4Q & Full Year FY23/24 Financial Results Briefing

Hi, good afternoon. Welcome to MLT results presentation for the fourth quarter and full year ended March 2024. With the full management team with here with us today. To start off the presentation will be Charmaine, our CFO. She will go through the key highlights. Hi everyone, thanks for dialing in. Our first run through the high next of 4Q FY23-24. So for the 4Q, our gross revenue increased 1.2% year on year to end at 181 million. MPI is higher by 0.6% year on year at 155.3 million. However, DPU is 2.5% lower at 2.211 cents versus the 2.268 cents we announced last year. In terms of portfolio, our portfolio remains resilient. Our portfolio remains stable at 96%. Average rental reversion of

the positive 0.9% including China. Excluding China we're looking at a positive 7.1%. Bill remains at about three years. Full capital management wise our leverage ratio is at 38.9%. That's about 84% of our total debt has been hedged into six rates with an average debt maturity of 3.8 years. About 78% of our income for the next 12 months has been hedged into $10. So we continue to be active in our rejuvenation of the portfolio. We started 4Q with 187 properties. We completed the divestment of 73 Tuas South in Singapore and completed the divestment of 17 Tuas South in Singapore and completed the acquisition of one India asset during the quarter. So our portfolio remains at about 187 properties. During the quarter we also announced a proposed acquisition of three well-

located grade A assets from the sponsor of about 213 million, one in Malaysia and two in Vietnam. In terms of sustainability, about 39% of our portfolio is green certified and we are generating about 59.8 megawatt peak of full energy. And also during the quarter itself we issued our maiden 75 million green bond under the green finance framework. So going into the details of 4Q results. For this quarter our financial performance continues to be impacted by recent performance from China, FX losses due to the beginning of the regional currencies as well as higher borrowing costs. Cost revenue is 1.2% higher, mainly due to contributions from acquisitions made at the beginning of the year. Also higher contribution from existing properties, however this is offsetted by lower contribution from China, which is down about 8% year on year.

Expense of revenue contribution from divested properties as well as currency weakness. Of the expenses, this higher may lead you to acquisitions made at the beginning of the financial year. Cost revenue and MPI would have increased by 3.6% and 3% respectively on a constant currency basis. For borrowing costs we are higher by 6.9%. This is mainly due to higher average interest rate, due to higher base rate on our unhedged loans as well as higher replacement rates on the hedges that have expired during the financial year. This is partly offsetted by as well as incremental borrowing costs to fund the current year's acquisition. Then this is the higher interest costs are actually offsetted by loan repayment with proceeds from private placement as well as divestment proceeds. Including our divestment gave up 12 million amount distributable to unit holders would have increased 1.1% or DPU failed 2.5% due to the enlarged unit base.

For the 12 months, results year on year, the reason behind the variances in some of gross revenue MPI borrowing costs are largely the same as 4Q this year versus 4Q last year. We are reporting a higher DPU of 9.003 cents which is 0.1% lower than 9.011 cents for the fall of last year. For quarter 4Q versus 3Q, revenue is down 1.7%. Mainly due to absence of revenue contribution from divested properties as well as lower contribution from China and Singapore. For Singapore it's really because of rental incentives given in fall few. As well as currency weakness which is down by which is about a million lower quarter. Property expenses is higher. Mainly due to higher property tax and maintenance expenses. NPI 2.6% lower.

This is 4Q versus 3Q and borrowing costs increase due to higher average interest rate as well partly offset by low repayment due to proceeds from divestments. The DPU is 2.21%, 1.9% lower than 2.25% in 3Q. Our balance sheet as of 31st March, 2024 versus last year, IP has increased from 12.8 billion to 13.2 billion. Mainly due to acquisitions of about 1 billion during the financial year. Partly offset by divestment of about 180 million. And currency translation loss of about 470 million. We also had a 1.8 million that said fair value loss in terms of the IP value. That increased from 4.9 billion to 5.3 billion.

Mainly because our investments of about 1 billion during the year is funded with 180 million of divestment proceeds and makes of equity as well as debt. NAD has moved from $1.44 last year to $1.38 this year because of FX translation loss due to the pertaining of regional currency. Leverage ratio moved from 36.8% to 38.9% and our weighted average interest rate 2.7% this year compared to the last year. The interest cost is kept stable. Really not withstanding the rising interest rate environment mainly because of the proactive capital management we do. So this is due to, I mean, number one following JPY loans to fund our acquisition as well as the active utilization of divestment proceeds and EFR proceeds to pay down

the more expensive loans. We expect this to increase to about 3% in the new financial year. Our debt duration remains stable at 3.8 years and interest cover and interest, just the interest cover is at 3.7 times and 3.1 times respectively. So our debt maturity profile remains well staggered with a healthy average debt duration of three to eight years. We have about 950 million available committed credit facilities on hand, more than sufficient to refinance the 270 million that's coming due this new financial year. In financing total about 964 million, accounting for about 18% of our total borrowings. In terms of interest rate risk management, about 84% of our total debt has been hatched or are drawn in six ways. As for forex, about 78% of our total amount distributable

in the next 12 months have been hatched in the same dollars. And the next slide would be the distribution details for this quarter's distribution. I'll now hand over to James to go through the portfolio update. Hi everyone, James here. So I'll update the portfolio. In 4Q in terms of diversification, we still offer a good mix of diversification between the developed markets, which contributes 70% of our portfolio AUM and gross revenue. This gives us much stability that we need. Yet at 30% comes from developing markets, which offers us the growth potential that we need.

In terms of occupancy rates, our portfolio remains very resilient. 4Q we registered 96% occupancy. We changed from the previous quarter. Most of the countries reported stable occupancy rates, except for Korea and Australia. In Korea, there were these expirations in 12 properties, the older spec property that we have in Korea. In Australia, it was due to a non-renewal of a small lease in Brisbane, Akashia Ridge. Overall, we achieved 2.9% positive mental aversion in the portfolio in 4Q, as compared to 3.8% in the previous quarter. Without China, the portfolio aversion rate would have been a positive 7.1%. Because China's mental aversion rate was negative 10% in 4Q.

Overall, we have a well-respected Leach Exploit profile in the next few years. And our top 10 tenants now contribute about 22% of overall gross revenue. And the top 10 tenants are coming from a mix of e-commerce companies and 3PL companies supporting those e-commerce companies. And also, hypermarts in Australia. And 3PL is supporting the consumer's people's sector.

Okay, on the active popular rejuvenation. So in the financial year 23-24, we have acquired over 1.1 billion in acquisition of a 12 modern grade asset, announced of N or completed in F.D.F.Y. across the developed and high growth markets. So we have acquired, in the financial year, we have acquired eight assets across Japan, for real, and Australia with a total value of 900 million. In the recent quarters, we have also acquired four assets or in the process of acquiring four assets in these emerging high growth markets to capture demand from the growing consumption types of selling. Kuala Lumpur, Kocimisi and Hanoi. So in February, we've completed the daily asset. And in the same month February, we have signed FPA to acquire three assets from our sponsor, one in Malaysia and two in Vietnam,

with a total value of about 12, 14 million. With the four recent acquisitions, it depends on footprint in Malaysia, Vietnam and India. So this offer attractive fundamentals driven by positive drivers such as the strong economic growth, growing consumption across these three markets as well as the uprising urbanization in this market. It also offers us favorable, secure trends. As you can see, the supply chain diversification post pandemic, as this daily e-commerce grow, and as well as the still limited grade A warehouse supply in these three markets. And all these present growth opportunities for MLT. So with this exposure to developing markets, it augments MLT growth and at the same time, complements the ability from the developed markets from the recent assets that were acquired in Japan, Korea and Australia.

Next, as part of the MLT ongoing asset enhancer plan, we have identified two projects with total development costs of about 280 million. So the first one is on this Subang asset enhancement. We have successfully acquired two land hostels in Subang and we are currently in the process of seeking approval from authorities for amalgamation with our assisting MLT assets in Subang 3 and 4. Once the amalgamation is approved, we can potentially use about 1.4 million square feet of modern grade A specs, which is about five times the increase from Subang 3 and 4. The next project is on this redevelopment project at 51 Benoy. This is currently on-going. We have started construction in July last year and expected completion in first half 2025. And also as part of MLT active portfolio rejuvenation strategy,

we have divested over about 200 million of older specifications with limited redevelopment potential. So we have sold seven, three in Malaysia, three in Singapore and one in Japan and two assets are under the selling process. We have found SPAs to sell about 40 million worth of assets in Malaysia. Next, on the portfolio valuation. In terms of the valuation, it remains resilient. The portfolio valuation was about 13.2 billion, 3.2% higher year on year due to acquisitions of nine assets as well as a capital expenditure input on assisting MLT asset and a 51 Benoy property that's undergoing redevelopment. This was partly offset by a development of seven properties, currency translation loss of about 471 million and 1.8 million net fair value loss on investment properties.

In terms of the net fair value loss, it's mainly attributable to properties in Australia, China and Korea and offset by the gains in the six other geographic markets and the main part of the gain is coming out from Japan and Hong Kong. If you look at the cap rates movement, I'll start out with Singapore. So for Singapore, there is actually no change in the cap rate. In terms of Australia, there is a cap rate expansion of about 75 to 100 bits. However, this is partly mitigated by a strong rancid growth. In China, there is also no movement in the cap rates. What you have seen here is that in March 2023, it was a growth cap rate that was adopted and then there was a change in value. So in March 2024, the value was to net cap rate basis.

However, if you look on the light for light basis, there's actually no movement on the cap rates as according to the value was, there are actually no transaction. Hong Kong, there's also no change in cap rates and the valuation increase in the Hong Kong portfolio is due to a rental growth. Similarly for India, there's also no change in the cap rates and besides the acquisition of assets in New Delhi, the same store assets actually are also raised due to rental growth. Next on Japan, there's a slight compression of up to about 40 basis points and this is due to a continued investor interest tracing for good quality assets as well as a rental growth seen in this portfolio. For Malaysia, there's also no change in the cap rate movement

and the portfolio valuation, there's a slight decline is because we have so three assets over the year but if you look at the same store basis, it is actually an increase in the same store assets in Malaysia due to rental growth. For South Korea, there's a slight expansion,

mostly about 10 bits and also at the same time, there was on the same store basis, it declined due to the lower rent side for the lowest specifications assets in the Korea. For Vietnam, there's no change in the cap rates and then the same store valuation increases in Vietnam due to the rental growth. So all in all, that sums up including the work of USASAT, the shorter value we're looking at for MLC portfolio valuation is about 30.2B for this year. I think that sums up my slides on valuation.

Okay, so just a quick update on the sustainability front. Please do share that we have made quite good progress on our green initiatives this year. To recap, MLC has an interim goal of achieving carbon neutrality for scope one and two emissions by 2030, which is in line with the Maple Tree Group's long-term goal of reaching net zero emissions by 2050. So we are focusing on two main initiative, solar and green buildings. For solar, this year, our self-funded solar capacity has more than doubled from last year to about 36.2 megawatt peak. Our interim goal is to reach 100 megawatt peak by 2030. But if we include third-party funded installations, then on the entire MLC platform, our solar capacity has reached a total of about almost 60 megawatt peak, which we believe is the largest amount at risk today.

For green buildings, 25 new buildings got certified this year. So that brings to a total of about 39% of our portfolio by GFA is now green certified. Our interim goal is to reach more than 80% for our portfolio to achieve green certification by the year 2030. Just a couple more points. Green financing, I think just now, Shami mentioned that we issue our first green bond, $75 million, under our green finance framework, which recently got a second party opinion from S&P. And this will be channeled towards eligible projects like green buildings and renewable energy. And for the third year running, we have planted an additional more than 1,600 trees across our platform. So that is under the planetary removal tree initiative.

And in line with this effort, we are pleased to share that we have, you know, we have attained a four star rating under GRAS, as well as being named a joint winner by CF for the Singapore Corporate Sustainability Award under the REIT category. So with that, I'll now hand over to Kei-EK for the outlook comments. Okay, I think that, you know, this quarter, we see the first DPU decline for MLT. So I think we're one of the last few weeks that, you know, have managed to maintain positive. And then I think we cannot fight against the macroeconomic situation, the forex. Weakening of the foreign currencies, as well as the higher interest rate environment. So I think we have been, you know, telling investors,

we've been telling analysts, and the message, unfortunately, will have to continue. So on the macro side, the forex, as well as the higher interest rates. Then on the operational side, China continues to be weak. Then, you know, weaker than what we would like it to be. James, did you give the rental reversion? I can go through now, the rental reversion. So overall, the rental reversion for 4Q was 2.9%, compared to 3.8% in the previous quarter. So Singapore had the highest rental reversion of 11.1%. These are new, we need with a strong demand for ramp-up properties, which continue to be short on supply in Singapore. Although by Vietnam, 4.0%, Malaysia, 3.1%, Korea, 2.6%, and China, negative 10%, which I mentioned earlier.

So the China environment, we expected to be volatile, uncertain for the next 12 months, and maybe even beyond, we're trying to get greater clarity on whether we are seeing the bottom. But I don't think we are seeing it now, we will have to wait for a while. So if you look at the stability of our portfolio, 2019.2, 20% of revenue comes from China. The emerging markets, Malaysia, Vietnam, India, about 10%. So if I take this 20% out, we are looking at 70% of the revenue coming from countries like Singapore, Japan, Hong Kong, and to a smaller extent, Australia and South Korea. So while we continue to put a lot of focus on maintaining the tenant retention, maintaining the occupancy in China,

we will have to work even harder to push our Singapore, Japan, and Hong Kong because these will make up about close to 60%. So if we are able to push this three markets and deliver stronger results, then it will compensate for the weakness that we see in China. So on the operational front, I'm confident that on the occupancy side, we'll continue to see high occupancy. On the tenant retention side, we have about over 900 tenants,

very diversified across many countries, not just e-pomads, which we are seeing a slowdown, but we are seeing higher value goods, such as pharmaceuticals, such as co-store, such as electronics. So we're seeing this movement coming in our portfolio in the other countries outside of China. So I think the headwinds really for us can be summarized in forex weakness, higher interest rates, and China, that will continue to hit us. Okay, we now open the floor to questions. Mervin, raise your hand, would you like to go first? Yeah, I agree, we can. Thanks for the call. If we can start off with Hong Kong, I was looking at the jail report for the March quarter. They noted a negative adsorption about 900,000 and vacancy rate seems to have creeped up to 7.3

from 5.8 in the fourth quarter. And rents are falling for the first time year in year Q&Q. So a bit shocked by that. Could you give us an update on terms of what's happening in the Hong Kong market? I still expect, I presume we still expect positive rent-related versions, but how is it in demand? And I think next year you have Hong Kong TV, which is a top 10 tenant. I think there's some renewals in June next year, so maybe starting off with that. And then in terms of China, any guidance in terms of rental reversion, occupancy outlook over the next few quarters, and whether we'll be able to collect on the rental rears, we should disclose in the previous quarter, thanks. So I think for Hong Kong, the red flag access, the red flag warehouses continue to see very, very types of lights. So we will start to see this dichotomy and others, this differentiation for better quality,

flight to quality, if you want to call it that. So I think for a red flag, we'll continue to see positive rental reversion, not the good old days like in 2015, 2016 double digits, but we should see still good positive rental reversion coming up for ramp up. And then as you know, some of our portfolio in Hong Kong are rented to data centers. So these are very resilient users. And then we know that in Hong Kong, it's very difficult to get power supply, increasing power supply. So these are the assets that will continue to hold very good resilience. And I think recently we did a rental reversion with one of them, Jim. This was a double digit rental version. For one of our data centers in Hong Kong. So moving just to add on what you had said, in Hong Kong, what you mentioned about vacancy rate increasing, there was mainly due to a huge supply coming from the North Korea, over 4.5 million square feet

at the Chappelok Park, the China project. So we will be at, so that is stated mainly for the air freight and transport related customers. And China obviously is only occupying part of a building. They are still trying to rent out a balance. So that is very unique product at the airport. So because of the excess capacity, it dragged down the vacancy rates. And there are restrictions in terms of the tenants. So it's not at white base. That means not every tenant will qualify for use in that China property. And for China, with regards to the guidance for the next few quarters, we believe the next few quarters continues to be uncertain in terms of the, we're still looking for signs of recovery. And not just any signs, but sustain the kind of recovery. And we're still keeping our fingers crossed. So in terms of rental reversion, we're looking at no teens, negative no teens in the next few quarters.

In the tier two cities. In the tier two cities. Tier ones are still doing much better than tier two. In terms of occupancy rates, we don't see it going down below 90%. We still hover around 93% like what we are holding now. So I think I did not mention about divestment earlier. So we will continue with our recycling strategy. So we will look to sell some of the poorer magnification assets in China. And then in fact, we're in the process, James is in the process of evaluating quite close to, closing some of those now. And then of course Hong Kong, the lowest-backed stratatidal units, these are also the ones that will be king to divest. So Mervindam, does that give you some... Yeah, maybe, yeah, thanks for the color. But just in terms of any updates on the Hong Kong TV release,

I think there's expiring next year. Then I also asked about the rental areas in China. I think the member of the Ranger have passed you. Thanks. Yeah, Hong Kong TV is one of the key tenants in the Ching Yi project from... We've been engaging with them constantly. So they are looking to what they call expand, if possible. But the moment they are still taking such as few. So we don't think there will be any movements on their end. And in terms of the reversion, I want to get as mentioned for Hong Kong, we're still looking at a positive re-reversions, particularly in Ching Yi warehouse, because it's still a good location, good spec warehouse, which is in the market, is short in supply. So the new supply that's coming out, like what James mentioned, from ShopLock, so that time to customer, that perimeter still continues to be a key driving factor in some of the usage that we have seen in Hong Kong.

So Ching Yi being much closer to the city, that ShopLock, and then compared to even two more, which is not as close compared to Ching Yi. So I think the location and also the specs of some of our ramp ups are going to continue to be attractive for our tenants. Mement? Yeah, how about the China rental areas? Have we collected those people have paid on time? Thanks.

For the China areas, we are monitoring closely, but we are seeing some tenants are still a bit lack in terms of the payment, but I think the ground team is actually monitoring very closely and then trying to extend certain helps or in terms of maybe extending installment plan for the tenants as necessary. But we are seeing kinds of improvement in terms of the collections. Especially this quarter, it has come down quite a fair bit. So last is close. Sorry? It's improving the liquid syndrome. Yeah, last quarter, I think it was 6% of annual revenues in China, which is where we are. So that's to make sure it's improved. Yeah. Thanks. 5.9%. Well, 5.9%. About 5.9%. Well, so has it really changed much? Is that all? 5.9%. But I think it's because that's the total dollar that it's come down to. It's because the total guys are doing.

Yeah, so Mervin, I think the long and short of it, China will continue to be very challenging for us. So occupancy, we think based on the specifications and the location we are in, occupancy, we should be able to maintain still a very healthy level, but reversion, that's something that, you know, we are gonna be seeing negative double digits. Yeah, and then the ARIA, we're gonna monitor for the next few quarters, but this quarter seems to be, I mean, what we are receiving now seems to be strengthening from the last quarter. Okay, thank you very much. I know what that is. Yeah. Okay, Derek, DBS, can you be next? Hi, Derek. Hi, good to see you. Can you hear me? Yes. Yes, hi. I'll just ask two questions. First one's on China again, right? If we look at China, I remember you mentioning that tier two, it's only like half of your overall exposure. And just wondering if you look at tier one cities

while it's looking still fairly resilient, are you seeing signs of weakness and should we be worried about it? This is my first question, yeah. Okay, so I think the, okay, you want to give us your second question, so we see whether we need to take it together. Okay, my second question is on the Japanese yen, it's great for consumers, but it's better for investors like yourself. But just wondering, I mean, your hedge out, how long is your Japanese yen hedge gonna defend you against the current currency drop? Just wondering if you can give some color on that. So yeah, just a quick question, thanks. The second question is easier to answer, so let me. Okay. Okay, so specific for Japanese yen, I mean, our strategy was to hedge up to eight years actually. So immediately for the next 12 months, 87% have been hedged. And then of course progressively as the year, you know, second year would be a slightly smaller amount and then third year would be a smaller amount,

but it's all the way up to eight years. So for the immediate year FY 24, 25, 87%, our hedge rate is at about 485 levels

versus the current one. Versus the current one. This is the current one, one five, four, four, five. We are 84, 85. Yeah, so this is because we hedged this more than seven, a long time ago. So some of it as far as eight years ago. Yeah, yeah. So while we will continue to benefit it, but I think like what we are trying to say in our outlook section is, you know, this hedged will gradually fall off and then the new hedged that we get in will become more and more expensive. So, so while this is for Japanese yen, you know, we have this support at least for the next six to 12 months. Yeah. Okay, so now back to your tier one and tier two. So what is happening now is in fact, we're in the process of digesting old specs, old specification China assets, some of them in tier one. And the reason is because if you look at it, the land tenor, some of them are going below 30 years.

So we have been engaging the government to see whether we can redevelop and then some of them has been rezoned to commercial. So that causes a strain on the occupancy and the uncertainty for the tenants. Yeah, so I think your question is, for tier two, there's excess supply, the double digit rental reversion negative will come from the tier two. The tier one, we should still be modest, you know, positive rental reversion. Yeah. Okay, okay. Sorry, yeah. Yeah, sorry, sorry, I want to add on is, this has to be the better specification properties. So if you go to an annual report, you will see some older properties that with the specification are not so good. These will be the ones that will also see what we call rental reversion pressure. Okay, great. So just one last one is- So you can't just generalize now and say, oh, tier one is gonna be good. Yeah, okay, okay. But you have some land as rezoned to commercial.

So meaning when you sell, it would be a big upside. There will be divestment gain, but until we actually sell, until we actually get the money, then we'll be able to have a better feel on what's the gain amount. Yes, but there'll be divestment gain, yes. Okay, okay. Sounds really good. All right, that's all for me, thank you. Yeah, but Derek, we are entering negative GPU zones. Okay, so things are not gonna sound so good moving ahead because, you know, edges are gonna come off and new loads are gonna be coming in at higher rates. So really, this is a part of the portfolio and then we still have China weakness coming at 20%. So really the 80% of that portfolio has to be generating substantial power to funnel, you know, this, what I call, you know, the growth that we want to see

and as opposed to the decline that we are seeing. Okay, sounds good, we'll take note of that, yeah, thank you. We will continue with our recycling strategy. So low yielding assets, specs, we will sell it out and then we'll recycle. So you see that we are doing a transaction with the sponsoring, yeah, Malaysia and Vietnam, yeah. And then the yield is about 7.5% to 5.5%, 7.5%. Yeah. Okay, sounds really good, all right, thank you. One more question please, okay, next is Yucia, hi Yucia. Hi, hi, thanks, thanks. Also on China, can you give the breakdown in terms of rent reversions for this portal between tier one and tier two, tier three and then looking at the lease expiry for this year, right,

13% coming from China. How much of that is coming from tier two, tier three cities? And then lastly is on acquisition and divestment given where your share price is and where your gearing is, is it safe to assume that acquisitions is gonna take a back seat? And if so, are you likely to focus more on divestments? And if that's the case, is it gonna be the same amount of quantum that we are seeing in this financial year? And that's it. Okay. Quite a lot. So let me take the first two questions. For China itself, most of the expirations in 4Q were, 94% were from tier two cities, all right. Tier two, the rent version was minus negative 11% and the tier one was slight positive about 2.2%. Yeah, and you can be, you know, I was just confirming the numbers with this gene.

I mean, this year we did 1.1 billion and then we managed to pull off an EFR sometime last year, March. Yeah, before, you know, things of when, even for down here, right? So I think looking, you're absolutely right, cost of equity, looking at where our share price is, cost of debt, where the individual countries are going. So we really have to rely a lot more on the recycling strategy. So that means we will divest and then recycle from low yielding and then recycle it into higher yielding assets. So that will drive us. And then the other thing is we will continue to divest, coming out from Malaysia, we'll continue to divest in Singapore, China, Hong Kong, maybe some more from Japan.

So to answer your question, the pace we are looking at, we are looking at about 200 to 500 million for this new financial year. It very much depends on our recycling strategy. Okay, but it seems like all your divestments are pretty small. Yeah, I think that's the interesting part. Yeah, if you, you see that, I mean, this is the comment I get because, but if you prank us, we have divested almost a billion, me and me, correct? Almost a billion. We have redivested a billion over the last five years. So each one is 2050, but we've divested a lot. So the MLT is a very old REAP. We started in 20, 2005. 2005. 2005. And then, so we have a lot of assets to sell, you guess. So hopefully, you know, we can get the price that we have. I think I always tell you guys that 500 million

that I would like to get rid of. So it's still there, it's still sitting on my books. They are not empty. Some of them are 100% doing very well. So we are constantly doing that. So the thing is we want to divest when we have a positive acquisition. So that means we're not doing a divest and hollow out our revenue while we wait for new acquisitions because these assets are still hitting 100% occupancy. We still see positive rental reversions. These are not in China. So that's where we are coming from. The other interesting point of how we can make our divestment more interesting is the pairing of assets. So for example, if we buy 200 million, I buy 100 million in Japan, I buy 100 million, let's say in another country. And then if I'm able to pair it together and then raise a gearing of 50 using majority Japanese yen that the accretion is at heart. Because you know that at MLT, we do not,

Shami, we do not do what we call... We do not over gear in the currency. Oh, okay. But we gear up almost, we gear up 90% of Japanese yen. You don't do at mortgage type of financing, we borrow at the MLT trust level, right? So therefore, when we go to the banks, we are able to look at raising loans as a combined basis versus I'm buying an Australian asset and I need to pay Australian interest rate now. How much? 5.5. 5.5. 5.5% Yes. If I will buy Australia and Japan, I put it two together and then I can raise more Japanese yen that then the accretion can be more interesting. So these are the avenues that we will look at. So I think to add on to Kit's point, I think what we were trying to say was because we looked at it on a portfolio basis, so for the acquisition we did in the beginning of the year, some of it we actually took on Chinese yen loan

because we were underweighted in terms of the Chinese borrowings. In the past, we had always funded our Chinese acquisition with equity, but then you know now there's an opportunity and the Chinese get each loans are of a lower interest rate. So we actually borrowed more Chinese yen to actually catch up on our capital head with regards to Chinese yen. Yes. So I think that is where the diversification of our portfolio has helped us to provide a base that we can still be quite active on acquisition. I'm not really now. Okay, just wanna go back to slide 34. That's 13.2% from China. How much is tier two tier three? Slide 34, yeah. That green bar there. The 10.2, how much of it is tier one, tier two, and tier three? What's the split? I would say almost 80, 90% would be tier two. Tier two and tier three. Tier two, tier three. Yeah. Okay, that's it for me.

I'll jump back to the kit. Thanks, Kit. Yeah. Okay, Dan Xuan. Hello, Dan Xuan. Hey, hi, good evening. My first question is on acquisition. Is the content also 200 to 500 million that you're looking at and what geography looks interesting to you now? Okay, we are already doing 200 plus million coming from sponsor. Jean has mentioned that. So there are some more Vietnam assets and India assets that we can take from the sponsor. So if you talk about being the easy way out, there is this Vietnam and India coming out from the sponsor. But if you look at the party acquisitions, we are watching it. We hope that the prizes will come down to more realistic level, then we can do the recycling. So to answer your question, 200 to 500, I mean, we're already doing 200. Will we be able to do another 200?

That's a possibility. Okay, and second question is on venture version for FY25. Do you think the balance of the 60% of the lease expiry from other countries will be sufficient to offset the China witness? We think so. We're talking about FY24, right? No, FY25. So, 24 slash 25, the next financial year, basically. Should we still expect positive revenue version on a portfolio basis? That's right. Yeah, we're confident of overall positive revenue version. Yeah. On constant currency basis, we are confident, right? So the only big part that we get hit very badly is actually on the forex. You know, you look at like, for example, this year without forex, our revenue have gone up. You know, here on year 3.6, but when forex is 1.2%, you know, a decline of more than 50%.

So that will be the main factor that will hit our... Got it. And lastly, cost of debt. I think previous guidance is 2.9 for next financial year. Is that still the key? Yeah, 2.9. And then the effect on your video time tension, you are from Goldman Sachs. Yeah, so I like it, you know, not... Everybody telling me, we can't hold your breath, you know, it's gonna be longer. So, you know, 2.9, 3%. The cost of debt, yep. Okay. Yeah. Got it. Thank you, that's so funny. Okay, Jonathan.

Hi Jonathan. Hi, thanks for taking my question. I hope you can hear me clearly. I have two questions. First question relates to the currency translation loss of 470 mil. It looks quite big. Which are the major countries contributing to this loss? And I presume this is mainly translation. Secondly, can we have a breakdown of the occupancy in China into tier one and tier two? I read that a lot of the new supply is coming from actually tier one city. So is there some ways that we may have some deterioration in occupancy for your tier one portfolio? You can take the China question first on the occupancy. The breakdown for 4Q, we are looking at tier one is 95.6, tier two is for the tier two plus.

So there's a breakdown. And yes, there's some softness towards the end of last year in terms of vacancy rates in tier one cities, including Shanghai, because there was quite a huge new supply coming into Shanghai and Songjiang district. And they have affected the market dynamics, but we're confident because in Shanghai, our assets are located more closer to the city of Shanghai itself rather than in Songjiang district. So that's for Shanghai. So this way most of the off of the new supply was concentrated in outskirts. In Guangzhou, again, Guangzhou is very supply limited market and our location in near to fine airport is quite a key location for logistics. And we're confident that we can achieve a high above 90 over the center occupancy rates. Do you have a question to let's say Beijing,

other tier one cities like Beijing? No. Guangzhou we have. We have Guangzhou. Thank you. So Shanghai. Okay, thanks. Okay, so in terms of the FX, the translation on IP value about 470 million, JPY is down near 11%. And then currencies like Vietnam, Song, Chinese, Yuan, Ringgit, they are all down about 6%. And actually, I mean, the rest of the currencies down about 2%, but in essence for the financial year, every single currency that we have exposure to is down against us. Yeah, yeah, unfortunately, a single dollar quite strong last financial year. Hopefully that reverse in the new financial year. Yeah, thank you very much for the update. Thank you. Thank you, Jessica. Okay, Brandon, we want to try to unmute or self-see whether we can hear you. Hi, Brandon. Yeah, can you hear me? Is it good? Yeah.

Yeah, okay. I just want to touch on a bit on the China valuation. I mean, just looking at your guidance or your version of what you have achieved, do you achieve things that the unchanged cap rates are kind of fair in this market compared to some of these secondary portraits that are on for sale? I do hear that they are obviously at between 7% and 9% cap rate. Yeah, that's my first question. My second question would be, based on what you have sold, are you able to share how much divestment gains there are left for FY25? That's my second one. And the last one would be, your stock is now trading at 3% discount in NEV. Would you be open to doing partial share buyback? Yeah, thanks. Yeah. Yeah, we are. Yeah, share buyback. Yeah, we are open, yes. Okay, let's take the simplest question. Are we open to share buyback? Yes. And then the other questions, please.

Do we want to address the gains? So, some of the divestment gains, we have about balance of about 10 million, including the completion of what we have announced. So, we have two Malaysian assets that we have announced but not completed, so including the divestment of those assets as well as where we have completed this financial year, we have about 10 million. Or FY24. Or that is unutilised that we can use in the new one. Yeah, and then in FY24, we'll make further divestments and then we'll build on that divestment gain. Okay, so on the... The most challenging, yeah. Yeah, so on the China cap rates, right? Yeah, so we have also actually, you know, I believe this is adopted, I mean, an advice given by our, it's a view taken by our valuables. So, we have also, you know, asked the same question. Why there are no movements? So, simply because there's actually no transactions that they can, you know, take in,

due to a lot of transactions. But if you look at the valuation year on year, it has actually dropped. So, the drop is primarily caused by this weaker rental reversion, lower rental, as well as, you know, the lower occupancy. So, that has impacted the year on year drop. No doubt that there's no change in the cap rate. So, if you're just looking at that, right, Kate, I mean, your outlook on China seems very uncertain. So, it'd be possible to FY 24, 25 valuation, right? Is there a good chance that that may actually come down? I don't think if you are looking at constant currency basis and then looking at just cap rates alone, I think the question is, will we see cap rate expansion? Yeah, so I think right now it's difficult

to give you an answer. The reason is because we do see Chinese capital chasing some deals, because we're out in the market to sell, right? So, we do see Chinese capital chasing some of these deals. These are no longer like the offshore guys. These are the onshore guys. So, let's see whether the transactions materialize. And if they do, then we have greater clarity. But, yeah. Are you able to share what is this Chinese capital looking at in terms of you? I think they are looking at about between 5%, around 5%.

Okay, great. Hey, thank you so much, that's all for me. Thank you. But that is for the general, but I mean, if you're talking about, you know, more prime or so-called very tight supply micro markets, maybe we can get slightly better pricing, but yeah, that's where we are. Okay. Thanks for having us. Taryn, UBS. Hi Taryn. Hi, good evening, can you hear me? Yes, Taryn, again. Hey, thanks. For the areas, can you clarify the understanding? Is it fair to assume that while we say areas, that this will actually be written off as opposed to it being collected at a later date? So, areas, basically it means it will be collected. And then you make provisions for that? We only make provisions when it's doubtful that the kind of way you pay you. So, we did make provisions last year.

There was some that was made last year. This year, not so much, much less than last year actually. So, yeah, but definitely the number that we're reporting is what we intend to collect, not what will be written off. Yeah. Taryn, does that answer your question? Yeah. I'll have to think about it. I'll just move on to another question. When it pertains to divestment gains, can you, do you mind reminding us, like in the past, what is the divestment premium percentage that is achieved and is that premium expectation this year likely to be much lower? For the year transaction, the average premium that we achieved was about 13%. So, this is FY24. Correct. 2324. 23, FY23.34. Moving ahead.

Yeah. Yeah, and looking at FY25, is that percentage going to come down? It's very likely, yes, because the market is softening so that we will still get gains because of the, you know, the advantage of being a very old read as, you know, we got it at prices that were much lower, say about 10 years ago. But the big is the in terms of buyers, appetite. So, we are going to see more competitive pricing, yeah. Okay. And just another question. What is the financial impact of the solar power generator? Yes.

So, what's the solar energy? You're talking about the revenue or the MPI yield or the returns we can get? We can get high. Anything. Okay. So, in terms of solar energy, our returns on investment is in the high peak. But I think in terms of contribution to our revenue, not say like 10%, maybe even five, 2%. Yeah. It's about 3%, right? It's about 3%, less than 5%. Yeah. So, Terrence, I think just to give you some numbers in terms of the loss allowance, the provision for that debt or the full debt. Last year we provided for 1.9 million. This year it's only about 200. Okay. So, I should think of this 200 as incremental to the 1.9 million. That's of the latest thing.

It's the P and L, yes. Thank you very much. Okay. Next, Vijay. In the interest of time, can we keep it to like next two questions? Hi, Vijay. Yeah, hi, hi, Kia. I have a couple of questions. Maybe I'll take it one by one. My first question is again, pertaining to the divestment gains. I mean, considering that you have about 10 million in divestment gain for this year. I mean, the total divestment gain for this year seems to be a bit high. What is your policy of divestment gains? Will it be fully dissipating all the divestment gains in the financial year? And will you also be looking at DRP, turning on DRP for this year? So, in terms of divestment gains, I mean, depending on the divestment gain quantum, we could distribute over four quarters in the fortress. Yeah. So, this year, I mean, we did make most of the divestments this year. So, we distributed for a third of this financial year.

Yeah. And for next year, we will have to consider divesting. Yeah, and that will contribute to the divestment gain distribution if any. In terms of DRP, we will continue for the new financial year. Yeah. So, Vijay, I think if your question is, what, do we have a policy of how we distribute our divestment gain? We don't have a fixed policy. We will divest. I mean, we will distribute the divestment gain four quarters to eight quarters. Because anything beyond eight quarters, I think it's quite meaningless. So, we are going to keep within that kind of ratio. That means, whatever you divest, you should see it in that year. If not, the gain will be to the following year, but that's max. Okay. We don't intend to hold that gain. We don't intend to hold that gain on our books. Got it. So, I was just looking at it. Got it. I was just looking at it from a smoothening of impact from a borrowing cost perspective. When more of it will come in next year,

would you be looking at it? But yeah, I got the idea. My second question is, in terms of asset enhancements, what kind of ROI are you looking for? 51 Benar Road and Malaysian property asset enhancements. And for the 51 Benar Road, are you looking at a single tenancy or a multi tenancy? Is there any update in terms of occupancies? Singapore and Malaysia, the ROI- About the 51 Benar Road. Are quite different. So, for 51 Benar Road, both properties we are looking at multi tenancy. We're now looking at a single tenancy. On the progress? For 51 Benar, it's about a 22, 23% completion really, as of 4Q. And in terms of the target news, we are looking at for Singapore and Malaysia. We're looking at close to six of Singapore and more than seven for Malaysia. Yeah. Got it. Sorry, if I may ask a question, one last question. I mean, your sponsor has a huge pipeline of China.

So, considering the market condition at this point of time, do you think it is a market to bottom finish or would you be passing on this asset to third parties eventually? Okay. The sponsor has set up a China fund. I'm not sure whether you are aware. So, that is an Evergreen fund. So, this fund takes on more development risk. So, some of the assets may be attractive for this fund. But for as far as MLT is concerned, we stick to our investment discipline, whether it is from sponsor or from third party. So, it has to be a creative. So, we're not going to buy from sponsor just because it's from sponsor. Got it. Thank you. That's all I have. Yeah. So, we're not going to be buying China for the next 12 to 15 months. That's clear. Thank you. Until we see China recovering and then there is potential for, you know, rental, reversion upside

and there are some assets that are coming from the sponsor that we consider. But if not, no. Discipline, accretion does not change. Got it. Thank you. Thank you. Okay. Raison, HSUC. Hi Raison. Hey, Antim. Hello. I just wanted to check right for the recent Malaysia acquisition, about 5.7%. I was just wondering if it's a little bit under-rented because I think it seems to be a bit tight compared to your valuation cap rate of about 6.5, 6.75%. And then maybe moving forward, if you are likely to acquire similar cap rates from your sponsor. I think just to take a step back, Raison, we just mentioned this now that if we do our own AEI in Malaysia, we are looking at 7% deal on TDC, meaning, you know, construction.

But because there's gonna be a profit margin that any seller will look at. So therefore, when we buy from sponsor, buy from subparty, we're not gonna get the 7% deal that we're talking about, right? So we recently bought at 5.7 and then, but the valuation that we have is in the range of 5.5 to 6.75. So for the 5.7%, right, it's, you know, the MPI-U that we are looking at. Yeah, so versus the cap rates in Malaysia, that is typically a growth basis. Yeah, so what Jean is trying to say is the valuation that the cap rates that you are seeing in the presentation is basically a different... Methodology, yeah. Typically, I think in the market, they value based on the growth basis because I think the fee structure and expense

of the country is different. So for Malaysia, what is in there, 5 to 6.75, is a growth basis. For us, the MPI-U that we acquired from the sponsor, 5.7%, is after the management. Okay. Okay, got it, yeah, that's very clear. And if I can just squeeze in one more, is there an update to the Hong Kong divestment? Is it still pending regulatory approval? Yes, it's pending regulatory approval for the potential buyers to bring his funds out from Beijing. Okay, so not much. So I think... Yeah, so I think it's one of those very uncertain deaths. So I think we have activated other potential divestments in Hong Kong, which we will disclose when we get there. But what we are seeing now is buyers from China, we have to be very careful because the ability for them to bring funds out from China is subject to, you know,

a lot of regulatory processes out from central government. It also depends on their business. It also depends on their personal track record with the government. So I think the lesson we learned is, you know, dealing with Chinese buyers, we want them to bring out offshore money. It's going to be very tricky. Okay, got it. Yeah, Ken, thank you, Ken and Tim. Okay, Karen, JP Morgan. Hi, Karen. Hey, thanks, Ken and Tim. Just wanted to ask, could you clarify a little bit more on the bad debt provisions again? Was it $200,000 for FY25 versus $1.9 million in FY24? Yes, so I think... FY25? Yes. This year, it's $200,000. Last year was $1.9 million, mainly because I think last year we had said before

that we had a Malaysian... And a Malaysian tenant that was giving us some issues, haven't paid rent for a long time. So because, you know, there was court hearings and all that, we made a full provision for it. Also, I think the end of last financial year, we had one of the tenants in China, Suning. I think they went fast, right? So we also provided info for that. This year, $219,000, it came from smaller tenants. They're also not doing well, and there were thousands of collections, but it's more measured numbers compared to last year. And I think James and I would proactively look into the collective literacy, and if the tenants show signs of imports and all, we will look at replacing them ASAP to review or manage the... Terrence, does it clarify your... Yes, yes, yes, yes, yes, yes, thanks. Could you please share on the same sole valuation changed by country?

Same sole valuation. Can we go and get the numbers on the... No, put in with that, that's what I'm saying, yes. System problem, yes. Terrence, can we come back to you? We'll get the numbers. Sure, thanks. That's all I have. Thank you. Yeah, OK. Shall we move on to Dale? Dale from DBS. Hi, Dale. Yeah, hi, Kit. This is Dale from DBS. Thanks for taking my questions. I actually have two questions. I think, firstly, with regards to your FX hedging, I think it's fantastic that you are able to hedge up to 8 years. But just want to understand, is this a mechanical process? You know, how do you do it? How do you decide, you know, what kind of proportion to hedge up to 8 years? Wherever I'm really coming from is I'm just trying to find out, you know, when will the amount of the impact from FX, you know, the FX impact to your earnings really be seen?

OK, so the 8 years that we're taking, we're talking about this particular alone. I mean, and we took this as a strategic kind of approach because of the volatility of the past volatility of the PY. And as mentioned earlier, we are doing the hedges, OK, so like now we will hedge 8 years, because it's going to discount. So 8 years ago, we would have locked in certain percentage. And then as the year passes, we will do it progressively. So like immediately for the next 12 months, about 87% of the DY has been hedged. But even though 8 years ahead, only 16% has been hedged. And of course, the rates may not be as good as what we did 8 years ago because of the current levels that we're looking at. Now, we're standing there, it still is discount from the 1.4, 1.6 levels that we're looking at. Thank you. The sales that's OK. So, OK, so meaning this hedging is dynamic and then according to currency, so you guys will decide, you know, I said when you think it's a good time to hedge more. Correct, correct, correct.

So we monitor the market and JPY is the one that goes the longest 10 years. So I mean, if you're looking at the other currencies for Hong Kong dollar, AUDU dollars, we're looking at 2 to 5 years. Hmm, hmm. OK, OK, got it, got it. OK, and my second question here is back to China. I think it is good that you're looking at divesting some of the lower specs properties. And then just now, I think you mentioned that there could be some gains from the reclassification of one of the properties, right? But in general, should we be expecting, you know, some losses when you when you divest the China asset, is this the best time to be divesting? Also because, you know, like you mentioned, your valuation there held up because of lack of transactions. But once you start crystallising this, this value, will it actually impact your portfolio? Yeah, so I think the interest of divestment for China,

we will be able to get gains from the older asset that we bought long, you know, much longer ago, primarily because the real estate prices at that point were lower. So that is one angle that, you know, that we will be using. And then in terms of if you're talking about, you know, the assets that we recently acquired, and then now because of excess supply, rentals actually come down and we are going to divest those, then definitely there will be a loss. So, yeah, so I'm not exactly sure which angle you're looking at, but if you look at our annual report, Yemi, correct me if I'm wrong, we have the purchase price and then we have the valuation. So if you look at our annual report, look at our China assets, you have a good feel of where the valuations are and where the original cost was. So to generalise, the older the assets are,

the higher the chance we have of getting a divestment gain. I mean, compared to your initial acquisition, definitely, you know, there's a high chance of getting a gain. But just wondering how compared to your latest valuations, are you able to get divestments at valuations or there could be even more downside from current valuations? OK, I think we tend to take a very practical view in our valuation. The valuation exercise is one that we do every year. So we do not just, you know, take whatever values that the valuants give to us, we actually challenge them and then we actually ask for proof of transactions. So even if there are, like what Jin said, even if there are what we call no visible transactions, meaning especially in China, you know, it could be one SOE selling to another. So you don't get great visibility, you don't get actual third party, arms length kind of transactions. But from there, we have a gauge as well.

So to answer your question, is our valuation realistic? I would confidently say that, you know, 99 should be realistic, meaning that we should be selling at valuations. If not higher, but I don't see us selling below valuation. Oh, OK, OK, got it, got it. Because the valuation should have come down. That means, you know, if you look, the valuation should have come down compared to the original car. Yeah, OK, got it, thank you. OK, shall we go back to Terrence from JP Morgan? Yes, thanks. Can we answer Terrence's question? Yeah, they... Can we come? Yeah, come to my country.

You don't have to be consolidated, I'm sure they can edit out. OK, I'll just cover the country. So, for Singapore, on the same-store basis, it's 2.6% increase. OK, for China, it's a drop of 1.1% year-on-year. For Hong Kong, it's an increase of 2.1% year-on-year. For Malaysia, excluding the divestment, just on the same-store basis, it's 1.5% year-on-year. Japan, on same-store basis, 3.4%, excluding divestment and acquisition. Korea, negative 1%, on same-store and in local currency. Vietnam, 4.2%. Yeah. Australia, drop by 8.1%. India, increase by 2.9%.

So, all the figures I've mentioned are on local currency basis and excluding divestment and acquisition. So, it's like for like on same-store basis. So, coming up on Australia, it seems like a very substantial drop. Could you highlight a little bit more on that? Yeah, so for Australia, I mentioned earlier, in terms of the cat-rathed movement, it's quite a lot of 75 to 100 bits. So, for Australia, same-store, drop by 8.1% on local currency basis. Yeah. Okay, thanks. Okay. Um, Yamee, we have another question. Okay, only Mervin coming back. Mervin, you still have one more question, is that... Yeah, I was wondering what is the rental-reversion guidance like China?

Yeah. Is it going to accelerate from here? I mean, Singapore's going to accelerate, I think. You just did the rental-reversions for different countries, again. Yeah, I'll repeat the rental-reversions. Well, I was asking for Outlook rather than actual... Oh, Outlook. Outlook for the next few quarters will be ranging around this level, between 2% to 3%. Yeah, so... Okay, so... Okay, China. So, we'll... Can I get a sense that... I mean, basically, a tone that if you could still be falling this coming year, would I be correct, given potentially a lower amount of divestment gains that could be distributed, effects, interest rates? Yeah. Yes. Yeah, okay. So... So, Mervin, you haven't given up on that yet, right? No, I'm just... I'm just wondering what... I mean, that's quite cautious, but...

Is there something else we should be... Yeah, I mean, that's... Yeah, so, hopefully, the next round of results, you guys are still in the cough. Yeah. It's probably been a fall. Yeah, so, okay, I mean, that's just... We're in the wake. Yeah, sorry about that. Are we... How close are we to a low in terms of the DPO performance? Is that... How much about all this? Are we close to the effects... Close to the end of the effects headwinds, or how far should we be thinking about that? Boring costs seem to be... Yeah. Yeah. I think, Mervin, in terms of macro, I think, you know, you may even have more information than us, right? So, I think the replacement of new loans at higher interest rates, we are not done yet. You know, our loans... You can see our... We showed that, right, just now. Yeah. The expiries of our loans. So, you will see that impact if you put in, you know,

whatever estimate you would have a feel of the impact, and then the outlook on FX, you will have a feel on the impact. The only good part is, you know, the hedgers will help a bit, right? But you will not be able to question 100%. So, that will be the main hit means that we are not able to control very much. But in terms of the portfolio itself, like I keep on telling our team as well, 20% from China, you have 80%. Out of the 80%, 10%, not large, but coming from emerging markets like Vietnam, Malaysia, India, that will still continue to see growth. So, really, you're going to have to bang on the Singapore, Hong Kong, Japan, this large mature markets that have demonstrated very deep markets, very deep tenants' relationship and supply in a very manageable way. So, we're not seeing like excess supply being dug into the market. So, what I hope is the 60% or 70% of MLT portfolio will be able to question

some of the negatives that we'll see from the treasury side, the interest and the FX. Yeah, so, we think that, you know, the DPO will continue to come down, yes. Maureen, don't get carried away with the JPY rates and DQ on the call. Yeah. I appreciate that part. It's just everything all adopted. It's a lot of it outside control. So, anyway, hopefully next quarter you got slightly more positive news to share with us. Yeah, yes. So, yeah, so I think that we are entering into, you know, a time, a period where, you know, the uncertainty, the volatility are a lot more pronounced. Okay, anyway, hope the team feels okay. The team will be very happy. I think they'll actually... I hear the sign of it.

Okay, thank you all. That's all we have. Anybody has any last question or last words that you want to get onto the call? I don't see any more raised hands. Okay. So, I guess you got... Okay, anyway, thanks for joining this rather long call. Okay, any more questions you can always text me. Thanks. Thank you. Bye.