# Mapletree Logistics Trust — 2Q & 1H FY23/24 Financial Results Briefing

Event: 2Q & 1H FY23/24 Financial Results Briefing & Analyst Q&A
Date: 26 October 2023
Issuer: Mapletree Logistics Trust (SGX:M44U)
Provenance: automated speech recognition (asr) of the issuer's public mediacast recording
Source recording: https://mapletreelogisticstrust.listedcompany.com/mediacast/FY2324/2Q-Results-Briefing.mp3
Official record: https://www.mapletreelogisticstrust.com/investor-relations
Presenters: Ng Kiat (Executive Director & Chief Executive Officer), Charmaine Lum (Chief Financial Officer)
Words: ~8,268

Unofficial machine transcript. Prepared by SMID Research from the issuer's public mediacast recording by automated speech recognition, without a full manual check: expect mis-heard names and figures. There is no speaker attribution: the source recording carries no diarisation, so cues are shown as timestamp and text only; timestamps refer to the recording. Not a company publication. Mapletree Logistics Trust's own investor relations page (https://www.mapletreelogisticstrust.com/investor-relations) is the authoritative record. Copyright in the briefing rests with Mapletree Logistics Trust; contact contact@smidresearch.com for corrections or removal.

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[00:00:00] Hi, good morning. Welcome to our results of briefing for the second quarter and first half of FY23-24. So the full management team is here with us, Kyat, Charmaine and James. So now Charmaine will kick off the presentation. Hi morning everyone. Okay, I'll bring you to the key highlight for the quarter first. So for input queue this year, we completed the divestment of four assets, two in Malaysia, one in Singapore and one in Japan. The net proceeds that we received were used to power down loads. So this brings our total number of properties from 193 at the beginning of the quarter to 189 at the end of the quarter itself. So queue financial performance remains stable, gross revenue is higher by 1.5% year on year, MPI is higher by 1.2% and DPU is a declaring 2.268 cents, 0.9% higher than 2Q last year.

[00:01:05] Our diversified portfolio continues to be resilient. Portfolio of 3% remains stable, 96.9%. Average rental diversion is a positive 0.2% on a portfolio basis, excluding China. We are looking at 9.1% higher year on year. Rail is stable at three years. With the repayment of loans with divestment proceeds, our aggregate leverage as of 30 September sent at 38.9%. About 83% of our total debt has been hatched into fixed rates with a debt maturity of 3.8 years and about 80% of our income has been hatched for the next 12 years, next 12 months. Moving on to details of the 2Q results, so gross revenue is 1.5% higher while MPI is higher by 1.2%. This is mainly due to

[00:02:11] higher contribution from our same small portfolio as well as acquisitions completed in 1Q. This is partly offsetted by lower contribution from our China assets as well as a loss on revenue by 4 assets that we have taken off for AISW's upgrading purposes. FX impact at the top line level is a negative 8.4 million FX loss. After taking into account hedging gains of about 4 million, we are looking at overall FX impact of 4 million. Boring costs increase of 10.2%, about half of 2% of this is due to interest costs incurred on additional borrowings to fund our acquisitions in 1Q as well as higher and the remaining 1.3 is due to higher interest rates on exit rates. Investment gain for the quarter is 8.8 million including this investment gain we are looking at DPU of 2.268 cents per month to 10 higher than last year.

[00:03:19] Two-year basis, gross revenue is lower by 0.7% and MPI lower by 1%. This is mainly due to the loss of revenue from the listed asset as well as an FX loss of about 18 million. The lower gross revenue on a same-store basis is offsetted by contributions from acquisitions made in 1Q. Hedging gains for the period 7.8 million, so net net we're looking at FX impact of 8 million. Into account development gains, we are looking at a DPU of 4.9% versus 4.516 cents last year on a one-half basis. Quarter on quarter, gross revenue is 2.5% higher as compared to 1Q.

[00:04:25] On an FX level, I mean in terms of FX, we're looking at minimal impacts between the two quarters. DPU is marginally lower as compared to 2.271 cents last quarter. Our balance sheet moving on to slide nine. Investment properties as well as total assets lower by about 200 million mainly due to investments of about 100 million as well as translation loss on our investment properties of about 100 million. Total debt is also lower from 5.6 billion to 5.4 billion mainly due to the repayment of debt with our investment proceeds. Accordingly, dairy ratio decreased from 39.5% to 38.9%. As for interest rate, we are able to hold this table

[00:05:28] 2.5% versus last quarter. And that duration interest cover as well as adjusted interest cover ratio, this remains stable as compared to last quarter. Moving on to the next slide. Our debt maturity profile remains 12 seconds with about 1 billion of proceeds available from interest credit facilities on hand. This is more than sufficient to meet our refinancing needs for the remaining half of this year as well as next year. In terms of our interest rate and forex hedging, about 83% of our total debt has been hedged into six rates. About with every 25 basis point increase in base rate, we're looking at an impact of 0.01 cents to DPU per quarter. As for FX, we have hedged about 80% of our DI for the next 12 months

[00:06:32] into think dollars. Next, with the portfolio update. In terms of assets under management in second quarter, the developed markets, you see it's still contributing a fairly high 73% to our overall portfolio. These developed markets are giving us a lot of stability and resilience to our portfolio. Next slide. Overall, in terms of the operational environment in 2Q, we still registered a fairly high occupancy rate of 96.9%. Most of the markets still remain as close to 100% occupancy. However, we continue to be tracked down by China's lower occupancy as compared to 1Q. China came in at 93% compared to 93.4% earlier on. This is mainly due to the weaker

[00:07:37] occupancies in the tier two cities where we're experiencing excess supply coming from northwest and central China. Overall, the operational situation in China itself, we expect to recover hopefully in four quarters around there and earlier if the government has stimulate economy with a booster. In terms of rental reversions, we are registering high rental reversions in markets like Singapore, Korea, and Hong Kong. In China itself, the rental reversions still remains a fairly weak. In fact, China's reversion was minus 8.6% into Q as compared to flat reversion in 1Q. So, without China's rental reversion, just to share a bit more, the rent reversion for MLT will come in at a positive 9.1% or 2Q. This shows the least

[00:08:47] expiry profile for our leases in the next few years. So, next year we have a fairly high least expiry coming up due to the shorter leases coming in from the renewals from China. But we're trying to do the early renewals and extensions of these leases for the rest of this year so that we can move and lower this real expiry for next year. So, from quarter to quarter, you should see this real expiry power in FY24 coming down. The top ten tenants accounts for about 22% of our total gross revenue and most of them are across these consumption sectors and e-commerce sectors. So, we have customers coming from Woolworths and Coals in Australia. CWT continues to be the number one customer, but in terms of their contribution has been

[00:09:51] pared down in 2Q. Our diversified trade sector contributes about nine head over customers that we have and 75% of them are serving the consumer related sectors. So, that gives us stability on the domestic consumption demand that we are targeting in our portfolio. Before we go on to rejuvenation, I would like James to give more details on the rental reversions across the different countries. So, for 2Q, the rental reversions, I will start from the highest, right? Singapore was, I'll start from the highest, the rent reversion in our portfolio. Overall portfolio registered 0.2% rent reversion. Hong Kong came in at 16.5, Singapore 8.1, Korea 7.7, Vietnam 4.8, Malaysia 3.2, and China negative 8.6. So, Hong Kong was

[00:11:01] a reversion, so it's very strong coming in from one of the least experienced and renewals that we recorded for the quarter. So, can you go back to the chart on the revenue diversification? This is Kea here. So, I think what we are seeing is the diversification of our portfolio on the revenue side. So, you can see that the diversification of MLTS platform is supporting our results in a very resilient and stable way. So, while we see China being hit by a negative rental reversion of about 8.6, we have Hong Kong, Singapore, and the other countries pushing it up. So, I think this diversification will continue to serve us

[00:12:02] very well. I have read some of the reports that have come in from the analysts, and I think some of them are still not understanding how MLT as a platform works. Our year-on-year performance, the revenue is up only by 2.8 million, but without FX impact of 8.4 million, our revenue would have increased by 11.2 million, which is a 6.1% increase. So, I think in this current climate, to register positive revenue growth across the different markets, I think your all-know is very challenging. So, while you look at the results from, you know, when we report the gross revenue, can we have that slide? Revenue slide. Slide 3. Yeah. So, if you look at it, 1.86 to 1.83, you would think that we have only increased it by 2.8,

[00:13:06] but what is included inside is an 8.4 million forex loss. Without the forex loss, the increase would have been 11.2 million, and that proves the resilience of the diversification of MLT portfolio. So, that's the first point that I want to make. And then the second point that I want to make is, I think there is some misconception that divestment gains is the one lifting our DPU, and if you have that conception, it is wrong. Without forex, our revenue would have increased by 11.2 million. Our divestment gain for the period only increased by 7 million. So, that divestment increase is not even enough to cover the forex loss that we are experiencing. So, that is the first point. And the second point is, for those who have been following us, you would have known that we have divested 700 million of assets today, and we are in the process of divesting another 500 million.

[00:14:11] And the reason we are doing that is not because we are keen to harvest and distribute divestment gain to unit holders. The reason we are doing that is because we were listed in 2005, and we are very old read. And some of our assets, whether we like it or not, their specifications are going to be more and more irrelevant as we move forward. And you know that there was a structural shift in logistics. The specifications have taken leaps and bounds in terms of automation, in terms of design, in terms of speed, velocity of turnaround goods within the warehouse. So, with that, in order to keep MLT relevant, this divestment strategy will be a critical tool to keep our platform young, relevant, and competitive for the next 10 years. So, you will continue to see this. So, the divestment is not coming in as old. You know, it is part of something that, you know,

[00:15:15] we need to do, you know, when we need to fix our DPO. It's not. It is an ongoing process. Whether whatever our DPO is, the rejuvenation of our portfolio cannot stop. Whether that's forex impact, whether there is interest cost increase, the rejuvenation cannot stop. And the reason is because, very simple, our tenants are not stopping. So, I think to be able to understand where MLT is going, because after that, you will want to talk about the outlook, right? You have to understand what is our strategy. You have to understand what is our objective, and what are the tools that we are pulling, what are the levers that we are pulling to drive this platform forward. We are not looking at the next year. We're not looking at the next two years. We are looking at the next five to ten years. And the objective is to deliver a stable resilient DPO to our unit holders. So, James, can you continue with

[00:16:23] the rejuvenation? So, we are doing the rejuvenation. In the next few slides, we will show you.

[00:16:34] This is actually just to help recall, we did a position of a belong in a set in the last two quarters ago. Six properties in Japan, one each in Seoul and Sydney. These are very good properties help to rejuvenate our asset portfolio, particularly in countries of Japan, Seoul and Sydney. And these are young properties with good specs and good underlying tenants. So, in terms of rejuvenation, value creation, you can recall this is a site we acquired next to our existing properties in Malaysia, Subang. And this we are in the process of seeking approval for land amalgamation of these four sites from government authorities. So, this process should be completed by middle of next year. That's when we start the redevelopment of a mega hub of

[00:17:40] six million building. And it will increase our GFA by about four or five times to 700,000 square feet. This project is about $770 million. And this is a core location for last-born logistics, which we foresee very strong tenants of demand. Next. This is a project in Singapore, west side of Singapore, Benoy. We started the construction just this month. And this project should see us completing it in mid of 2025. It's a six-story mega hub modern specs building. We're going to attract all the multinationals and the 3PLs that is interested in this property. At the moment, this modern spec ramp up properties in Singapore is still shortation in demand, shortation supply. So, you look at the momentum we have in Singapore due to the supply situation. This quarter rental revision for Singapore is close to 10%. Yeah. So, if this trend continues to

[00:18:45] 2025, then this AEI of 51, Benoy, I can read your 51, is going to augment our contribution from, revenue contribution from Singapore very well. So, it's again the timing, right? That, you know, we look at what is the supply situation in Singapore. And then this project came up. It was a good time for us to do the rejuvenation and the ability to take a five-year view on this property when we spoke to JTC and bring it up in a year of 2025 where Singapore logistic market should be on an upward trend. As Kate has mentioned, we have divested some of our older properties to rejuvenate our current portfolio and these are lower yielding assets and we also

[00:19:47] achieved a divestment gain reflecting in the tables there. So, these are two properties in Malaysia, one in Singapore and one in Japan Maria Center. So, the ongoing process, I think, with the interest rate environment increasing, the challenge for MLT will be to find buyers who have still the liquidity and the ability to buy some of our assets. And so far, we have been fortunate. You know, portfolios sell about $400, $500 million. The buyers, in our view, have dropped off a lot. But if you're looking at the local SMEs with the ability to buy $20 million to $50 million and even like in more expensive countries like in Hong Kong, somewhere, you know, the what you call the ticket price can even be higher. We're still fortunate to see that bracket of buyers and that is the part that we will take advantage of to rejuvenate our portfolio.

[00:21:00] The next slide is on sustainability. I think our one-way proposal just after I made a presentation about our, you know, recipe rating has gone up to four stars and also our green space and all that. So, I will not... So, let's go to Q&A. Can we have the first question? Hi. Do you have the first question? Yes, Brendan, is it? Yes, hi. Good morning, good morning, good morning, Kit. Just a few questions I think that morning. Kit wanted to ask about China, basically. So, I think this quarter, the negative 8.6% reversion as well as the 93% occupancy, is it correct to say that this could be the worst that we have seen or you think that the negative 10% we should guide it earlier is still going to hold for the next three to six months. So, Brendan, this is James here. So, the science of recovery

[00:22:04] is still not there. It still rests off in terms of some of the underground feedback we get from tenants because the consumer confidence currently is still pretty weak, right? It's not clear. Even the recent, you know, good and weak holidays, spendings and all that is more services related rather than tourism related rather than goods purchase related. So, in terms of the forecast, you know, we expect the reversion to remain negative at least for the near term. And this is the reason is very simple. We are trying to keep our tenants, right, in many of these tier two cities where we are experiencing excess supply and competition is much tougher. So, this is enough for the more incentives they're giving to tenants. This 93% you see will even be worse. We are going to give a flavor on the tier one and tier two occupancy. So, in terms of tier one occupancies, it's in the mid-90s, 95 and birth. For tier two, it's low 90s, about 92%.

[00:23:10] So, you can see that, you know, the tier one occupancies is still holding up because the supply is still more or less balanced, right? And we experience a positive albeit, you know, positive but smaller brand reversions of 2% or so. So, Brendan, what management, MLC management is looking at is for the next 12 months, we expect China to continue to be stopped. And that is where the uniqueness of our platform come in. From this chart, you will see that the revenue contribution from China is about 20%. So, we are going to be banging on the 80% that is outside of China to lift China's weakness. And so far for this quarter, you will see that, you know, overall revenue increased by 11 million. You know, that resilience and that stability from the revenue from the other countries should be able to help us to

[00:24:14] provide some stability. I would say some. I would say provide, you know, a certain significant level of stability while we navigate to China's weakness. Does that answer your question, Brendan? Yeah, yeah. But are you able to just keep quantified because you still think that we can, you still see the negative 10% for the next four quarters, in just seeing the next 12 months it will be solved? Or you think that it's going to be negative 5, like negative 10, or, you know, that kind of thing? Ha ha. It will be negative 5, okay, it will be negative high single digit to negative low double digit depending on the city you are in, especially the second tier. Does that answer your question? Does it give you some guidance on, you know, how you're going to? Yeah. Yeah. Okay, okay, okay. Thanks, thanks. And also just second question would be, I think the earlier

[00:25:14] acquisition of the two staff property and the divestment of the Hong Kong one, are you still in the process or are you trying to? Yeah, so the for the staffing properties, the vendor is unable to satisfy certain conditions in the legal agreements. So therefore the deal is no longer on the table. So we are walking away from the charging purchase. And then on the Hong Kong one, it is still ongoing. We hope to close the transaction, meaning sign the SBA, hopefully in the next few weeks. The reason being that there was authority's approval that need to be sought for certain conversion of use that we are putting on the property. Okay, got it. Okay. So just one last one, right? I think going forward, we know that you're still

[00:26:17] divesting, but how about acquisitions and given this higher for longer environment, are you saying it buys? Yeah, we will be buying some more before the year end. You should hear us buying some more. And the reason is that we have a very strong balance sheet and we are having a very active recycling program. So the proceeds from the sale, the divestment together with the gearing room that we have will enable us to make further acquisitions. And in this current climate where interest rate cost is very, very high, the good part is we are Maple Tree Logistics. The name itself is giving a lot of comfort to bankers. So the differentiation between a Bluetooth borrower and a not so Bluetooth borrower, I think that importance to the

[00:27:21] banks is coming into play. So in fact, I've got bankers asking us to draw more on the lines and the rates they're giving us will be one of the best in the market. So that being said, so it allows us to take advantage of this current market. Some, I would say a substantial portion of the buyers, especially speculative buyers have dropped off. And then we expect to see some cap rate expansion. So we want to take this opportunity to get some good value properties from both the party and our sponsor. Can you share the specific job they are looking at? Okay, so what we're seeing Asia is we are going to have, we continue to see very strong growing tigers in places like India, Vietnam, and Malaysia. So obviously acquisitions coming up from this market will be of great interest to us. And then we look across the different markets. We see this

[00:28:30] Korea and Australia has seen cap rate expansion. So that gives us an opportunity. Do we think that the cap rate expansion has reached the bottom? We don't think so. So maybe we will wait a bit, but if it's a good asset in a good location, and we're able to get it a good price, we will do that. And then then of course you have the other countries like Japan, Hong Kong, which continue to see tight supply in very prime locations. So for example, in Greater Tokyo. And because the benign, I mean the not so high interest rate environment in Japan is going to make Japan acquisitions more aggressive. So I think the using the recycle proceeds using our gearing headroom and the preferential interest rates that we will get from banks, that will enable us to make quite substantial acquisitions over the next few years. Okay, sorry, I just want to just pardon

[00:29:38] me. Just one more. I mean, I realized for this quarter, you didn't cut sort of like how you can distribute gains for the divestments. Will you be doing that? Sorry, what's the question? You didn't guide on the gains. That means you didn't break it out. Yeah, I think you're going to distribute it over how many quarters and whatnot. Right. If you if you look at the divestment gain that we have, the distribution is usually distributed over four quarters to eight quarters. So it depends on when the divestment gains come in, and then we will be distributing over four quarters or eight quarters. Okay, thanks so much. Okay, thanks so much. Very, very, very clean up. Thank you.

[00:30:29] Okay, we've got a question. I think, Sanxuan, you've raised your hand. Would you like to proceed with the question? Yes, Sanxuan, come. Yes, hi, morning. Can I ask a bit more about acquisition? What kind of size are you looking at this year from sponsor in the third party? Okay, this year, since this financial year, which half has gone, is that the year you're talking about? Yes. On it. So we have already done 900 million, right? And then we'll be looking at another 200 to 300 million. Is this actually from sponsor or third party? Depending, but it will be from the countries that we like I've highlighted earlier, you know, Malaysia, Vietnam, India. Okay, but what about divestment? Divestment, we have, I think if you're in the local markets where we are operating, you will

[00:31:33] hear of us putting out, you know, what we call

[00:31:40] assets with specifications that we feel are no longer going to be relevant for our growth. So countries like Hong Kong, Japan, Singapore, Malaysia, Korea, Australia, you will hear that. So as to which one will come into fruition, it depends very much on that specific buyer and the price. So there are ongoing discussions. So there will be divestments for the divestments that will be announced for the later part of this year. But at this point, it's going to be difficult for me to give you an exact number. But over the next few years, we're looking at 500 million. So each year, 100 to 200 million, if you need it for your numbers. Okay, got it. That's very helpful. And just one last question, right? Can you guide us on course of depth for this and next year? This year, we're looking at about two. Okay, so we report on a quarter by quarter rolling basis, right? So this quarter we are reporting 2.5%,

[00:32:43] probably by end of this quarter 2.7. And then next year, about three. Okay, got it. That's all for me. Thank you so much. Thank you. Okay, we have a question for the online audience. How much capital gains do we have remaining? Divestment gains or capital gains?

[00:33:08] About 20. That is not distributed yet. Yeah, excluding this quarter's distribution, quarter's DG, we still have about 20 from completed projects. Okay, the mermaid you put up a hand. Can you ask now? Yeah, thanks. Thanks for the opportunity. Yeah, I think maybe can send to slide two.

[00:33:46] Yeah, congrats. So, like, 32.

[00:34:08] Obviously, you guide it in terms of the rental reversions for China this financial year. Any color terms of the weight is for China next year? Is it first half second half? And how does it how does the expiring rents compared to market rents at this point in time? Yeah, so usually for for this chart here, the expiry is for China to be most precise for next year. But 40% is coming from China, right by NLE, NFI to fall in terms of the spread Typically, it's quite evenly spread out. But that's how we manage our concentration risk of will or expiry each quarter. So you can assume it's fairly spread out first half and second half. Sure. And how does the expiring rents compare to market? Yeah, so sorry. Sorry, my video was your question. How does the expiring rents for China compare? How do they compare against market at this point in time for the leases up renewal in FY25?

[00:35:11] So most of the so we go through this financial year, right, then negative reversions we experienced is coming from the new, the new leases and replacement leases, and some renewal leases. So come next year, we should see a full cycle. Yeah, more or less. Yeah. So Mervyn, I think your question is, if you look at this chart, you see a toll bar green color coming out from China. And China because of the softness in the market, the tenants have taken a very cautious view. So what we're experiencing is shorter leases, like what James elaborated, you know, a year, they're going to do a year, 15 months, 18 months kind of extension. So that toll bar from FY24 will continue to remain as we push out some of the green bars coming up from 23. And then I think it's your question whether our rental reversions is in line with the market.

[00:36:12] Is that the question? No, I'm just trying to guess, will the rental reversions get worse or actually? Yes, it will get worse. Our outlook is for the next 12 months, we expect China to continue to soften, meaning that we continue to see negative rental reversions. And we are looking at high single digit or low double digit negative rental reversions, like I told Brendan earlier. Okay. Well, at least your AD pathologist still has a very strong starting that's. Yes, correct. So this is where, you know, the diversification, you know, diversification sometimes does not work very much for MLT, especially in the golden days of China, right? Because we are very small exposure in China. When China was, you know, booming, we only had a small exposure. So we did not, we were not able to capture that completely on our platform. But on the flip side, which is what we are seeing now is that China makes up 20%, but we have 80%. Hong Kong was doing 16% rental reversions. Singapore is doing 8%

[00:37:16] rental reversions. So I think James read to you all these. So the 80% is the one that will lift the overall portfolio from China's witness. So that is one part. So I think investors need to understand what MLT platform is about, right? It is not about a single country focused kind of platform. It is a multi country providing diversification to the investors. So like I mentioned, we have got tenants who want to move out from China, go to Vietnam, go to Malaysia. We have got American companies coming out from, you know, wanting to come to Vietnam, India, you have seen Apple, you have seen Google, right? And then you have seen Samsung doing very intense expansion in Vietnam. So you will see that. And then the other part is

[00:38:19] investors need to understand we are not a stagnant platform, meaning that we have these assets and we're going to pretend that these assets that we have are going to be relevant for the next five to 10 years. The logistics industry has taken a very big structural shift, especially during COVID. The requirements for automation, the requirements for design, the flexibility of expansion, removal of walls, increase of dock levelers, right? The ability to call us and say six months later, we want to expand double the space by taking the next unit. So these are all the things that our platform has to be ready. And because of that, we're not going to pretend and tell investors that, you know, the assets that we have since 2005 are going to be relevant in 2025. So that is why divestment will be a critical part of MLT's strategy, which is rejuvenation,

[00:39:22] keeping our platform competitive and relevant for the long term, not the short term, but for the long term. So I think the rejuvenation, I cannot over emphasize, you know, that the importance of this rejuvenation for MLT to continue to compete, we must rejuvenate. We must admit that some of our assets are going to be irrelevant. What are we going to do? We're going to tear it down. We're going to rebuild it. We're going to sell them if we cannot rebuild. And then we're going to recycle all these capital into better assets. So that has to be the case. And those investors who have been with us, we've known that we've divested 700 million and there's more to come. So we're not interested in, yeah, we're not just saying growing AUM. We're not interested to be the biggest AUM boy in town, but we are interested to have the most modern fleet of warehouses that we can offer to our tenants in as diversified locations as they need. They

[00:40:24] want five locations that can come to us. Right now, I'll repeat customers across locations is 43. 43% and that's not good enough for me. I think that is in different countries, but that's not good enough. So the uniqueness for them to come to us and said, you want to talk to us in Vietnam, China, Singapore? No problem. You want to talk to us in India, China, US? Of course, that's a different platform, but we have maple trees presence that we have the ability to serve. So I think that diversification is going to be our core strategy and the rejuvenation as well. Yeah, I think most investors understand strategy and done the fabulous job. We took over from all the SUA to NTV conversions. Sorry, Mervyn, if I may add, and that if we make divestment gains, we'll distribute to investors. If we don't make divestment gains, we won't distribute.

[00:41:26] So it is not about divestment gains that we're doing it. We're not trading. We're not just in trading, but it is rejuvenation. And then we have kept to the principle that we'll recycle the capital and then share with our loyal investors any divestment gains that we make. Right? That we have bought the assets in 2005 and now we're able to sell it for a gain. We share that benefit with our business. So that is the whole strategy about maple tree logistics trust. Yeah, this is on the divestment gains. It's much higher than historical. And just following Brenda's question, basically a commentary that you typically pay out over four or eight quarters. Yeah. So we'll be expecting like 8.8 million per quarter going forward. And how much do you have in the bank to still pay out? And the other question I have in terms of the fees and units, it's much higher than what we used to. Like, is there guidance in terms of fees and units that we should be assuming in terms of models? Come, Shami. Oh, fees and units.

[00:42:32] About 55% of our fees are paid in units. This is the guidance going forward, is it? Or because Okay, yeah, 55, 50, yeah, 55, 60. Okay. But I think the question was in this quarter, we have reported a higher proportion. I believe that is taken from the cash flow statement. On a technical basis, performance fees are paid once a year in one queue. So even take that component. So performance fees for the whole of last financial year is included in that adjustment for this quarter's result. So even taking the component aside, you'll be about 50, 50 plus 55%. So I think it is a discussion we had with the sponsor about alignment of interest. Right. So they, you know, while we make acquisitions, while we manage this platform,

[00:43:32] we want them to have a long term interest in us. So that's why the management fees in units of a proportion of about 50, 55% is something that we will continue to manage. Okay.

[00:43:48] Divestment. We have about 20 million. Yeah, we have about 20 million left, excluding whatever is announced this quarter. Yeah. And this 20 million completed transactions and then now transaction. So more to come. Yeah. So I think the question, Mervyn, that you have is, do you expect our divestment gains to become bigger or smaller as we move forward? Right. So if you look at what we have divested earlier, the 700 million, a lot of them are smaller assets. Right. So therefore the gains are smaller in dollar value. But as we move, you know, we are buying bigger assets in Hong Kong. We are buying bigger assets in Japan. So what was considered small back then of 20 million, what is small to us is 50 million. So the 50 million guys will get

[00:44:49] divested. The 50 million guys will get divested at a gain that will be higher. So depending on what we divest, we expect that to come. But what is important moment is not every divestment will have a gain. I think that is the part that I'm trying to say. We are not doing it for divestment gains. We are doing it to rejuvenate our portfolio. What's the point of keeping an asset in our portfolio when it is not going to be able to compete in the market? So that is what we are doing. And then as we get bigger, right, the assets that we have already sold the 20 million. So what's going to be left is going to be the bigger assets like 30, 40, 50 million. And then these will get sold over time, right? Because their site is going to be too small for efficiency. You're going to have cargo lifts. You're not going to have automation. The velocity of goods turned around time in the warehouse is slower. So these are all the considerations. So I think on the divestment,

[00:45:53] there will be gains when we are able to divest at a higher price. But there will be cases where we will not be able to make a gain. And that is the part that we need our investors and the audience to understand. Sure. I think everyone understands you need to rejuvenate our portfolio. Because historically, you, as Brendan mentioned, you disclosed that you paid this X amount for next few quarters. Is this at the time around we have no visibility? So that's the issue. I think you did the guidance for quarters to eight quarters. So there is no benefit to us to hold the divestment gains on our books for too long. So if it's a small divestment gain for quarters, if it's a bigger divestment gain, it costs us. If it's a very, very big divestment gain, which we'll be very, very happy. I think we'll try to keep it to eight quarters as well. So can I assume you got not 20 million that you could still pay out? So

[00:46:57] yeah, yeah, it would be about five mil per quarter going forward. Is that something that is conservative for the 20 million for the 20 million that have been announced? Yes, you can assume five mil for the next four quarters. And then there will be more divestment. There'll be enough over the next six months. Yes. I mean, I have predicted divestment gains even though you haven't. Thank you for having faith in us.

[00:47:26] It was much harder than what I thought. So I just don't know how to forecast. Yeah, I just need your guidance. Okay. I think a lot of time I'll just hand it over to other people. Thanks. Thank you. Okay. Joy, would you like to pose your question? Yeah, thank you. Just a few questions. I think one on rental reversions, we've seen out of China, we've actually seen acceleration of few locations like Hong Kong and Korea. How much of those are going to sustain and how much will one off we get a bit of guidance? Yeah. For example, in Hong Kong, you know, the market is not like a pre COVID days, you know, it's going like a four to five percent. In fact, this is a kind of a one-stop because it's a one of the, I mean, the tenant, Aquinix

[00:48:18] in one of the buildings, all the properties actually we knew the lease you've asked. Yeah. And so there was up to market. Yeah. So I think what you are saying is the 16 percent will be what we call at the top range of Hong Kong reversions. Right. And then what will be a typical one for ramp up like our teeny, right? We'll be looking at five percent, maybe eight percent. And then for those cargo lifts, maybe two to three percent. Does that help you, Joy? Yes, it does. And for Korea? Yes, for Korea, we have a good revisions coming out from two of our assets in Beckham and Biontech. Yeah. So it's again the same thing. The range will be for the highest-spec assets. We should be looking at above the five percent. Okay. Okay. Cool. That's very helpful. And second

[00:49:22] question on just, you know, just to help us think through sort of acquisition and also redevelopment, looking at your Malaysia-Subon redevelopment, what sort of targeted return would you focus on? And also how does that compare with, you know, an outright acquisition? Okay. We are looking at high seven to eight over eight percent on MPI yield for the

[00:49:53] Subon redevelopment. And that will be a gap versus current market acquisition. And the acquisitions that we have made in Malaysia is about six percent. So if you do your own AEI, we probably can make about 200 bits, 150, 200 bits by taking on that development risk. Because the developers profit, you know, is going to be around that kind of range. How much opportunity do you have for your existing portfolio? The low-hanging. The low-hanging. Okay. The problem I have with the low-hanging versus my main obstacle are the authorities. So there are actually quite a number of properties that we are keen to do AEI, but we need to engage the authorities over a significant period of time.

[00:50:55] So on that front, I think over the next 12 months, we don't think there will be another AEI that we will announce because we won't be able to get the authorities approval in time. But over the next two to three years, there will be more AEI for sure. I see. And these authorities that any okay countries, Singapore, Malaysia or other countries? Across the board, we are speaking about Guangzhou. We are speaking about Korea. We are speaking about Japan. So we are speaking about Kyoto in Japan. So that is how extensive and of course, we have Malaysia in sight as well. And Malaysia is also there's a redeveloped potential for Sha'ala Muan. It's a single story. And in Malaysia, you know,

[00:51:56] we have started to build four stories. Oh, I see. Yeah. So that's how the market has grown. In Sha'ala Muan, single story. But today, the next door, you know, a few minutes down the road, we're having a four story warehouses. Got it. And for all these markets, you're looking at. Sorry. You are looking at speculative redevelopment, right? Yes. Because I think our lesson that we have learned, especially for us, is multi-tenanted speculative developments have served us very well. So for example, Phi Phi Togon. You know, we have Amazon inside. We have all the top players inside. And we also have Phi Phi Togon, which is just next to us. And they're all multi-tenanted.

[00:52:57] Sure. And one last question, if I may. Just on a post-op plan, you mentioned around about, you know, remixed currencies, you know, sort of the denominations. Is this part of, you know, when you got 3%, is it already including sort of mixing some of the currency from high, you know, cost to lower cost? Yes. To some extent. So I think to clarify on this, the 2.5% that we are achieving right now, there's really an outcome of what we have done in the past. You know, we have always been proactive in locking rates at between about 7% at least. Hedge rates, 75%. Yeah. So this is really an outcome of our past efforts, where we are able to lock in lower rates at less than 1% for non-JPY currencies. But this will slowly be replaced. And it is a little part of our strategy as what we have previously shared,

[00:53:58] that we will, you know, as all this Aussie dollar, Hong Kong dollar, same dollar IRS has come to you, we will replace with lower costs such as CNY borrowing. So that's already incorporated in our forecast. Yeah.

[00:54:17] Okay. Cool. Thank you. That's been very helpful. Thank you, Joy. Okay. Derek, did you have a question for us? Hi, Derek. Hello. Hi, can you hear me? Yes. I can hear you all the way in Tokyo. I'm in Tokyo now. Okay. Good morning. Just two questions from me. Can I circle to Singapore? I just understand, just want to understand whether you think reversion to still going to be about 8% plus, given that next year's fair amount leases are for renewal. So I'll be... Yeah. Yeah. I think, Derek, if you look at the supply situation in Singapore, it's going to remain tight for the next 12 months. So I think high single-digit reversion is something that we're optimistic about, especially for our ramp up. You know, that's what I was trying to say the read you. You know, our cargo lifts, I'm not going to say they're going to give us good rental reversions. I'm talking about the ramp ups that we have, like 5A, 5B, Pioneer, you know, and all that. So these are the ones that we will see high single-digit reversion the next 12 months. Okay. Sounds good. And for... Can you remind

[00:55:23] us again for CWT lease, right? So are they going to expire soon? And is there something where you may take over? We have started to take over like a pandan. Yeah, two properties we have taken over. Pandan and... And Pandan and Pangiuru. Yeah. And the other balance tree is, one is next year, and the other two are further down the road. So this is... So we have already... Ever since acquisition, I think I've told everyone the objective of buying CWT is there are some of the top quality in terms of specification in Singapore. And then the second thing that we were interested in are the underlying tenants that are occupying these properties. So we have been talking to them. They have been aware of our intention. And so we have started taking over the underlying pieces. Okay. So you'll take over next year like essentially.

[00:56:23] You'll be an MTB for you just to clarify. Next. Okay. We've taken over two. Next year, one more and the following about... Five to eight, eight years more. Yeah. Yeah. Okay. Okay. Sorry. Just last one, right? I believe that when you did this acquisition, the opportunity or so was for you to acquire the benign property, right? So is that still on the pipeline for you? Yeah. Mega Hub, right? You're talking about the data PC Mega Hub. Correct. Correct. Okay. The main challenge we have is the underlying lease, which is going below... It's now about 22 or 24 years remaining land lease. So that is something that we are not comfortable with. Okay. Unless they sell you 8%. Derek, you know me well. Okay. Okay. I understand. Okay. That's all for me. All right. Thank you. Okay. We have a few questions from the webcast audience. One is about the exit

[00:57:28] NOI cap rates for the divestments announced presented on page 23. Yeah. So they range from about 3.5 to 4% for these five transactions that are presented here. Okay. And then there's another question on whether for the plan or potential acquisitions, whether we'll be doing any capital raising? No. As for also what would be the comfortable gearing ratio? We won't be doing any EFR in the near future because looking at our cost of equity, now looking at our share price, it is becoming very, very expensive. So it will be from recycle proceeds, our existing cash or the new cash generated from the properties that we will use. And the gearing ratio will keep it at the comfortable level of below 4C.

[00:58:34] Okay. Do we have any more questions? Come just read the question. Okay. Sorry. There's a question that says 63% increase in income tax this quarter, which was partially attributed to divestment in Singapore. In Japan. So what happened this quarter would be because, I mean, we mentioned previously just now earlier that we divested two assets, one in Singapore and one in Japan. So we will actually, because of the tax in Singapore, we will usually put aside 17% pending confirmation of IRAs that this can be distributed. And then in Japan, there's actually

[00:59:39] capital gains tax, before we take my capital gains. So that one we also have to put aside. So the increase is really because of tax provided on the divestment gain.

[00:59:55] Okay. Any more questions from Natalie? You know, we call it a day. Okay. So I think to summarize, the environment going ahead will be very volatile. What we can see is China is not going to recover very soon. And then, but you know, the other countries, we continue to see resilience and stability coming out from them. So on the operating front, we are confident that we will be able to maintain that growth that we have achieved so far. What is going to, what's keeping me awake at night is the interest cost and the forex. So these are the two elements that we do not have much control over, but these are the two elements that can impact our DPU performance. So on the operating front, we continue to be very stable, very strong, very resilient. It will take quite a lot of market changes to impact that, but

[01:01:03] the forex and the borrowing costs will be the ones that, you know, we may be in for some surprises. So like I said, this, for this quarter result, if it's not for forex, you know, our revenue will have increased by 6.1% versus the current 1.5%. So you can see how big that impact is. So I think we are cautious. We remain vigilant and we continue to be very active. We intend to continue to be very active on the recycling front, meaning acquisitions, meaning divestment. And then if we make divestment gains, we'll be more than happy to share with the investors. Okay. Thank you for joining us. Bye. Thank you.