# Mapletree Logistics Trust — 2Q & 1H FY24/25 Financial Results Briefing

Event: 2Q & 1H FY24/25 Financial Results Briefing & Analyst Q&A
Date: 24 October 2024
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/FY2425/2Q-Results-Briefing.mp3
Official record: https://www.mapletreelogisticstrust.com/investor-relations
Presenters: Jean Kam (Chief Executive Officer), Charmaine Lum (Chief Financial Officer)
Words: ~7,351

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. This is your mayor. Welcome to NLP's second quarter results for the financial year ending March 2020. I now hand over the session to Shange for kick off the presentation. Hi, my name is Yewan. We continue to do the key highlights for the quarter before going into details of the financial results. Key highlights. Okay, so for the quarter, our gross revenue is 1.8% lower year on year at 183.3 million. NPI is 2.1% lower year on year at 158.6 million. NTTU is 10.6% lower, 2.027%. Popular capacity remains stable at 96%, with an average revenue version of a negative 0.6, mainly due to our China portfolio.

[00:01:08] Excluding the China portfolio, our revenue version is a positive 3.6%. We have reduced payroll to 1.3%. As we leverage at 40.2%, higher than 39.6%, again, the last quarter, mainly because of the strengthening of the JPY, as well as lower fair value on our financial derivatives. Our debt has been looked at for 84% that means debt maturity of 3.6 years, and income for the next 12 months. The reserves have been hedging the same dollars, or I can buy the same dollars. We have three properties in Malaysia where we announced divestment and spending completion. A total of about 15 million. And what the concrete that is in the portal would be one property in Singapore and one property in Malaysia. We also proactively issued 180 million of perps at 4.3%.

[00:02:10] This is the intention of redeeming the 180 million, which is at 5.2% at the end of September. So the 180 million at 4.3% was issued at the end of August, while the redemption was at the end of September. You would notice in our financial results that there is a one-part overlap in the distribution. But in the meantime, I need to clean up a lot of overlap. We have achieved some really good proceeds to pardon loads of similar interests. Moving on to 2Q versus 2Q1 results. First revenue was lower mainly due to the low contribution from China. Second revenue contribution from domestic properties as well as currency weakness. This is mitigated by tons of performance in the rest of our countries. As well as contributions from acquisitions completed at the end of last financial year and the beginning of this financial year.

[00:03:13] On a contract monthly basis, cost revenue would be sad and NCI would have declined by 0.3%. Foreign costs increased mainly due to higher average interest rates on our existing debt, where we replaced our expiring or expired IRS's at higher rates. Incremental borrowing, so fund 1Q, FR24 and 4Q, FR23 results. And then the increase is actually partly due to the low repayments that proceed. So out of the 8.2% increase, which is about 2.3 million, it's due to incremental borrowing to fund the acquisitions. While the remaining, whatever increase in our IRS is actually offset by interest savings on the low repayments is 14% investment as well as our proactive capital management.

[00:04:14] And accordingly, our PI is 8% lower, 109 million versus 118 million. But leading to a DTU of 2.02 cents, 10.6% lower than 2.268 cents. Excluding the DG of 6.1 million in this quarter and DG of 8.8 million in total last year, our adjusted PI would have been 7.2% lower. And the adjusted DTU excluding the effects of that investment gain would have been 9.07 cents versus 2.091 cents last year. For the one-half results, versus one-half last year, the reasons behind the cost revenue and end time estimates are largely the same. And so I have mentioned earlier, foreign costs also similar trending as what I mentioned, 2.8% last year.

[00:05:14] Amount is attributable to unit holders with 7.5% lower than last year. Transcause leading to a DTU of 9.8% lower than last year, 4.095 cents. This quarter, this first half, this is 4.5% last year. Excluding DG, our first half, DTU would have been 7.9% lower, 3.861 cents. This first half of F of 24.75, this is 4.191 cents versus one-half last year. For the quarter, our gross revenue is 0.9% higher, 2Q versus 1Q. This is mainly due to higher contribution from our same-store asset in Singapore and Australia. And full contribution from the acquisitions within 1Q last year, 1Q this year. Partly offsetted by lower contributions from China as a currency witness.

[00:06:16] So really the increase in gross revenue, it's mainly due to the acquisition rate last quarter. Otherwise, whatever shortfall, I mean, a lower contribution by China would have been offsetted by the same-store performance in the other market. NPI is 1.2% higher accordingly. Foreign costs increased by about 1.4 million, mainly due to incremental borrowing to fund 1Q acquisitions. Otherwise, whatever higher interest we have in terms of IRS replacement, it's offsetted by savings from the repairing down of loans with divestment 14. DTU is 2.0.2 cents, 2.0.0.6 cents. Excluding DG, it's 1.907 cents versus 1.954 cents, 2.4% lower, fourth and quarter.

[00:07:17] Moving on to the balance sheet and capital management ratios, NAB is at $1.33 versus $1.37. Mainly due to two key reasons. One is translation losses and the other would be lower fair value on our financial, lower fair value on our financial derivatives because I think at the end of last quarter, at the end of September, because of the interest rate movement, I think generally all our IRS's are of lesser fair value at the end of 2024. Earring picked up to 40.2%, 0.6%, higher than 39.6%, mainly due to the strengthening of KPY debt as well as the lower fair value on our financial derivatives which decreased the total asset rate.

[00:08:19] Our debt duration remains at about 33.6 years. The interest cover is 3.5 times and I think I'm glad to share that we have managed to keep our interest rate stable at 2.7% for the third quarter already. I think moving on to the debt maturity profile. I think our debt duration remains healthy at 3.6 years. We have more than sufficient credit facilities of $987 million, whatever is coming due for the rest of this financial year as well as the financial year. Moving on to our hedging strategies. At the end of the quarter, our total debt that has been hedged into picture is 84%. Out of the remaining 16%, we only have an hedged portion in JPY and SING dollar.

[00:09:24] JPY because of the low interest rate environment and SING dollars because we needed the flexibility to pardon loans with our election proteins. Similarly for FX, 77% of our BI for the next 12 months has been fetched or revised in SING dollars. I think I will now hand the mic over to James to help you on the portfolio. Hello everyone. On the portfolio update, it shows that the market is 17% and the value of the SING remains EUM. In terms of the portfolio, in both SING and SING, we continue to do 96%. This is due to the fact that we have stayed in all these countries like Vietnam, South Korea and all. So overall, the portfolio is between 2,000 and 3,000.

[00:10:30] In terms of rental revisions, it is 1.6% of the overall rental revisions. This is due to the negative ratings and negative reversions of 12.2% and 6% of the rate. In terms of the top, you can see that Singapore's resolution remains pretty healthy and strong. Over the month, it remains warehouses. Japan's threat is at 2.9%. In terms of the effects, the risk is that the 3.7% view for the technologies,

[00:11:35] the risk is coming in from China and China. This is a shared instance from the Goldwasser CRG. In terms of the number of reasons, in terms of the number of countries, between Vietnam and Vietnam, these are the global market.

[00:12:39] In terms of the first case, we have the ability to see data adjustments. So far, we have been completed 8 advances in Malaysia, Singapore and China. So we can expose us to free up and modern assets. Quick update on our GSE journey. As you recall, we are committed, MLC is committed to achieve carbon neutrality for scope 1 and 2 emissions by 2030.

[00:13:44] This is across the line with the MLC's longer-term target of net zero by 2050. Growing our solar capacity as well as green building certification is one of the key focus areas. Please do update that as of September, our solar capacity, S.W.1, has already grown now to 44.8 MW. This puts us well on track to achieve this year's target of 45 MW. As well as, of course, we are still driving our efforts to reach the 2030 target of 100 MW. Then for green building, we have also grown it to about 45% as of now. This will be in line with our M.B.E. target of 50% of our portfolio by GMA, between 35. Of course, our longer-term target is going to 80% by 2030.

[00:14:47] For green financing, we continue to make good progress and we procure about $395 million of new green notes and credit facilities here today. Currently, we total green or significantly low amounts to about $966 million. Then for green lease, we also please update that since last year, where we entered at about 22% of our portfolio, we have, you know, the leases are all incorporated green lease provisions. That statistic has now grown to 40% as of September. Okay, now I'll hand over the session to Jay to conclude. Hi, morning all. In terms of the outlook, right, we continue to see this macro-headwind with this riling flow control tension that is affecting the business and the consumer sentiment.

[00:15:49] We're actually monitoring the current economic situation closely, the destiny on China. So I think for China, right, despite the current weak property market and the weak domestic consumption, it still offers a very healthy fundamental, you know, we have a large population base, rising urbanization, a high savings rate, that offers actually a very significant demand potential. So, I mean, as you can see from some of the reports, we are seeing that, you know, the analysts are actually anticipating some property market turnaround in the second half of 2006. So I think, and with that, right, we have also seen that China has entered into a rate cut cycle, and, you know, they have this low interest rate that is likely to continue in the medium term. So because we have our asset in China, right, we are actually able to benefit from this low interest rate,

[00:16:50] as it offers us a very attractive interest rate being the second lowest in our portfolio after the Japan debt call. And if you look at the reversions in China, I mean, this quarter we reported a negative 12%. On the other hand, we are actually seeing that 90% of our leases have been marked down to market. And in terms of the negative or double digit reversions, we expect it to proceed over the next two quarters. And bearing any further unforeseen circumstances or any external short rates, we should hopefully see it trending down, meaning in a negative reversion in a single digit zone in state thereafter. The other thing is despite the high vacancy rate that is happening in the China market,

[00:17:52] our team continues to follow our tender very closely. We have a very strong and experienced local team, and with that we are able to achieve a high occupancy of 93% as compared to our peers, which is mainly in the high 70s to 80s range. And if you ask me in terms of the signing leases, we are still short right now. You know, our tenants are still signing short at around 19 months. But I think it also means that we can capture the rental rebound when the market recovers. So I think that's what I want to say for China. And for the rest of the markets, right, I would say it remains resilient with our diversity portfolio. As you hear from James, we have a high occupancy rate of 96%. And then in terms of the reversions, excluding China, we are looking at a positive rate of 3.6%.

[00:19:00] And in terms of the financial performance, as you have heard from Charmaine, we have also sustained a stable performance in local currency terms. So for first half, you have seen in terms of the gross revenue and NPI, we go by about 1% to 0.5% respectively on local currency terms. And with our full active capital management, we actually managed to maintain 2.7% average interest cost for three consecutive quarters despite the higher interest rate environment. We have actually refinanced more expensive debt with our C&H borrowing. We have also done things like cross-currency swaps from currencies like Australia dollar, Hong Kong dollar, US dollar into a C&H. And of course, I think Charmaine mentioned earlier, we have done a part that actually gave us

[00:20:06] a 90% savings in terms of the interest cost. Despite that, I mean, we still foresee that our financing cost is still expected to rise. As Charmaine mentioned, our replacement loan and hedges will be progressively roll off, and these will be answered in a higher rate because as you are all aware, we entered the earlier in a cheap debt during the COVID years. So the high borrowing cost will continue to hit us. And now in terms of the portfolio rejuvenation effort, we have seen ads acquired about $2.20 million this year. And we are also actively on the lookout for equity acquisitions. And we continue to see potential opportunities in emerging markets like Vietnam, India,

[00:21:09] and as well as some developed markets like Japan. As you are all aware, it is still no doubt that the insurance cost has risen and it still offers a positive use price. And as for Korea, Australia, I think we are still watching the environment closely. Korea still gets in terms of the buyers and the sellers. And then for Australia, I think there is still quite a tight use that they are expecting. So that's on the acquisition side. And on the divestment front, we have seen ads announced and completed about $130 million today for its effect in three countries, Singapore, Malaysia, and China. And we continue to have a pipeline to divest.

[00:22:13] And I am pleased to say that we are actually halfway marked there. I have identified about $300 million of assets to be divested. And we are right now close to a halfway marked there. And at the same time, while we want to accelerate on the execution front, we also need to balance again the tenancy expiry, the time taker for the regular tree to review extra assets. For example, assets that we are looking to divest, we are waiting out for macro market recovery for better pricing, particularly in the China and Hong Kong assets. So I think, so I'll talk about the divestment. So in terms of the AEI, right, so as Shameen and Jim has mentioned, we are accepting our Benoit AEI completed by around May, June, next year.

[00:23:19] And we are actually based on the current team feedback that we have been receiving pretty healthy level of inquiry from a broad spectrum of industries such as electronics, industrial goods, and consumables. And we hope to be able to secure some pre-commitment ahead of completion. I mean, prospects would like to generally view the space and field it before, you know, they would like to commit. And hopefully we can have some traction by early next year. So I think that sums up what I want to share on this. So maybe I'll hand over to Rami. Okay, now we will open the floor to questions. Maureen, you're always first in the line. Please raise your first question. Yeah, thank you, Rami.

[00:24:21] Thanks, Jim and team for the call. Yeah, maybe you can go through all the bad stuff, and then hopefully we end on the corner. I mean, China is terrible. But in terms of the negative rental reversion double digits, would it be still run that 12th or 7th? Maureen, Maureen is a bit mouthful. Yes, can you hear me now? Yeah, can you, okay, can you start again? Yeah, maybe we can start with all the bad stuff first, get out of the way and then end the call on the positive note. This one, China is terrible, clearly. In terms of the guidance on the negative rental reversion double digit for next two quarters, would it be around that 12% or would it be worse? And in terms of leasing inquiries, are you seeing a pickup in interest or is time to slow off? Has any of these sponsors been talking about buying properties from MLT?

[00:25:24] Is there anything imminent? Then the second question I have is for Japan. Seems rather weak on the MPI basis, Q&Q and even if I adjust for FX headwinds, what's happening there given the occupancy has been somewhat stable? Thanks. Yes, thanks for the question. The China's reversion, yes, it's a very short, the same as the last quarter. But clearly, from now, the second regime around this level, in the next two quarters, in the next six months, we don't see that you will, what do you call it, all the things will get significantly worse than this. All around this level, the next two quarters, I'm telling you in such a time that, you know, the effect of the mercury stimulus and all these new rules

[00:26:24] that says it's a ground, so there will be a time, we think that it will take about six months or so, and then it's optimistic that things will depend on it. So that's for China. And the second question is related to... Yes, Japan seems weak, what's happening there? Yeah, I think for Japan, right, in terms of the MPI, because we acquired the larger assets like kawana and kobe, so these are MPV in nature, and typically, you know, on a quarter to quarter basis, there will be movements in the occupancy. So we believe it as a more frictional kind of movement. We need you to kawana and kobe. Okay, so kobe is hard, but we had some frictional in between.

[00:27:28] Okay, then the China investments, any progress there, or let's do more next year. Okay, so for China's divestment, we are in negotiation on one asset in China, so that is currently under exclusivity. So on top of the China divestment in Xi'an that we have announced earlier, we are working on another one that we hope to be able to announce sometimes in this quarter. Yeah, we hope to be able to make some announcement this quarter. Okay, excellent. I'll hand over to the rest. Okay, next on the line is Berwick-Samm, BBS. Sorry, BBS, sorry. Hi, can you hear me? Yes, yes, Berwick. Hi, B It's just going back to China, right?

[00:28:29] I thought that the negative reversions were quite in line with what you were guiding. Maybe your thoughts on your rents currently in China, right, versus where you think you could get. You mentioned that there's still negative rental reversions, but I thought you have already marked the market 90%. So is there further winners from what you have signed recently? Just want more color on that. And if you give us a sense, how is tier one doing versus tier two? Okay, hi, Gary. Most of our recent China market, we have seen it about 90%. The market is about 10%. They're still coming up with the only big ones. So, so they're actually, it's what you can see, in terms of working out. So that's the market project that we have in China.

[00:29:30] And in terms of, what's the 10 question again? Sorry, tier one versus tier two. Okay, tier one versus tier two. So tier one, in this second quarter, there was about like a 3% negative reversion in tier one CT, compared to minus or new CT. The negative reversion in tier one CT came mainly due to some oversupply in the Shanghai market, first of all, the new stock in the first of this year, in the outskirts of Shanghai, where's the stock in the first time? This is for the, we merged in the first year. But we believe in this phenomenon, in the next, in the next few quarters should stabilize in terms of the occupancy. The occupancy is still,

[00:30:32] the excess supply rate in Shanghai itself, we understand it's close to 20%. And hopefully the last, sorry, the next one here, the stock in the next one here, because Shanghai is still a core tier one consumption market, we're quite confident. When things move up, we should be very strong for tier one CT. I see. Okay, okay, thanks for this color. So I just have one more question on your interest cost, right? I think Jin, you mentioned that it's still expected to trend up as we approach to next financial year, right? I'm just curious. Could you give us some guidance you expect to come off next year with interest rate coming off? So we are stable at 2.7% now. I think previously I've guided that we will increase to about 3% by end of this year, and about 3.3% for next financial year. But I think with interest rate cuts and all that, we are looking at that reducing.

[00:31:33] So by the end of this financial year, maybe about 2.8% bearing in mind that we report this percentage on the quarter by quarter basis. And then I think next year, we will probably trend up to about 3%. Okay, so you're dialing back your interest cost assumption that we should be looking at slightly lower versus your initial guidance. That was starting previously before that 50 basis point cuts during the quarter itself. But yeah, we think it will still increase definitely because of the IRS's. I mean, we have stressed many times the IRS's are locked in like during the really low period. So you would still see them being replaced at higher rates. Although now that they have cut the rates, it would be probably slightly lower. And also for active rate converting them from the Aussie dollars and Hong Kong dollars, which are still high to C and H borrowing via swaps. Okay, that's good news. Okay, that's all for me. All right, thank you. Okay, direct no more questions, right?

[00:32:35] So I move on to Rachel McQuarrie. Hi, good morning. Thanks for the call. Sorry, could you repeat your comments on the tier one and tier two market? It was a bit breaking, so I couldn't quite catch. Okay, 93% of the leases buying is in Shanghai and what was the reversion for tier one and tier two? Okay, I guess on the reversion for tier one, tier two. The reversion for tier one is for the thank you for 3%. Tier two is against the 30 to 40% negative. That's on the reversion side for tier one and tier two with respect to the. So the question for you, in terms of whether they've realized the box first, where I think that in terms of the leases that we have been using and signed so far, 90% really, box to market. So when you say it comes with that open, which is at a market, so even about, I think about a camera set of the.

[00:33:37] Okay, got it, thanks. And probably moving on to a brighter spot, I think for a slings up for double digit reversions, is this still sustainable? Well, with new supply coming out, we did this double digit reversion for the long. So we should still be strong, but probably be closer to high single digit. Okay, so by N-

[00:34:46] probably close to high single digit. Okay, and Hong Kong, I saw reversion seems to have reduced, so that is positive. I'm just wondering whether, has there been any softening in terms of the Hong Kong? Hong Kong, the reversion is about 2%. You see some softening, yes. Because of the supply has been low, but I think we believe it's more like the mention of some business in the standing, and also to some extent, in this supply, we can see actually one particular project in the airport. I think I need to add on, right,

[00:35:47] in terms of the supply, the market is actually still supported by limited supply over the next three years or so. So with that, I think, though the retail momentum is not that strong, but I think the market is still supported by limited supply, and I think the China asset, which we have accumulated a few times, it doesn't pose a direct competition to our assets, in particular, our Qing Yi asset, which is a different location and a different product type. So we are targeting on our time as well. Got it, thanks. Just one last question in terms of the debt refinancing. Can I just understand how much of your debt has still not been marked to market just yet? Did the debt expire this year, next year, or up to 2027? We should see the market, but it only exists here.

[00:36:48] So, yeah. Whatever is not bad, yeah, that should be, you'll see the higher rate this year in the future. Okay, got it. Thank you so much. Okay, next is Tan-Sueh. Please go ahead. Good morning. Can I follow up on China in terms of expiry rate? It's roughly about 40% of NLA. But can you give us what is China's least expiry as a percentage of rental income for the birth of 2025 and 2026? We will come back to you on that. Do you have another question? Yes. And then the reversion guidance through NARRO to single-digit, right, after two quarters,

[00:37:48] is the underlying assumption that by then, 100% of the leases will be marked down to market, but market rent continues to decline? We believe that market rents, in terms of decline, are still down really, so we're excited to hear as a result of this year. So, then go back to the question. F-25, F-25, F-25, F-25, F-25, F-25, F-25, F-25. F-26 is about... You're quite right. Yeah, I can't hear you. In terms of the China expiry portfolio, in F-25, it's about 45% by NLA, and 36% in F-26. Yeah, I get that. Would you be able to share the rental income, at least inspired by rental income, how much does China make up in this year and next year?

[00:38:50] We will be starting to ask, because the China rentals, the market is lower, so the contract is much higher than this, but we believe, you know, people are... Okay. ... I think that session will come back to you on the proportion in terms of bio-GR. Okay, okay. In terms of the exact numbers, yeah. And just to clarify, the underlying assumption is that spot rent continues to decline, but at a lower magnitude. Enhance the single digit negative version. It is correct. Okay. Just one last question on acquisitions. I think the previous guidance was that acquisitions would be funded by divestments and you're not expecting any EFR. But given rates movement and what peers are doing, has your stance toward that change? For the time being, I think, for any acquisitions,

[00:39:53] it's still primarily to be funded by the recycled proceeds. So in terms of whether there are any plans for further equity fundraising, we do not have any plans at the moment, at least for this financial year. So any acquisitions, if any, we would prefer to recycle it with the divestments that is ongoing, and we are pretty confident that we are able to actually divest the target that we are looking at, you know, 250, 300, and we have done half of it, and the other half is actually under exclusive negotiation. So we are looking at markets like against Singapore, Malaysia, the small one in Japan, as well as in China. So to sum up, to answer a question, it is really to priority to funded by divestment proceeds,

[00:40:54] and any EFR will not be happening for this FY. Okay, got it. Thank you. Okay, next we have Brendan. Please go ahead. Hey, my morning. Can you hear me? Yes, Brendan. Yes, morning, morning, Jane. Just a few questions on Hong Kong, right? I think recently there's been a site at UNDOL coming out for development. Will NOD be keen on that? That's my first one. And the second question would be, any data is based on a funding divestment? Is it totally caught off already? Yes, thanks. Okay, so on the UNLOL site, it is actually a really huge site to be launched by the Hong Kong government. We, together with the sponsor, we have reviewed that potential opportunity, but I think in terms of some of the restrictions that they are, even though some of the tendered restrictions

[00:41:54] that they are putting in, it is something that we felt that it's a bit prohibitive, and it is something that we do not think we will come in to participate on the UNLOL site. And for the following site, I think we, as I mentioned earlier, we are trying to wait out for better pricing. We are still trying to sell at a target pricing that we are looking at. So in the meanwhile, there is still an effort that we would still want to divest, but at the same time, we have actually managed to actually lease up the place. So we have actually leased up to Google Express in this quarter. That's why I think in terms of the occupancy, we have seen that Hong Kong occupancy has improved this quarter. So, Brenda, I hope it answers the question. Yeah. So out of this 250, 300 million, right?

[00:42:56] Is it safe to say that it doesn't include funding? No. No. Yeah, it doesn't. So I actually have identified quite a huge pipeline. It's about 1B, but not everything can be implemented right away. So like I mentioned, it depends on the market, whether there's a bias appetite, but at least for this FYI, right, I'm seeing about executing one-third of it. Okay. Okay. Thanks. I just have one last quick one, right? Your comments on single digit negative reversion subsequent to the next two quarters, right? How long do you see that level being sustained? In terms of the single digit on China? Yeah, correct. Is it going to be another like two years or another like four quarters?

[00:43:58] Yeah, basically, I just want to know when you see that negative magnitude kind of turning around. Turning around is hopefully a simple problem. Turning around is totally not negative, like maybe positive. Or like flat. Well, if anybody gets to me, well, if you talk to me, we'll turn around later. But I think, you know, pretty much depending on how much food factor is not consumer, but the government has really done, hopefully can move more money into the pockets of the people to spend. So yeah, I mean, if anybody has to take a profit to stabilize, take in the money.

[00:45:00] Got it. Okay. Hey, thanks so much, everyone. Thank you, Robert. Thank you, Brendan. Okay. Joy from HSBC. Please go ahead. Thank you. Morning, all. Just a few questions from me. First, if I can just follow up on the divestment pipeline you mentioned, Jean. So, out of the 1 billion, what would be the geographic split? And also, you know, for this year, we've done quite a bit already in Malaysia. Can I say for the rest of it, it sits predominantly in China? Okay. So, in terms of the 1B pipeline, yes, we would probably have about half coming out from China and Hong Kong. And the other half would be, we still do have some, a few more in Malaysia. We still have assets in Singapore. And we have also, you know, one or two in Japan, Australia, and Korea. So, these are the countries that we have identified, you know,

[00:46:02] where assets are no longer relevant. It doesn't fit with our strategy, and it doesn't have much potential for redevelopment. But of that, right, of the 300 that I gathered for this financial year, we are expecting, you know, to sign one in China. Got it. Okay. That's helpful. And then secondly, just in terms of China, can I get a, you know, your occupancy is really high. Is that because you have a very high retention ratio? What's the retention ratio in China, actually? Okay. The retention ratio is about, you know, it's about 30 to 80 percent. So, the other factor is high. It's also an option of, you know, market-backed capital. This, you know, is pushing, and we try to push out of remote assets.

[00:47:11] And your rental, your negative rental reversion would have included the incentives, or that's not part of the rental reversion? Partially, it includes. Okay. Got it. Cool. And lastly, just one question on Japan. Could you share your JPN hedging rate and the percentage that's hedged for this financial year? For whatever that's coming due, whatever the hedge fees for the next 12 months, we're looking at about 90. And is that still about, 90 is the rate, right? And then is it still about 85 percent hedged or? 80 percent hedged now. 80 percent. Okay, great. Thank you so much.

[00:48:12] That's all. Okay. Brandon, do you have a follow-on question? No, no, no, no. I'm good. The hand is too long. Let me know. Let me know it. Yeah. I'm a mermaid. I'm a mermaid. I do have a follow-on question. Yeah, I have a question. It's a question for our client. Just in regards to your investments, what are the exit yields are you targeting in China, Singapore, Australia, Korea, and Japan, or what have you achieved thus far? I think the question is coming from the fact that they're worried that you're selling at very high yields. And actually, the divestment exercise is actually deep-viewed, dilutive. Thanks. I can't hear. Moby, I can't hear him clearly. No, he's asking, what kind of yield are you expecting for the divestment in China, as well as for the other countries? What have you achieved so far? I see.

[00:49:13] And the concern is whether are you selling at high yields and therefore will be diluted? Okay. In terms of the targets that we are looking at, in terms of the exit yields for the assets that we are looking to divest, right? So those that we have divested, we actually are able to, for example, Malaysia, we are actually able to exit at high yields ranging about 3 over percent, below 4 percent. And for the, let me see, for the, in fact, for the CN asset that we have divested, it's actually 2 per cent, in terms of the SDEU. So really, I think in terms of the pricing that we are able to achieve, I think it depends, really depends on the special niche target segments that we are able to identify.

[00:50:15] And so mainly they are all end users, in terms of the divestment pipeline. Then as for the China assets that we are looking to divest, right, it is about around 4 per cent kind of SDEU that we are looking at. So we are still able to achieve a different type SDEUs for the assets that we are looking to sell. And mostly it's because I think we are able to find some niche buyers that are key in this particular asset. And for the one that we are actually currently working on, the China asset that we're currently working on, it is also, you know, it's a bit confidential at this point, but it is actually also going to be a very diverse type SDEU. Yeah, great. So, Mervin, I hope I answered your question, yeah. Client's dialing in, so it is the right answer. The filing occupancy, where does it stand now in Hong Kong? Do you have filing occupancy?

[00:51:19] Yeah. It's 100 per cent. 100 per cent. Yeah. Fantastic. Fantastic. Yeah, so I mentioned earlier, I mentioned earlier, you know, for the filing asset, last year, we have further funding to divest, but I think we will look out, you know, we have a certain target pricing that we have in mind and a target yield. But in the meantime, while we wait out for the market recovery and for the buyers appetite to improve, right, so we have managed to lease out to a tenant, Court Children Express, that actually took on the full building, just this quarter. Okay, excellent. I noticed that DRP is too activated for this quarter. Given your divestments, should we be turning it off, given it's actually quite dilutive to your BPU performance going forward? As of now, we ask you, I think the intention of the DRP is we need to fund the 51

[00:52:23] by now redevelopment. So as of now, we still would, I mean, we were quickly activated, but yeah. It is something that we are reviewing, yeah, but for now, it remains to be available for us to tap to actually fund our KPACs as well as some AI, you know, we have our 51, but not AI that's ongoing. But it's something that we are reviewing internally. Yeah. My question for me, the nerve seems to have dropped quite a bit this quarter. This one, what's exactly happening there? Yeah. Sorry, what is your question? Your net asset value per unit seems to drop quite a bit to 1.33. Yeah. Yeah. Sorry, come here. Anyhow, anyhow, anyhow, anyhow, anyhow, anyhow, anyhow, anyhow, anyhow, anyhow. Yeah, it's quite a lot of help. Bigger than normal, yeah. Yes, unfortunately, okay, I think the first reason is because, I think, I tried explaining earlier in the call. So first reason is because of the lower set value on our financial derivatives.

[00:53:28] So we have all the interest rate swaps and currency forward. These are actually marked to market on a quarterly basis. So because of the fact cut last, I mean, during the last quarter, generally our IRS's and our CCAs as well as forwards, because of FX movement, have actually moved against us in that sense, while it's still a marked to market gain. It is a lesser marked to market gain as you have seen the NAB amount. Okay, that's on the first point. So because, you know, if your total asset, you're gearing up against total asset and when that value goes down, your total asset base reduces and that's therefore negatively impacted our gearing. So that's the first point. The other point is because of the strengthening of the JPY, just at that quarter end. So I think we closed our books when JPY was about 109 versus same dollars. Of course, now it has depreciated back to the 150, 140 levels.

[00:54:29] Because of the FX rate at that point in time, and because we have about 80% of our JPY that's, I mean, our borrowing of the JPY portfolio is actually right alone. That movement has actually negatively impacted our gearing and NAB. Okay, thanks very much. Hopefully all this bad news is in the prize already. Thank you. Okay, I've got a few questions from the floor. These are from the audience who Zao in. Okay, I think this question is on China related. Okay, not sure about the question, but I read out anyway. Are all the Chinese related debt converted into IMB? Is not one way to convert them to IMB? Not sure what that means. And then second question is interest rate for SGD has come down somewhat. When will these benefits be felt by MLT?

[00:55:33] Okay, so I think on the first question, our Chinese asset, when we acquired them, it was doing very high, the need to be borrowing rates environment. So a lot of these were actually funded with equity. So we do not have any onto loans in terms of our asset investment in China. But progressively what we can do now is whenever there is an AUDI dollar or Hong Kong dollar or maybe SING dollar, IRF coming due, we will actively convert this and replace it when we thereby increasing our percentage of borrowing to Chinese related debt. Then on the interest reporting dollar, yes, I mean we will benefit. But I think what we have locked in in terms of our SING dollars, there has already been times in the cards. So that fixed rate card, I think it will take some time before we will benefit. But definitely on the unhatched question, it will benefit from the interest rate card.

[00:56:35] And I think we are benefiting from it now already. Do we have any more questions? I think we have some more questions. Any link payment defaults or indications of delayed payments? So far, based on the last quarter, the coupon was $2.8 million. So we have a percentage, 2.7, 1.8, essentially lower than the quarter. And it's a plus rate effect, even the average percentage is 1.5%. So it's very much low currently. We do not actually see further deterioration in the rental collection.

[00:57:37] I think in terms of the arrears, it remains a comfortable range. It is around under 2%. And we didn't see any further deterioration in terms of the rental collection by the portfolio. Okay. I think this should be a final question from the back card audience. Okay, this question is about long term, what MLT is a long term strategy for China? And whether any plans to be used at BOGEO, I think you talked about our plan to divest. So what's the longer term view for China? I think I mentioned in the outlook is that no doubt currently China is suffering in terms of the property market do drugs, in terms of the domestic consumption that is currently weak. But on the other hand, if we look at China, they are the second largest in terms of the economy and the property, in terms of the large population base.

[00:58:39] And as well as with the rising urbanization rate that we are seeing, and as well as if you look at some of the savings rates that they have based on some of the statistics that they have, they actually have a lot of high savings rates, but they are just afraid to spend. They are just afraid to spend because of the current week, 90 months, and when the property market starts to turn around, the people will then feel richer because they see some positive wealth effects, and they will start to be able to spend. And we will then see there's actually a huge significant potential in terms of the demand for America because they are very large consumer base. So I think in the long term, it still offers a very healthy economic fundamentals, and China still remains an important market for us, for MLT.

[00:59:42] So I think that's the – do we have another question? I think there's no more questions from the webcast as well as the webcast. So I think coming back to earlier on, thank you for your questions on the meat and barley from China's portion by G-R. So China's better company here is 44% for China for MLT. For Asia, it's 0.25%, it's 7.5%, and 0.26 for… Okay, so everyone for dialing in. Thank you. And follow questions, please just email me. Okay, thank you. Thank you. Thank you everyone. Thank you. Bye.