2024 Corporate Connect Webinar Presentation & Dialogue

Hi, good evening, everyone. Thank you for joining tonight's Corporate Connect. My name is Gerald, and I'm very pleased to be your host for tonight. So we have with us today, Lendly's Global Read, where we will be able to get the update from the management team on some of their key developments. We're very pleased to have with us the audience from MooMoo Live with us tonight. And in case you are wondering, this webinar is organized by CIRS and supported by the ASHX group. Many of us would probably be familiar with Lendly's Read. They own and operate properties in Singapore, such as sub-situ entry, as well as gem.

So we'll be able to get an update from the management team on some of these key assets during tonight's Corporate Connect. Before we actually go into the presentation, we'll actually have an upmarket update from Amelia from ASHX, where she will be able to share with us some of the recent developments in the Singapore market. Amelia is the Director of Research at Finland at the ASHX group. And with that, I'll hand over to Amelia, who will share about some of the recent developments in the Singapore market. Thank you, Gerald. OK, I've got my slides up. Today, we will talk a little bit about the ASHX market

to give everybody an update of how the sector has been performing so far. And then later on, we'll hear from both Kelvin, as well as Nigel, an update over there from Land Lease. So first of all, disclaimer slide, just to highlight that everything that we talk about today is meant to be educational in nature. Whatever historical numbers may not predict future performance. All right, so when we talk about the S-Rates sector, or REITs in general, interest rates is a key topic that has been in mind, especially since 2022, when the US has started to raise rates over the last one, one and a half years.

All right, and higher interest rates will continue to impact REITs, global REITs, not just S-REITs in three ways. For example, number one, higher financing cost could be as a result of that. Number two, this could also potentially impact the distributions that REITs pay out to investors. And number three, potentially also lower property valuations, and hence lower overall attractiveness to investors. From 2022, when FED started to raise rates until end of July, we took a look at some of the numbers. The IHS REIT index, which is the benchmark for the S-REITs market, has declined about 12%. And comparatively, the Food C Epran Narit Develop Index, which measures some of the REITs from the developed markets,

has also declined about 14%. So I'll walk you through how the interest rates will impact S-REITs, right? So if you look at the chart on the top left, this is the S-REIT index total return chart that we have plotted, which is the dark blue line, against the rate cut expectations back then when we took a look at the data set for the March, as well as the May FOMC meetings in dotted lines, the light blue dotted line, as well as the green dotted line. So we know this, I mean, what you can see from the chart is that last quarter, when FET started to hold rates steady,

we saw REITs rally. And we're talking about global REITs, not just S-REITs. Global REITs rallied up to 15%. S-REITs rallied close to about 20%, right? And they continue to rally all the way until January, where the rate cut expectations then started to ease after that. And we saw REITs actually retrace a little bit. The index is now in the REIT zone, down about 7%. So far, in the 6-7 months of the year, the FTSE Pranar REIT development index is also down about the same 6-7%. And on the right-hand corner of this slide, this is the CME FET Watch tool, which is a very useful tool that investors market can use it

to look at predictions or some of the expectations of where interest rates will be over the next few months. Right, so we can see that initially at that time, the markets were expecting the first REIT cut to come during the last quarter of this year. And we also saw the recent news from the FET market is expecting the first REIT cut to be in September. And in fact, close to, as of today, I had a look at this FET Watch tool. 80% of the market, 80% of expectations, are expecting a rate cut of up to 50 basis points in this September meeting. Okay, this is another chart that I took from the NARIT,

which is America's REIT Association, which compares all the global REITs versus the 10-year US Treasury yield. Similarly, right, when the 10-year yields rose about 332 basis points from 2022 onwards, REITs declined about 30%. And last year, when the 10-year Treasury yields declined about 100 basis points, the broader market and REITs all rebounded close to about 20%. This year, when Treasury yields rose a little bit, REITs also started to decline. So you can see that obviously there is directional correlation between interest rates movements, as well as the REITs total returns. And the NARIT CEO actually believes that the first rate cut in the US will start to see institutional funds

deployed back into this REIT sector. This is another chart that I took from the NARIT Association also. This actually talks about how they've done an analysis, and the analysis shows that REITs tend to outperform at the end of rate-raising cycles. So NARITs, at that time when they released a report, which was in the middle of this year, NARIT was cautiously, they are cautiously optimistic that REITs could recover next year. And the performance of REITs that we saw in the last quarter could then signal that as monetary policy adjustments are being made later on, the end of a rate-raising cycle will herald, or will see periods of REIT outperformance subsequently.

And the study over here from the chart shows that while during periods of Fed tightening, there's underperformance for both the private, public real estate as well as the equities market. And after that, which is four quarters after Fed tightening cycles are over, there is outperformance. And in fact, public real estate from the study have outperformed equities as well as private real estate. And we took a look at our own SREIT sector. Our own SREIT sector, the sector has an average gearing of about 38 to 39%, which is still well below the regulatory limit of 50%. More than half of them are in fact below the sector's average.

And close to about three quarters of our REITs have their debt secured or hedged into fixed rates. So given strong balance sheets, fixed rates locked in, REITs should be well positioned to weather these high interest rate periods. And I think you guys might have also seen in the last two weeks, MAS has also a latest update for the sector. They've announced a proposal to simplify the average requirements for REITs. Today, there are two sort of requirements. One is the leverage ratio of REITs can go up to 45% if the interest coverage ratio is 2.5 times or below. And they can go further up to 50% gearing ratio

if the interest coverage ratio is 2.5 times and above. So, MS is proposing to streamline this and to have a single gearing ratio limit of 50% and a lower interest coverage ratio of 1.5 times. This is also to provide REITs with more flexibility so that they can ensure that they can still service their debt obligations and have sufficient earnings to pay their interest rate expenses today. So last week in our REITs column, we took a look at our S REITs and we noted that ICR, which is the interest coverage ratio, most of the REITs report this figure today, which measures how much of a REIT

is able to pay off the interest on its outstanding debt. And the sector's ICR today on average is at 3.8 times. And almost all of our trusts have the ICR above the 1.5 times limit, which is what MS is looking to propose. And aside from looking at gearing, which measures the balance sheet strengths of REITs, we also look at valuations. Now typically REITs for investors, they will value REITs in two ways. One is to look at the dividend yield and the other one is to look at the price to book ratio. So when we took a look at the price to book ratio, as you can see right on the chart over here,

typically on average REITs usually trade at book value, but now it is trading much lower than its average at about 0.8 to 0.9 times. This means that investors are actually valuing the REIT at a discount of up to 20% of what the property assets are actually worth. So value investors during this period may be looking to take opportunities. And we have seen retail investors come in into this particular sector since 2022. Retail investors have net bought $3 billion worth of SREITs in the Singapore market. This year alone in the first half, first six months, retail investors continue to net buy the sector and they've bought close to $1 billion worth of REITs

just this year in the first six months. And this is much higher than the numbers that we saw over the same period in 2022 and 2023. And on the chart on the right, we took a look at some of the top 10 largest REITs by REITs. And as you can see, many of them are in fact trading at discounts against a five-year average ranging from a discount of about 6% to 30%. And this includes a COVID period because we're talking about the past five years. Next, this is one of the first slides of our SREIT chart book, which is our quarterly production where we try to put all in one chart book

relating to the sector where we have different stats that investors can really refer to when they look at the sector. So over here, you can see that SREITs continue to be a very important part of our market. They make up about 12% of our total market cap, but in terms of the Singapore market, it trades at about one quarter of the daily turnover. The average distribution year of the sector is close to about seven, 8%, and the sector is very well diversified in terms of property type as well as markets. And this is very important because diversification allows you to diversify risks the same way.

REIT managers also diversify into different asset types to diversify across industries, customers, and also the different currencies. So this is our quarterly chart book. We don't just have some of these numbers. We also have, you're able to also look at things like the distribution yield across different sectors. You can also see over here, what we've done is we've plotted the SREITs distribution yield against the volatility rate, and you can see for our SREITs generally, one of the higher distribution yielding markets and a lower volatility. Last slide, last chart that I also took from the NARIT Association. This shows the 2023 real estate allocations by institutional investors.

So you can see that retail investors, they're not the only ones that buy REITs. In fact, it forms a key part of InstiInvestor's own portfolio too. And here are some reasons why InstiInvestor will consider REITs, right? Because of the allocation needs, liquidity objectives. And the last one I feel is also relatively important because it allows you to invest and get exposure into certain sectors that otherwise an investor would be, it would be hard to sort of directly purchase a physical property. So with that, thank you for staying with us. I hope you look forward to the session later with Lenny's. I myself was also keen to hear a little bit more from them

and hear from their latest updates so far. So thank you, and I'll pass the sign back to Gerald. Thanks Amelia for the market update. We are very pleased to have with us representatives from Lenny's REIT management team, as well as investor relations team. So tonight we have with us Mr. Kevin Chow, who is the CEO of Lenny's REIT. We have with us Billin and Nigel from the investor relations team. So with that, I'll hand over to Nigel, who'll give us an update on the company. Nigel, over to you. Thank you, Gerald. Good evening, everyone. So today I will be presenting LREIT, second half and full year financial results.

So let me share my screen. Okay. Gerald, are you able to see my screen? Yes, I can. Yeah, okay. So yeah, without further ado, I will proceed to the key highlight page of our second half financial year FY Denver 4. So for the financial performance for LREIT, we actually registered gross revenue increased 7.8% year on year to 220.9 million for the full year. So this is because of two main reasons. So one reason is because of the healthy operational performance from our Singapore assets. And the second one is because we include the recognitions of the stock inventory rent from the lease restructuring with Sky Complex.

So just a quick recap for everybody. So LREIT actually have the lease restructuring with Sky Complex back in the first half, FY 2004 in December last year. So during the lease restructuring, we actually received the supplementary rent equivalent to about approximately two years from Sky Complex for the lease restructuring. So with that, the net property income also increase in tandem to 7.4% year on year to 165.3 million. So distributable income for the full year was 91.4 million, which translate to the distributions per unit at 3.87 cents. So the lower distributions is due to the higher borrowing costs as compared to last year. As you can see for under the capital management sections,

the average cost of debt for the financial year ended 30th June was 3.58% per annum as compared to 2.69% for the same period last year. So LREIT's gearing ratio stood at 40.9% as of 30th June with interest coverage ratio of 3.2 times and also our fixed rate hedging was 61%. Moving over to portfolio metrics, LREIT portfolio committed occupancy improved to 89.1% from last quarter of 88.8%. So for the individual portfolio, our retail portfolio actually achieved 100% of full occupancy while our office portfolio was 80.9%. Our retail portfolio tendency has reduced and increased 0.2% year on year with return rental reversions of 14%.

We continue to maintain well balance with the average lease expiry of 7.5 years by NLA and also have a healthy tenant retention rate of 84.9% by NLA. Effective from April 24th, we also obtained office rental uplift for our building one and building two Sky complex while the building three is still undergoing repositioning for multi-tenancy to secure the market rents. So moving over to financial performance, so these slides may have a bit of information here but actually some of them are covered in the key highlight slides. If I can bring your attention to the table below, so as I mentioned previously, so gross revenue and net property income

actually registered the growth of 7.8% and 7.4% respectively. Even though if we exclude the supplementary rent that we recognize in advance, gross revenue will still increase by 3.2% year on year while the net property income will increase by 1.3% higher year on year. Likewise for the second half for FY 2004, if we were to include the support from the supplementary rent, actually the gross revenue will increase 1.4% year on year in state while the MPI will also register a lower decline of 2.6% year on year. Moving to our balance sheets, so as at 30th June 2004, I already maintained the total assets at approximately 3.8 billion

with total liabilities at approximately 1.6 billion. This results the net assets to 2.212 billion and the units in issue as at the period ends was 2.376 billion and translate to NAV per unit of 76 cents. This slide shows the debt facilities and our maturity profile. So as at 30th June 2004, L-Ritz has 168.6 million of that undrawn debt facilities for the working capitals. And for the chart below, you may notice that for next financial year FY 2025, there's a 360 million loan that is due for renewal. And the management team is already in discussions with the banks for the refinancing.

Moving on to capital management, some of the key points has already been covered in the key highlight pages. So just to bring up the two points in this slide is that post the financial year ending 30th June 2004, we actually increased our interest hedging up to approximately 70% from 61% to better manage our borrowing costs. Now we're sustainably dealing financing actually accounted for approximately 85% of the total debt and we have achieved interest savings from it since the establishment of the green finance in FY 2022. This slide show the distribution schedule and our unit holders, you can actually expect to receive your distributions payment date on 26th of September.

And one more thing to highlight here is that for this half year, we will also launch the DRP and for unit holders, you can subscribe to our DRP before 10th September 2024.

Moving on to portfolio performance, as I mentioned earlier, LRE continue to maintain a well balanced, well spread least expiry profile with a will of 7.5 years by NLA and 4.7 years by GRI. In terms of least expiry in FY 2005, we have decreased the least expiry to 8.9% by NLA and 16.8% by GRI. So overall LRE portfolio of these tenants continue to account for approximately 21% of popular GRI. In our office long will we continue to ensure stable cashflow for LRE unit holders. Just to bring some highlights on our DRC 5 tenant base, the top three tenants is the category will be the food and very rich 28.4%

followed by the fashion and accessories, 12.2% and the government of 11.2%. Going into retail portfolio. So on the left side of the chart, you may notice JEM actually achieved full occupancy as 30th June, 2024. And the Q&A at Somerset also improve its occupancy from last quarter from 98.7% to this quarter 99.9%. So if we were to combine them all and rung up, so it will give us a 400% of our retail occupancy. On the right side of the chart, you may, there's the tenants use and the visitations. So overall for the full year, tenants use and visitations are increased 0.2% near a year and 3% near a year respectively.

So as you may notice the last quarter, April, May and June, we actually registered a bit of muted numbers. One of the reasons is because of the strong Singapore dollars which encouraged the Singaporeans for outbound travels and also have a bit of restrictions of inbound travel due to the strong Singapore currencies.

Going into office portfolio. Singapore office portfolio, which is the JEM office continued to be fully leased to MND until 24.4. So one of the thing to highlight here is that for the rental review for JEM office, it will be happen later this year in December. And we are looking forward to have good numbers of rental uplift for our unit holders. So over in Milla of these assets, Sky complex, the occupancy stood at 73.9% as the 30th of June. And we continue to see positively seeing interest for the space at building tree. And we are in discussion with a fixed prospect right now. And we look forward to provide more updates

to the unit holders as we progress further. This slide is showing the portfolio valuations. So for the financial year end, we also done the valuations of our portfolio. So looking into JEM and 313 at Somerset, JEM registered a 3% increase in terms of valuations while 313 at Somerset registered a 1.3% increase in valuations. So the cap streets for the Singapore assets actually remain quite stable without any change. On the other hand, for Sky complex in Milan, registered a decline in valuations from last year, 290.5 million Euro to this year, 263.1 million Euro. So this can be accounted for two million reasons. One reason is because of the higher cap rates

that increased 25 beeps to 6% this year. Another reason will be the valuations actually take into consideration the lower occupancy and building tree.

Moving on these slides is just to show some of the new FMB and retail tenants that we welcome on board into outreach retail portfolio assets. Moving on to sustainability, we have one slide for this one. So for sustainability, it continues to form the integral part of outreach business operations. Just a quick recap for our Grecipi results last year in 323, we continue to hold the global and regional sector leader in the retail category with five star ratings. And we also continue to score in Grecipi public disclosure. In order to further enhance our sustainability journey, we are partnering with the SCORE consultant to look at reducing our energy consumption

at outreach Singapore assets. Also not to mention here is that outreach 100% portfolio actually is green building certified. Looking ahead, our key focus in the near term will be still covering these few areas. One of it will be the proactive asset management to drive operation performance. More particularly is looking forward to the lease render review with jam office coming up next later part of this year. And then also including the prudent capital management to manage our cost and gearings, specifically will be the upcoming trip with 60 million loans that we will be coming to refinance. So I have an hour of my presentations and I will hand back to Jero.

Thank you. Thanks so much, Nigel, for the update. With that, we'll go to the Q&A session for today. So for audience who are keen to ask your questions, you can put it into the Q&A box in Zoom. For the audience from MOMO, looking on the link to join us in Zoom to be able to pose your questions. We aim to be able to take as many of your questions as possible. Okay, there are actually some pre-submitted questions that I will go through first. I think earlier Nigel gave an update on capital management balance sheet, but there are probably some questions that I do see being asked quite often.

The first is really regarding the interest coverage ratio, given the high interest rate at this point in time, as well as the need to maintain a certain interest coverage ratio, how do you intend to go about doing it? Right, and first of all, good evening to everyone and thanks for participating in this event. And very nice to actually touch base with a lot of retail investors, which is the part that we saw missed and we want to actually continue to grow our presence with the retail investors. Okay, back to the questions. I think it's very interesting that you have mentioned that of the high interest rate of environment

and also the coverage ratio, but also I think the investors might actually, I mean, sort of notice some market phenomenons that is right clear, I think two of it is very obvious. First of all is that I think we are probably close to the peak of the interest rate cycle. I think which I think now people are looking at how the interest rate will be cut and how much is cut and all that. So obviously we already know or feel that that is the peak. I think that's one of the phenomenon that we have seen. I think the other interesting phenomenon is that now we are actually at an inverted interest rate curve.

I mean, it still continue to be as an inverted curve. So what it means is that the shorter end, which is a spot rate, is actually higher than a five year rate. So I mean, the most important is that how you achieve big or take advantage of this situation or this phenomenon to actually improve your current situation. So for those that actually following us, you will know that our interest rate hash ratio has been relatively low. I mean, as you, as end of doing, which is our financial year is only 61%. I think that actually give us a lot of benefit to sort of capitalize the falling interest.

I mean, as I say, the first predominant, and also it gives us a lot of opportunity to hedge our positions to take advantage of a lower interest rate on a longer term basis. So that's why when Nigel make his presentations, we already technically has another 9% of our positions to increase from our hash position from 61 to 70%. I think these are things that we need to capitalize. Of course, nevertheless, when the bank look at how and why do you should refinance you, I think the most important thing is that your portfolio has to be able to perform. I think if you look at all our portfolio metrics,

I mean, we have high interest rate, rent reversions, sorry, we have high rent reversions percentage of 14%. I think that is remarkable. We retain, we have a strong retention. That's mean the tenant never want to leave us. And also our occupancy rate is high. Of course, never, we didn't actually obviously mention is that the ops cost for the more is actually lower. So why is ops cost? Basically ops cost is to the tenant is the renter that they pay over their total sales. So if the ops cost is relatively low, that's mean they are renter actually is actually lower than what they pay compared to the market

to the sales that they have grown. So if their sales grow, that's mean that percentage will continue to fall. And so far, I think this is the case and this proof that our more actually been running quite well. So in that case, it helps the tenants to grow. Of course, at the same time, you help us to also grow our renter revenues through the reversions. That's why we achieved the 14% reversion. So very importantly, strong, I think strong portfolios performance is important. So continue to strengthen that. I think that will help us in negotiating with a good rate with the bankers. And then that will help us to some men

may maintain a lower interested margin. And secondly, with the low hedge profile that will help us to manage a future interest rate growth, leveraging on the two phenomenons that I've mentioned. Okay, a related question to that. So one of the points you mentioned was that there's a likelihood that interest rates will start to come down from here. There's a question from an investor. What happens if the FEDS anticipated recast do not come true? In this kind of scenario, how is Lenny's week going to be able to cope with the elevated interest rates? Well, I think it's a very interesting questions, but I just want to emphasize what will destroy a REIT.

What certainly based on my observation is either mismanagement of the REIT or they have focused in a round sector or round market, but it never, because of the macro environment that actually caused the REIT to destroy our damage and also in a bad state and kind of things. So as long as you focus very well on what you should actually emphasize on for us, I think we emphasize very much on the growth of the portfolios. That's why you can see that, I mean, we continue to report a lot of positive operating operation metrics and all those things. That is to sort of emphasize to the investors

that we are continue growing while the macro environments continue to be challenging to all the REIT across the industry that impact all the REITs. So if let's say things that can impact everyone. So that is something that you just need to hunker down and focus on how you can actually defend yourself because at the end of the day, the whole, I mean, everyone will suffer and you just need to be sure that you'll be the last man standing. I think that's what we should actually focus on. So macro environment would never be, I mean, you never kill you. If let's say you can manage your asset well

and know how to position your asset and focus on the right market that you're talking about. So your actions, the measurement actions means a lot to this uncertainty in the markets. Hey, related to that, I think we'll just take all the questions relating to your balance sheet first. Is on perpetual debt, how do you plan to manage the cost of debt, especially your perpetual debt? There are potentially cheaper funding sources that are available. Would this be something that you continue to consider or whether there are other options that can potentially come in? Okay, I think for perpetual debt, of course, it's one of the instrument that we use

when we do acquisitions of gem, but it never means that it cannot be replaced and all those things. And of course, there are several ways to manage it. First of all, I mean, for those that follow us, you know that our first perpetual, we're going to do for you next year around April. So I am actually sharing with some of this investor it depends on how you expect of the trajectory of the interest rate dropping. If you feel that the interest rate would drop very drastically, so in the case you probably no need to do any things now, but roll over the assisting purpose. So as you roll over,

it doesn't mean that you roll over for another four years or five years, you just roll over for another half a year. So that will continue to provide you the benefit of probably catching a lower interest rate since it's fall so drastically. So, but if I say the interest rate falling off and pause and fall and pause again, that's mean it take a long while for it to actually reach optimal rate that you are actually target on. Then in that case, probably you should actually repeat your existing one and roll over to the other one. That's why I say it actually depend on how interest rate

would unfold themself and then how you can manage it. Of course, the other things that I think we have also mentioned earlier on the presentations that I mean, basically the MES is actually changing the way they sort of monitor the gearing of the REIT by increasing to 50% as far as your interest recovery ratio may take 1.5 times. I think we do analysis, if I say we were to convert our PERPs that is for due on April next year to a debt, our gearing will certainly increase and but it's still within the MES threshold. And that will probably help us to position ourselves on a cheaper funding cost to install a PERP.

So that is something that we can actually work on, it doesn't mean that we will work on that solution but I think that is something that actually will also have a positive outcome to manage the cost. If you want to unpack on that, but it's just a solution. There are a few ways to skin the cap but I think we just suggest some of this. Hey, still on the cost of capital but moving a bit also into growth strategies. So given the interest rates, how do you think about acquisitions into these environment? I think the acquisition is continue to, it still will be meaningful but I think most importantly has to leverage

on I think the strength of your sponsor or what you actually have in different of the others. I think what happens to Land List Street is that we do actually have a very strong sponsor that has a lot of asset in Singapore. So what it means by a lot is actually we are saying that it could be close to around 10 billion of asset has yet to be injected to the REIT. So I think that gives us a very strong positions to continue to be identified as a Singapore asset REIT because I think we want to gravitate ourselves to our portfolio more in Singapore asset.

So that helped us to grow our Singapore present. I think that is something that we can actually sort of give the unit holder more confidence because I mean, most of our unit holders are in Singapore. They want to see how the performance of the asset will be and all the things, even that we have that kind of portfolio which I think you probably can't find in other sponsor that actually will be very helpful for us to continue to be able to present, provide the presence and also have some confidence from the unit holders as they invest in us because they do able to look and feel

and also be able to somehow even participate, for example, if it's the model we require to get even go to the mall and understand more about the mall. I think that's the beauty of it. So I think we believe growth is necessary but growth in the right way, growth in a way that the unit holders actually prefer. I think that is more important and even that we have a very strong Singapore asset base from the sponsor, I think that will help us to continue to add confidence to the unit holder as we grow. So we will gravitate to grow our asset in Singapore to get that confidence from the unit holders.

So we'll go asset by asset in terms of potential acquisitions. That's a question around par-re-bup quarter. This investors the perception is a good performing asset. Any plans in terms of acquisition of par-re-bup quarter? I think it's very interesting. We do actually have a few asset on the plate and par-re-bup quarter of course is more of the few asset that I mentioned within the 10 billion asset base that we have for a sponsor but we need to solve approach it, I think in the best way that we feel that you will generate values for the unit holders. So at this moment, we look at that and also compared to our trading price,

it might not actually be a creative acquisitions for our unit holders. That's why we saw put it on hold. I think the good thing is that while we put it on hold, I think our sponsor continue to manage that as we continue to have the feasibility of how the asset operate. I think that helped us to solve like find a more suitable time for us to acquire. But at this moment, I think based on some kind of criteria that we have, I think this criteria we have mentioned in our IPO prospectus that I think he hasn't sort of met that kind of criteria. So we didn't actually acquire it.

So we pretty much strictly follow the books of what we are doing. At the same time, we have very close, we are very close to the sponsor. We know the performer of the asset and that helped us to time our acquisition more appropriately when the times and opportunity comes by. Okay, I'll jump to some of the live questions. That's a related question on acquisitions. Yes. So it's related to pathway parade. Yeah. Any chance or opportunity to increase your stake in the asset? I think they always chance the opportunity for us to increase the asset. But at this moment, again, it might not be a priority.

Then for those that actually sort of, I mean, follow us, they would know that when we acquire this small stake in the pathway, it's mainly to solve leverage on the growth of pathway through the completion of the development of the MRT and also some of the refurbishments of the surrounding for such to actually enhance the performance and all things. So this part of it, we are observing and see how much that we can sort of capitalize on that and how that work means it translates to the value of inter distribution, also translate value in terms of the asset itself. So that part we are observing it.

It doesn't mean that we will not grow or continue to buy more as we more stick, rather increase our stick in the asset, but we have to be very careful to make sure that everything that we do, every asset that we invest, it do actually have a very positive value equations to the investors. I think allow me to actually point you back to our acquisition of gem. I think for those that know how much we have acquired for gem, I think you should know that the value of the gem has increased by around 8.4%. And that is barely two years. And if that's it, we will do acquire something,

we want to have that curve, good growth trajectories and continue to generate very good cash flow, stabilities and future proving. And gem actually is one of the few asset, or rather our whole portfolio is actually green certified and gem is one of the platinum certifications asset that we hold on the portfolio. So these are things that we always looking for, not only for the current situations that we see good values generate from the asset, but also future proving ourselves. I think that is what we are looking at. So in short, I mean, we are not, yeah, we never say no on acquiring more of pathway,

but we need to understand whether the values that we create really make our investors appreciate that the asset acquisitions that we're looking for. So we have to time it right also again. A related question on pathway parade, how has the sales actually progressed since the opening of the Thompson East Coastline? Actually, I mean, there are sensitivities on us disclosing some of these metrics, but based on my observation, it just my observation, I think the traffic has been improving. I did went down for a few rounds. I feel that there are more at higher for fall. I think also based on what I've observed, I think the offering,

the tenon mix actually has been sort of transformed and changed. I think that that helps the more to perform better. I think it's a very interesting outcome based on my observation, but of course, given that we are just a small leader investors in a whole fund or pathway, I cannot do so too much, but my base on my observation, I think the metric has improved. Okay, now we'll move on to some of your existing assets. Quite a number of questions on Milan, starting with this question from King Ling, who poses live question that the supplement rent for a building tree in Milan is fund loaded

in this house revenue. The subsequent house may not have such a supplement. So what is the likely impact to the GPU? Yeah, I think for those that understand how this supplement tree rent has been working, is that basically it's just subsidized, I mean the shop of the cash flow for the next two years. So what happened is that while we do actually have adding front loading of this 10 over a million that is for the body supplement tree rent in the P&L, but when it come to distribution, we actually saw spread across the two years. So, I mean, unavoidably, I mean, that is how the accounting need to recognize

the revenue once we receive it. So once we receive it, we put it into the gross revenue and then it seems that the gross revenue has grown, but it actually, it managed to spread across two years. So that's why when I come to the distribution, that's been on the DPU line, or the distribution income line, we apportion it so that in the case, only the right number of months and the revenues that to be recognized within the months has recognized for the distribution. So in that case, that would not be a short form of revenue for the, at least for the next one and a half year,

even that we only recognize probably around half a year cut revenue for this distribution. Okay, and in terms of the operational aspects, any expectations on when Skype, the building tree is expected to be completed, contributing to your DPU, and how is the current leasing situation like? Yeah, I think as we spoke, I think we already continue to lease out our space. I think for, I mean, to your understanding is that we already have some occupancy of the space and we are moving towards another few more closing to conclude some of the leasing activities. And that probably will move us to around close to 20% of the lease activities asset.

Asset now, and of course we continue to see very positive renters, tenants prospect and all those things are coming to us. And we look at the prospect and the requirement of the space they are talking about. If all the prospect become materialized, I think that will technically fill up the whole building. So the prospect actually is not small names. Some are big operators in the industry, like from the steel industry, from the academy industry, I think from the fashion industry, I mean, if I name it, you will know who are they. So these are big names that actually looking for office space that actually relevance for them.

So more important is that how we make our office relevance for them, I think it's the connectivity of the office location that we have. I think it's very hard to find that curve. I mean, location we've well connected with train, metro station and all those things. And also we are just probably 10 over minutes to the United airport which connect throughout the whole Europe and all those things. So this make us appeal of course, the other thing is that the green certification of the buildings is one of the other plus point. And also we are not only in the building that is green certified, but we also have the district that is green certified

actually is one of probably the only one so far in the whole Italy that has that care of green certified district, quality certifications. So that actually is one level up in term of improving our listening activities and all those things. I think last but not least, of course, I wanted to mention that our foreplay is pretty much very efficient. I think very much columnar analysis again, these buildings that you hardly already we got to find in CBD area, which I think at worst is probably the second options besides CBDs with that kind of efficient layout. I think more importantly that I think investor might want to actually know is that we technically

are trying to improve our renters from the building that we try to generate by probably 50% or more. So for example, if I were to lease based on the previous lease arrangement that I have that's been fully, my building fully lease to Sky, Italy, I might collect a hundred dollars. Now I am able to collect $150 for the building tree and somehow is even more. So what it means is that even if I would not be fully lease out the whole space, my break even point could be only 70%. So if I would lease out 70% of the space, I'm all good as neutral. But if I lease out more,

I think it will be more to distribute to the unit holders. That is why, and that is the motivation why we actually start want to convert this building itself to a multi-tenanted buildings. Hopefully investor understand the whole logic of why we are doing that. We are trying to enhance values for the unit holders by doing that. And so far, I think the strategy seems to be still in the positive way and we continue to see on that car directions. Yeah, that's fully, I think in our sharing to the unit holders. A related question from Muin Kwang, also relating to Sky Building Tree, when is the building expected to stabilize

in terms of occupancy? Building tree basically, I think, as I mentioned, if let's say you got your stabilizing that when do we roughly achieve what we can achieve previously? I think as I say, it's the 70% mark that we're talking about. So if we were to be able to fill up the 70%, I think to 70%, I think within the two years time, I think we are good enough. Of course, filling up more, I think you will probably be able to sort of provide more income to the unit holders. So of course, we want to do that. So while we are actually trying to sort of

continue our leasing activities, which I think is going on quite a healthy even, our very unique and very good locations. And also if someone were to know, someone if you were to know that I mean, the location of the building actually is right close to the Winter Olympics in 2026. You also know that there are also prospect that actually going to sort of like continue to work on this arena that actually meant for the Winter Olympics pre and after the events will also be located at the areas. And our building is probably the only few buildings around the areas that is available for them to lease.

And the arena that they built will not be tied out after the Winter Olympics. So there are activities going on. So we make our buildings very relevant. So I think technically, I think the leasing activities will continue to be healthy and doing well. It's just a matter of how we want to sort of quickly lock in the some of these prospects, because we want to actually have a strong prospects that actually continue to provide us a very strong cashflow. So we want to fill it up with good names and good tenants. So there's the reason why we could be quite selective at the same time.

I think the leasing activities is also a little bit slower compared to Asia. That's how it works so far in Europe. And also not to mention is that now is the summer holiday for Europe, literally for the whole August, they are probably having a break. So again, that was told us how to process. Everyone's probably watching the Olympics. Yeah, exactly. Okay, now we will move back closer to Singapore. Quite a number of questions relating to the GreenShoke Cup. Can you provide an update in terms of what is holding back the project? When can we actually expect construction to begin? Okay, I think the GreenShoke Cup

is started off with a very simple kind of structure. And now because of the ambitions of the STB and SLA, I think it become a more elaborate kind of structures that we will probably technically be able to house from a very small concept to different kind of events that is happening and we have usage. Of course, the whole intention is to grow the local talents at the same time, see how we can solve marriage, the Western and the local knowledge together as we grow this industry. So it's a very complicated, but it's a very strong propositions for us to solve, make these venues work. So because of the more elaborate kind of structure

that we are looking at and the more deeper way to solve and unfold some of the activities we are talking about, that take a longer time. But I think we are there. I think we managed to clear some of the, most of the authorities requirement because even more elaborate, that's me, you're looking at a more solid structure. A more solid structure has to be able to, I think, soundproof, able to make sure that the evacuation is clean and easy when it comes to any kind of emergency and all of these, these are things that the structure has to address, which is very different from a typical

kind of stadium kind of structure. So hopefully I give you enough of complexities to talk about the structure. So that itself takes some time, but I think we are close to getting it across the line. So once it crossed the line, I think it should take around 12 to 18 months for us to solve construct the asset. And then once it's done, the asset probably will be there for the longest time because it's a very solid asset. It could probably stand tall for another 30, 40 years. It's a very solid asset that we're talking about and you will certainly change the face and look and feel

and attract a lot of different people that come to the venue itself, which is very much aligned to the whole visions of 3-1 traders. Why we saw support the project to solve for all. Okay, moving next door, any plans to capitalize on the extra NLA for short stream? Yes, I mean, they always be, but the plan has to gradually deploy instead of a one-shot deployment. While we see, I think the sales and food flow has been improving on all those things, but any kind of major change or major construct of the buildings means that you will have to, first of all, halt the place. Secondly, it affects some of the operation from the tenant

that you need to sort of stop the operation. I always think this will be a moment that you will actually have to stop the cash flow for the time being because, I mean, certain level of the tenant, he might even need to compensate them for doing the major work and all those things. So these are things that we do not want to, why it will happen now, even that the interest is still at the highest side, which I think that will compromise on our distribution, let's say we do that and affect the distribution, but it doesn't mean that we stop there. I think progressively when we see a tenant moving out

and the next tenant coming in, and we feel that opportunity for us to deploy more space on that floor itself, I think we will do that. So we slowly move, I mean, dish out this additional space to some of these other tenants that wish their surrounding space can stop like for view and add up some of the space. But we cannot do in a very major, very big project. So that in the case, we do want to affect our current cash flow because I think we still not at that moment have a luxury to solve, have some cash flow disruption yet. I think that's something that we are conscious about.

Do you see the muted group of choice arrivals impacting 90's week? I think if let's say we are talking about only more in a doubt how it could somehow be impacted, but I think again, where fortunately we have a jam in the portfolios, which I think I think suburban mall is never been supported by tourists, but always been the surrounding cashmen and all this thing. So that is a plus point that we saw have discovered. That's why we during our acquisition of jam is strongly encourage the uni holder support and thanks for the uni holder support we acquired jam and it proven to be right.

As to 313, I think it also slowly convert it to, I mean, we saw changes identities so that it actually attract a young and a young professionals to come to the mall. So we are not so dependent on the tourists anymore, but of course tourists that come to Singapore will tends to go to Ocho and we will hopefully be one of the mall that were able to attract them to spend on the money. I mean, that is very important, but nevertheless we is trying to solve like fit our, our tandem mix to actually be able to attract a young and young professionals to continue to spend the money over at our place.

So that I think strategy proven to be strong. So in take case we continue to see very strong growth on the sales numbers, but a food form might compromise. We end up get back to what we are because tourists do actually feel some of the food still be somehow the food form that we are talking about, but it doesn't compromise on the sales number. So I think that's something that we're trying to solve transform ourselves. So I would say that the tourists still relevant, but it not technically jeopardize or cause any big issues to our tenants operations. Likewise, it will not be able, it would not likely affect our rental collections.

And just a question of cost, the utilities costs actually increase quite substantially in the recent half. Is this expected to come down from current levels? Yeah, and thanks for the question. And if again, if you refer to one on our third quarter announcement, which is somewhere in April, I think you will notice that we managed to lock in the utility cost at a 30% discount. And assuming or rather you look at it, our utility cost if it's around 15% of our whole operating cost, I think 30% cut will be, I mean, it's a resident for numbers. So we managed to lock it in and perhaps it's one of the lowest cut of utility rate

that is available that has, we have locked in, I mean, to how the whole market and we are pleased that we have to make this action. And in fact, some of these other rate was also trying to check with us, oh, is it, I mean, how do you actually manage to get that cut rate and all those things? So we share with them, we have to do so give them the kind of understanding how we solve more into the market to catch, to capture this rate. But that certainly will be a saving. I think shutting from the new financial year, which is first July onward for the next two years.

I think this saving itself, if it translate to DPU distribution, again, it will increase by another 0.2 or 0.3 cents. I mean, that's how we look at it. Yeah, if I say we convert it to a distribution. Okay, maybe just one final question. This will also help to round up today's session. This investor has been holding onto your shares since IPO. And he would just like you to analyze why some investors do not seem to be interested in investing in Landy's Suite. I think it's a very interesting question. And also, I'd love to say that I'm also the unit holder. So in that case, I have the same sentiment

and also have the same urge to solve, improve the performance of the REIT. And of course, if you invest in the REIT and invest in the REIT with very specific sectors, I think you will have to expect some of the up and downs due to the natural asset cycle that you're talking about, the investment cycle. And you also face a lot of different macro changes and all those things. These are trends that I think you have to face it. But I mean, as long as you have a strong confidence about the portfolios, I think more importantly, whether the portfolio impresses you is very important because portfolios that we are talking about

will have to able to generate regular returns and stable returns to you. And also in top valuation able to stand generally a very strong valuations that will actually represent on a trading price. I think that's very important. I think a lot of things, I mean, these are the first part. The second point is a lot of times the investors are miss a very important key point is that whether this, the portfolio itself is screen certified or whether it actually has a very great potential because this, we are not holding assets just for the current moment. We are holding asset for future distribution. It is a long-term distribution.

I think this portfolio that we have is, I mean, all the asset is screen certified which were able for us to actually future proof ourselves. People are looking for how asset can be a future proofing. I think some of the asset inside the roof is not able to convert into green. I think that investor has to be very conscious to that in the case when they invest, they know that they are not buying a set with a very future looking things but it is more of the near term return. So that is something that we are looking at. So what actually stopped investor from investing in us,

I think probably is due to the interest constant. But again, I have addressed on the first question is that as long as you see how the two phenomenon, I think the peak of the interest rate and you see the inverted interest cost that is actually happening and we can sort of capitalize on that and actually reduce our interest cost. I think that is something that eventually we're able to attract investors. So our rate is very much linked to the movement of the interest rate and probably our co-relationship is even stronger than the others because we have a lower hedges compared to others. So what it means is that if you have lower hedges,

the interest rate or the move down, you are going to fit more than the others compared to those that actually hedge higher because they cannot actually solve, take the account improvement of the interest rate environment to the P&L because they have already hedged their position. So for us, watch out for the interest rate movement, we will then suddenly be able to benefit from that. I think investing happens. Thank you so much Calvin for your sharing tonight and for taking all the questions by the participants during today's session. With that, we'll end today's Corporate Connect. For the audience who have joined us today, we hope you found the Corporate Connect session informative

and if you've got any further questions, please feel free to contact the company. In case you missed any part of today's session, you can rewatch the webinar on SIA's Facebook or YouTube channel. For those who are new to Corporate Connect, it is a monthly webinar. You can visit the SIA's website to get updates on some of the ongoing investor education programs as well as initiatives. The next Corporate Connect webinar will be with From Well European Read on the 20th of August, 2024. If there are other companies that you would like us to also feature, you can share with us in the chat box as well.

So thank you so much for joining us this evening. Thank you, Calvin, Nigel and Billin for joining us tonight. We hope that you have a very good evening and do join us for the next Corporate Connect webinar. Thank you.