Management), which I think is something that is we need to explain to you how we add value to our assets. And we have multiple bytes of the same asset cherry. And this is an excellent idea and I hope you embrace this. But in our core markets, we have the ability to bring secret source to our own assets. But in addition to that, take it outside the system. And that's a fantastic endorsement of by third party people who want us to manage the assets because they believe we can bring value to the assets. So I think that's something to be proud of and something we want to continue to grow. So the four fee income verticals doing what we set out to do. Obviously, there are challenges in all of them. But I would say that if you look at the results from the FRB side of the business, we are executing and we are on point.

Based on the results, I would like to leave with you a few conclusions. Number one, I think the operating pad me is at a level which shows that there is a resilience to the recurring income that we can deliver to you. And this is what we set out to do. We set out to build a business that delivers a steady resilient recurring fee income base that you can rely on and you can predict with visibility and reasonable amount of certainty. And despite the economic challenges, despite the financial difficulties, the operating level of pad me, despite the high interest rates, the operating level of pad me is more or less at a stable level where we can confidently say we can get you to have sense of confidence. So that's an important, I think, landing point.

Obviously, we cannot control for existential events. When you saw during COVID, we took the decision of bringing dividends down. But we gave it back to you the following year when conditions improved. So I think that's an important point for any business that wants to hang its head on the ability to provide shareholders with recurring stable dividends. Number two is management's commitment to being disciplined. We've said many times, right? She can say many times we're not going to grow for the sake of growing. We're not going to buy for the sake of buying. We will do so only when it is right and good for our shareholders, our unit holders are helping us. And that is something that pervades the entire organization.