2Q & 1H FY24/25 Financial Results Briefing

Please may a team analyst, investors, and members of the public warm welcome to MPAQ's Analyst Briefing and live webcast for our results for the second, fourth, and first half of Financial Year, 2023-24. As a distinct pleasure of hosting today's results briefing, allow me to introduce our speakers for today. They are Ms. Sharon Lin, Chief Executive Officer of MPAQ, Ms. Jennifer Tan, Chief Financial Officer, and Mr. Koi Rong, our Head of Investment and Asset Management. We're representing our financial results, providing key business developments and sharing market insights. Following your presentation, we'll open the floor for Q&A. We invite you to ask questions or seek further clarification on our results. Without further ado, I'll hand the floor over to our TFO, Jenica.

Good evening. Okay, I hope everybody can. This meeting is being recorded. This meeting is being transcribed.

This quarter to be of underscore the resilience of Cintex Singapore portfolio and mid-diverging overseas currents. So the strategic investment of military entrance, coupled with daily performance of the Singapore asset, provided some cushion against the effect of diverse conditions in the overseas market. Second quarter FY2425, gross revenue, 225.6 million, and MPI 167.7 million were lower by 6.1% and 8.5% year on year, respectively. So this largely reflects reduced contribution from military entrance following its divestment on 31st July 2020. And more contributions from the overseas asset, which was further impacted by the strengthening of the same dollar. Excluding military entrance, the Singapore properties recorded a revenue growth of 1 million year on year, led by continued robust performance of legal city despite the ongoing AEI IP2.

The property operating expenses were higher by 1.7% at 57.9 million, mainly due to a 2.8 million one off property tax refund. And this is relating to vivo city recorded in last year and not this year. Okay, moving on to net finance expenses for the quarter. Net finance expenses were to 26% lower at 56 million as compared to second quarter last year. And this was mainly due to the repayment of borrowing using the net proceeds from the divestment of military entrance and partially offset by higher interest rates as the lower fixed rate literacy interest rates sort of progressively roll. So amount available for distribution, 104 million, 11.9% lower, DPU 1.9% down 11.6% year on year. If we were to exclude the one off property tax refund received last year, the DPU would be at 9.6% year on year.

This slide shows the contribution by different markets, excluding the results of military and certain and a one off property tax refund received in last year. Both gross revenue and NPI of enough properties were higher year on year. The full-call assets account for more than 50% of the portfolio's gross revenue and NPI. The lower contributions from the OSC properties were mainly due to weaker performance because of low occupancy, negative rental repersion, and unfavorable effects impact from depreciating Japanese and Raminpi against Tingdong. Okay, moving on to first half, gross revenue and NPI decreased by 3.3% and 4% year on year to 462.3 million and 347.1 million respectively. This was similarly driven by the reduced contributions due to divestment of military ensign and we see overseas contributions further determined by adverse foreign exchange effects.

Net finance expense for first half was 11, 115.5 million up 3.4% mainly due to higher interest rates on Tingdong dollar and Japanese yen borrowing as legacy low fixed rate RRS progressively tipped off. This was questioned by the reduced borrowing after divestment of military ensign. Amount available for distribution for first half was 214.7 million down 7.8%, BPO 4.07% down 7.9% year on year. Excluding military ensign, gross revenue contribution by Singapore properties due to 5.1 million higher year on year and excluding military ensign and one off property tax rebate refund and on poor properties NPI would be at 3.2 million higher year on year. On balance sheet, in view of the non-renewal notice by FGM's master tenant and the localized market softeners

in the Makuhari market of Chiba, in-treme revaluation was carried out on the three Makuhari properties, namely MBP, MBT, which are Seiko building, and FGM. This resulted in a 17% drop in fair value as compared to their respective valuation conducted in March 24th. We now will go into more detail on this revaluation later. So as a result, this revaluation and class D adverse impact, NAB per unit was at $1.71 at 30th September, lower than that of 31st March 24th. Moving on to capital management. So utilizing proceeds from the Maple Tree and some divestment to reduce growth in rate net, the total growth net was lowered from 6.8 billion as of June to 6.1 billion as of September. So however, the interim valuation of the Makuhari properties, partially offset the positive impact

of this debt reduction on the leverage ratio. So consequently, the average leverage ratio improved from 40.5% last quarter to 30.4%. At 38.4%, the debt hit room was 3.6 billion to 50%. And assuming total borrowing remains unchanged, it will take about 3.6 billion drops in IT for gearing to reach 50%. And that is about capital expansion across the whole portfolio of more than 100 bits. Then with the average owing cost of debt of first half was 3.56% per annum, and adjusted ICR remained the same as last quarter, 2.8 times on a 12 month trailing basis. By the close of the financial period, MPEC has a financial flex of about 1 billion in cash and entrant facilities, ensuring sufficient liquidity. The debt majority profile remained well spread with no more than 24% of debt expiring

in any financial year.

On the next slide, the fixed rate debt portion was raised from 78.9% to 53.6% during the quarter. And this was mainly due to the pattern of floating rate borrowing with incentives proceed. So with 83.6% of debt of fixed rate, every 50 bits change in benchmark rate is estimated to impact the DPU by 0.0% per annum. And at the close of the quarter, approximately 90% of MPEC expected distribution in distributable income on a rolling spot for the basis was derived from a hash-interfering dollar. Last but not least on the distribution detail, BCD is on 4th November and PLD is on 6th December. I will hand over the wheel. Okay, so good evening everyone. Maybe I start with committed occupancy. So you'll see that MPEC's maintenance commit occupancy at about 92.5%. There are a number of vacant spaces

that came in this financial year, namely the full floors as well as Bank Julia's Pierce space that both of which were given. We are still in the progress of leasing out some of these spaces. As it came down just a lot of occupancy remains strong. Of course for this quarter, the other achieve properties are only M Tower and ARC because of the divestment, sorry, and M Tower, ARC and Bank of America Harborfront, one of the purchase ends with the fact form. For Festival Walk, the 3.6% vacancy there is largely due to offices vacancies

at the office component of Festival Walk. I guess I'm signing up a number of leases. We hope to get this number. China occupancy, 87% number is for the fourth 80% and has been for the last two months. Japan, the biggest change here, biggest change is actually in the Japan portfolio. And you will see that this set of numbers, the performance at Japan has tracked down the portfolio largely due to the fact that even though the Japan portfolio is about 28% of the portfolio net electable area. So if you look at the change in occupancy

for Japan assets that's largely due to Finnegan-Gangman, now about 92.7%. Moving on to rental reversions. So this remains very healthy. 5% people at 17.3% and the actual property at Festival Walk slightly was signed.

19 bioprops are still slightly positive. China properties, rental reversion has widened very slightly, it was meted in my Beijing, still remains soft, has largely due to the coming in.

The way also, office way is now 2.5, what we do remains at 2.5 in the Makuhari. So the change in the spaster lease, the main change is what happened is that

at the point of this valuation, the value was had taken,

we also have, there is a SMHAS activities undergoing in the mall currently. Some of these, a number of the shops have actually opened, number of the kiosks have actually opened. So we have continued to refresh the context and the tendencies within the mall. These are some of the new tenants that have come into the mall, as well as some of the tenants that have refreshed. We continue to drive shopper traffic through events

and activities within the mall. For this past quarter, we collaborated with Disney on Donald Duck's 90th with our Mid-Autumn Festival. Moving on to Festival Walk. Here the shopper traffic numbers are a little bit more positive, whether on the first half or second quarter, as well as second quarter. Shopper tenants sales remain weak. The change by the fact that beer currency remains very strong.

Looking at Festival Walk's tenancy mix, we have a lifestyle concept. So now the mall has a gym. We're looking at a number of other changes in the activities in terms of advertising and promotion, remains very strong at Festival Walk. And these are some of the activities that are past quarter. They seem to be very good at, the team there is very, very good at attracting and hosting events. Last but not least, I think we mentioned this earlier, Long Beach Street and so it's completed on 30th of July. The ratio of parking, perhaps you can go on to Q&A.

Thank you, Janika and William. We're now ready to take questions. We kindly request that all analysts please take a minute and for people asking questions and for online participants. We have Terrence from JP Morgan. Hi, hi. Thanks so much. This is Terrence from JP Morgan. For my first question, I'd actually like to understand a bit more about Japan. How long should we expect the downtime to last for these three properties? And I can see that Japan, the MPI margins have dropped quite substantially. So is this sort of like, for like stabilised MPI number going forward, not resending the... Okay.

Hi, maybe I'll take that question. It's all the way to 2026. So that would depend on how fast we can now. If you ask me a very pointed question of how low can it go? Like I mentioned at the ballpark, yeah. On an extreme case base, talking about in the next three to five years, the worst case, we're talking about Japan was contributing, let's say about 60. So it will drop all the way down to 30, okay? Half, because it's about half the asset. If you put it at zilch, it will be... And that is now all the way to Fujitsu. We still have income. MBT is already multi-tenanted and is still continuing.

So that is as a general guide in this day to four to five years on the worst case basis, that will be the general drop. I'm gonna put it into... You may see the drop. Let's look at in relation to the other leases. Maybe I'd like to touch a bit on the VEL, its contribution. Okay, so I think I've already given you the worst case of the Makuhari assets. It's not gonna be immediate impact. It will be beyond a three years and longer, okay? And to even get there. The valuation, I think a lot of people may wanna ask, why do we do a VEL? Okay, I think it was triggered because of the notice that was given by Fujitsu out of prudence. We decided that we should VEL. 120 million is less than 1% of our entire portfolio.

Okay, your perspective, you may see that, hey, you know, the occupancy is locked, but the value per square foot of rental days contributing is actually very low. If you're talking about below $2 a square foot, just for a matter of perspective, then you convert the Super Bowl into a square foot, same dollar. And if you look at... Seiko is equivalent, a whole building is equivalent to a Hong Kong Fujitsu. Whole building is equivalent to one lease, the relativity, or I'm not belittling the fact that there's softness in there. We have been guiding that there's some softness in the Maku Harig assets. And now we have rebuilt because of the notice

or the Fujitsu, but I like to put it in contact on the impact of it. Worst case, 60, down to 30, okay, for Japan. And that is on a longer term basis, not one year, not two years, not three years. I'm talking about beyond that, okay, on a worst case basis. Maybe to comment on that, with the result, your gearing, let's say you comment on that too. The gearing has been taken... Yeah, the gearing has been taken in consideration at 38. We're still comfortable at the LTV level and the coverage and all. The gearing impact itself, I think we are still in a safe zone, way below the 40 as of now at 38. So I think we are comfortable at this level. Even at over 40, we are always said that we are comfortable. But right now, we are at 30.

Even taking a consideration at 120, now perspective of what is 120, 120 is just at 1%. Last year, just a forex move valuation, just the currency itself when we just translated, close to 300 million. Okay, and with the AEI works coming up that we have done, the worth of it is definitely more than 120 million. So if we were to delay it to our yearly value, I think people itself... Sorry, just matching the Japanese yen debt to Japanese yen assets, is that risk of over leverage given that you're taking such a big rebound in the Japanese? I think we are still comfortable. The banks are not, nobody's making any noise about it.

So I think we are fine with where we are. We do have a very small overhatch position. But once our CTA show up, we will be in a better position. We will be in a 100% position. Yeah, it's very, very, very small. Yeah. Okay, thanks. And finally, a question from me, which one? Consider the impact, consider the top parts, given that there could be some DPU decline there. No, we don't have... Using debt... No. If you're talking about borrowing money to top it up, we don't see the need to do so. Yeah, I think it's not sustainable. And we would like to... DPU typically has to be from operations

as opposed to borrow from the bank and give it to you. Yeah, it doesn't make sense for my perspective. Okay, thank you, Taryn. Thanks, Taryn. Next, can we have Jerodin from DBS? Jerodin? Hi, Sharon and Tim. Maybe just a follow-up, Nagohari Building. If you were to multi-led, have you taken a look at the rents as compared to what you were getting from the anchor? Taryn, previously? Not sure if it's too early to us. So, the valuations have really taken into account the differences in rentals between the multi-led and the single-tenanted. So, for... The difference actually is a little bit different. The differences are varied. Each building is slightly different. Ranges from somewhere... Ranges from between only about 500-year-to-zubo

to about 2,000-3,000-year-to-zubo difference. Okay, so the 500 is the anchor rent and the 2,000-plus per subo is the... What I meant is that the difference between the anchor rentals and the multi-tenant rentals, the anchor rentals are typically a little bit higher. The difference between the anchor rental and the multi-led rental is about 500-2,000. And just back to Singapore, NBC, there were seven different signs this half. Can you share a bit more about the tenants sign? That sign with you this half and any more productive tenants that is potentially in the picture? Well, the seven tenants is a mixture of office and retail tenants. The number predominantly comes from the office tenants.

The retail tenants are quite small. These are renewables as well as a small number of... Only about one or two new leases. Generally, the tenant mix hasn't changed. It's still a mixture of office as well as advice. We are prospecting for... We are in negotiations with a number of tenants for the vacant spaces within the building. And when we are able to have those signed off, then we'll report them. Okay, thank you. Next, we have Rachel from Macquarie, Rachel. Hi, good evening, Sharon and Kim. Thanks for the call. Maybe just back to the Japan properties, I think in your slides you mentioned that there could be potential change of use or potential divestment. How realistic are those options?

You still have to try that because I think there is some restrictions in terms of land use and more Japan itself conversion will take a bit of time. I mean, if you talk about conversion into DC, then you will have or selling it as a DC, you need to have the power and that will need time to talk to TEPCO and all that. How realistic? I would say that it's going to put a longer term horizon on it as opposed to immediate term. Okay, but if you do go on that route to change of use, would you look to develop it or you would look to sell back to sponsor and develop? I don't think I'm looking at the sponsor. I think we will have to look at what is the best use and whether we are capable of doing it. I mean, if it's a different sector, obviously, we are not going to with that. Let's say for example, if it's conversion into student housing or ability to assuming it can, that's not my core expertise.

So you have to be able to sell it. If you ask me, I would rather sell it as opposed to do it because it's not within our mandate nor our core capability. Okay, got it. Then maybe just on festival walk, could you give us some updates in terms of how many more leases that has yet to be marked to market while your expectation on reversion is moving forward? And, you know, I mean, softness in terms of the tenant sales have been slow in recovering. What do you see in the next few projects? Okay, I think what are the positives that we see on our festival walk? Yeah, falls are better, Q1Q and so on. So on to falls they are better, okay, put fall. Tenant sales, although it's down comparing, we are still better than the retail sales in the market. Okay, so I cannot say that it's doing fantastically, but I would say that it's doing better

than the market in terms of tenant sales, but I'm seeing positive in terms of the put fall. Hong Kong, there is still a little bit of softness in there. When we look at the rental reversion, okay, when they analyze the leases, most of it was, most of it that has already been renewed one time prior to the, after the COVID, the reversion was not down, okay. The down and reversion was due to leases, a lease that was done prior to COVID. So that has to come down, yeah, because this was, you know, they signed prior to COVID, and then this is the first renewal after the COVID. So I think we are, we are still cautiously optimistic. I mean, if I look at a put falls, I look at the sales doing better than others, but it's still negative, on a negative region. I would say that my team has done better than the market, yeah, but it's still not good enough compared to the old previous high, yeah.

So we'll continue to do what we can and try to strip out a little bit more efficiency on the ground in just the old pack.

Okay, I remember last time the remaining leases was about 10%, right, or less. Is that still about the same figure? This is to that, okay. One of the big, this quarter took in one of the big ones, yeah, the supermarket is a big one, yeah. It's a big one, yeah. Okay. It took in into that. If not, the rest of the leases, they took that back, it's one lease, yeah. Okay, yeah. And I think the vacancy is in the office side of festival, what are the rents, is it also still soft and will that impact as well? Okay, I think the office is rougher than the retail. Yeah, the office has been rougher than the retail. Yeah, in Hong Kong. This lease actually, it was flat glass and it was not renewing a good nine months to 10 months ago. Nine months to 10 months ago, we have been working to try and lease out the space. Only about half the space out,

that's where the committee documents. Discussing a number of other tenants, but we've had to cut up the space quite a bit. Use the one tenant only, now we have cut it up too. And unfortunately, rentals really have come down. Location, we've... I think we just have to deal with it and to make sure that our key anchor tenant, which is Eruk, continues to stay. Yeah, I think that lease is good until 2034. Yeah, and that is a very, very huge tenant for us. And that's already been done. I would say that the stability is there for the office component. We just have to deal with the current vacancy. Yeah, so we have to adapt.

We have to chop it up, make smaller. Okay, thanks. Indeed by squeezing just one quick one. Now the interest rate cuts have started. What else can you do with MPAT? You've so answered. What do you think, what else you can do with MPAT? What do you mean? What do you mean? You mean like your gearing? Yeah, your gearing is okay. Interest rate cuts, what else would you do? Okay, you're talking about acquisition is it? Yeah, acquisitions are that. I think we just have to be still a little bit more careful because I think asset values are at certain level. In terms of the overseas market, the spread is still not really there. Yeah, I think we are still in the market to look out. As long as there is a good fit or an improvement to the quality, the quality in depth of our portfolio.

So where I'm coming from is, it's not that we have the gearing, we have the capacity, let's chop and just do everything that we can. I think there is still, the spread is still may not be attractive enough. There's only a few sectors and a specific market that has a spread. The rest does not seem to have a reasonable spread yet. Okay, all right, thanks Sharon. I'll circle back, I'll let others ask questions, thank you. Thank you. Thank you very much Rachel. Can we have Brendan from Sydney next? Brendan? Yeah, hi, can you hear me? Yes, you can. Can you hear me? Yeah, I just wanna go back to the festival wall, right? I think last quarter Sharon, you were saying that you're working on some AEI, right? Do you have any updates on that fund? Sorry, just to repeat the question, what's that?

You're talking about AEI for which one? Festival wall or? Festival wall, festival wall, yeah. So festival wall, I mean we are in process, okay? We are in process, the submission process and the regulation is heavier than Singapore any time, okay? So we are already in progress, 1000C is going on and now we need to apply to certain regulators, okay? So the process is a little bit more long-drawn as compared to Singapore. So it's progress, okay? And for Singapore as well under its way, we're ready, we talked about entire basement going for conversion, we have started the phase one and part of the phase one has already started. So as you see that hey, you know, if some of the numbers are down, it's people down the line because when we looked at, there were a lot more downtime, we actually stop work and remove chaos for upgrade

and a portion of it has already started and that will progressively continue over the entire year, okay? So different speed, I would say different speed and I do thankful that Singapore is very efficient and very far in the profile. Yeah. Yeah and my second question, right, I think with the recent China stimulus and also the lower rates, right, do you think that we have a high chance of selling some of your Hong Kong China assets today? Okay, I think in terms of the China stimulus, everything is positive for sentiment, okay? But what we want to see is more on the demand side, moving up, yeah? A lot of stimulus is more on consumption and more on the finance and debt side. So if you look at it, the key for real estate is always demand, okay?

So hopefully there will be more better outlook in terms of demand situation. The supply situation on the ground is huge, but it's not that the supply is huge, it's just that demand is less than previous, okay? So any good news is good on the sentiment, but it will still take a bit of time for us to see that the demand stops coming back, okay? So we have been prodding along quite well, especially for Gateway, okay? Gateway is in one of the key CBDs within the Beijing side, yeah? So if you look at all our occupancies and stuff, we definitely have stacked up occupancies and rent, we definitely have set stuff better than most of our peers, okay? So we are thankful to a few of our anchor tenants that we did a year or two ago, okay? And that has given us a lot of stability. So in back to the stimulus, okay? I think for the real estate sector to benefit,

there will be, but we need to see it more from the demand angle, okay? Which the stimulus are more tilted towards borrowing, and you know, stock market, as opposed to the demand, I think that will be the second part. Even when the sector will come back, people have more optimistic in terms of the general outlook, yeah, and they will start expanding, yeah. Okay, thanks, thanks so much.

Before we go to the next question, I'll move on from Festival Board, I just want to clarify that the key office tenants actually could kill two, three, zero, not three, four, sorry, Beijing, you know, final Beijing.

Thank you, Brendan. We have again, Derek from DBN, Derek Hinton. Hi, good morning, good evening, can you hear me? Yeah, you. Fine, I'm Beijing, Derek. Yes, yes, Beijing. So just a few questions, right? If I go back to Japan, Sharon, just curious whether, given the options that you have, should we assume that the divestment option would be an accelerated option in the view, or you still want to try to work this out? I think if I can divest, I would tell you so. It's a locational issue. Marko is a locational issue, so it will be a bit more trying to do so. I'll be very upfront with you, yeah. Yeah, and even at the latest write-down price, is this something you think can clear the market, or if it's put up the market, or you think it's unique? It has to be single user type.

Okay. People who want to own their own building, single user. As opposed to somebody buying out to hold it for multi-tenanted. So you will be a different subset of potential buyers. Yeah. Yeah, okay, got it, got it. Okay, no problem. My next question is your interest cost, right? I mean, if you're gonna give us a guide, could you give us an update on how you see it trending the next year, maybe the next financial year? And do you have any low hedges that would expire that would spring a negative surprise in the coming financial year? Actually, if I look at my interest rate swap, or IRS profile, my interest rate swap with low fixed rate

and the current prevailing swap rate, okay, there's quite a bit more to go and it will last until FY20, FY26. Okay, whether this will impact my borrowing costs, that depends on where the market is at the moment. Currently, those are still below the current swap rate. But having said that, I like around the rates now of meat, around the meat trees. Okay, so the meat trees, okay, got it, got it, thanks. Sorry, last one for me and look at VivoRides, your staff performer. But in the tenant sales has been a little bit soft recently, just wondering whether the reversion that you're seeing, is it okay, still can maintain?

Okay, you see, we shut down a number of fields for AEI. We have higher number of feedback periods compared to previous periods, okay? So there's one component. The tenant sales, you see that is actually there is a better for preceding quarter, means like second queue is better than first queue. Okay, and there's no festival matinees, okay? And first queue was the one that was addressed, and which is March, April, May, June. And I would like to associate that more to traveling during the June holidays, okay? But if I take the queue two, which is July or September, it's better than queue one. So I think I'm not so concerned. I'm not so concerned. Okay, sounds good. You know what I'm saying, right? The numbers are down because of majority of queue one.

Yeah, yeah, yeah. I mean, people are still spending less, yeah. Then plus AEI, you see my whole basement one, the first half next to the escalator, the whole stretch of the queue was all down, yeah? So we tore it all down and now it's back. Yeah, basement two, yeah. Basement two AEI. Basement two AEI. So when we do AEI, we still consider, we don't go our sales calculation for the mall. We do not remove any of them because of downtime or AEI.

We take the very simple approach of this entire mall sales. So definitely during AEI period, definitely the sales will go down. If nothing else goes up, yeah. Okay, okay, okay, okay. Sounds good, sounds good. Thanks, thank you. That's all for me. Thanks, Jerry. Thank you for coming out. Please unmute yourself and pose your question. Hi, Sherry. Good evening. Sherry, on your overseas markets that are currently pretty weak, right? Like Japan, I guess you've mentioned you expect weakness or presence. China and Hong Kong, do you expect them to turn around in the next 12, 24 months? Okay, I think, oh, in terms of reversion, I think it will potentially narrow, okay, but this tool, if you talk about Hong Kong itself,

I wanna see this day whether if the Forex has moved against China, yen, it means Hong Kong is less expensive. Then I think the UOC better talent sales, okay? UOC potentially better talent sales and there'll be less better reversion. Right now, I think there's some leakage to some terms of consumption or overseas, okay? Because their dollar is strong, hopping on a plane to ABC next to themselves, which is being Taiwan or Japan, is a very common thing. Even on a short weekend, consumption is potentially still happening, but maybe not consuming Hong Kong. Okay, so when there's a potential change in the currency, then I think the output will be better for retail. Right now, Hong Kong dollar is very, very strong, okay? So, tenants actually educate me that they are still spending budgets, spending outside, okay?

So, they can draw the conclusion in terms of the Forex having an impact on, having being a driver to that. So, if you talk about when are we, when the reversion, I have to look at where all the only sales that you signed before is less than 10%, those will go down now, okay? What I'm seeing now is the second round of those that have renewed one round after the COVID, this quarter, it still looks like it's holding up in terms of that it's not breaking another round, okay? So, the rental reversion that you're seeing negative is predominantly due to one visa, which is the supermarket that was done way before, that was done before COVID, yeah? So, that definitely came down.

What about China? So, we don't, so for two reasons, we don't expect China to reverse the rental reversion profile anytime soon. First and foremost, the economy still remains very weak in terms of demand for spacers, we're not seeing significant improvements, but on the, not just on the demand side, on the supply side, there is quite a lot of issues in Shanghai in particular, there is a lot of supply, both in the offices versus the BP space in Shanghai, if you go and check some of the statistics over the next, this year plus two more years, the amount of supply in the Shanghai market will be more than 20% of stock, right? So, there's a lot of space being built up, some of that is due to the fact that a lot of these spaces would be late from demand has actually cost rent goes to-

occupancy is key as opposed to having a very, very long downtime and to find new tenants, okay? It makes more dollar and tenants. Now, like last time I was mentioned, the rental reversion is always a good signal, but if you were to say, Sharon, are you gonna keep this space vacant for six months and go for a 2% rental reversion, no way, I would rather take the 2% to 5% cut as opposed to a six to nine month downtime. One month, one out of 36 is about three to four. So, if you take one quarter down, it's about what is the likelihood of one month vacant? Because in office, you do not match the- you are seeing, if you wanna have a gauge of

where revenues will go, what you are seeing is a rental reversion. The other component is downtime. Now, when we manage, we always see what is the potential downtime that we need to hold it vacant. If I'm just after a positive rental reversion and to wait out for nine months or six months, it doesn't make sense on a cashflow basis and a return basis, yeah. So, I think just a matter of putting that into perspective. Thanks. On Japan, right, can you share M Bay Point and Makuhari Bay Point? What's the committed rent? And also, what's the actual occupancy into the rent that's paying for a quarter? So, for M, Makuhari Bay Point, rentals, they are generally signing in about $10,000 to $12,000, $12,000 yen per school range.

occupancy at the building now is about 80%. Makuhari Bay Tower, the former, the former Seiko Makuhari building, that building has rentals slightly lower. We are running at about 9,000, five-dollar range, but the occupancy is only about 26.5, because that's the space which Seiko retained at the building after the termination of their master lease. Thanks. Just a last question on capital recycling, right? Does it sound like your priority is AI at festival walk and divestment and lastly acquisition? I think it all has to come together and see whatever is available in the market. Okay, if I put the current market out there and evaluate and say, would I be actively looking at acquisitions today? I think, like I mentioned, we have to be convinced about the spread

versus the borrowing costs to be material enough for it to make sense to the portfolio. Yeah, which is presented by a few sectors, not all the markets, so that's one. Now, the capital recycling, like I said, is part and parcel of our job to make sure that if the two key properties of ours, which is synonymous to us, is Vivo City and NBC, the rest, if it makes sense to recycle, we would. Okay, so it's not that we are accelerating or decelerating, it will go through every year that we will consider, okay? Like I mentioned, we are not gonna be pushed to do any recycling due to any form of carrying issue which we don't see that we are in any, we're in dire straits and we need to do anything about it. So if you're saying that, are we gonna be doing any more divestment due to our certain capital structure,

I don't think we need to, we are healthy enough. Okay, we are healthy enough. So our capital structure is relatively strong, okay? So expansion have to be careful in short. Bivestment, where it's at the when, when it comes, we evaluate, okay? But the two cores, Vivo City and NBC, is not in our books to consider, is not in our books to consider. Okay, got it, thank you. Thank you, Tanshian. Next on the line, we have Derek from Morgan's Denny.

Hi, Ethan, can you hear me? Yes, Derek, yeah. Perfect, just sort of, hi, Tanshian, I just want to follow up on your comments earlier on, that's the work, I think you mentioned that you outperformed the Hong Kong retail market. Retail sales. So, haven't failed. Okay, yeah. Yeah, just looking at some of the numbers that came through, I think Hong Kong, you know, and the retail sales are down maybe about 10% so far, last couple of months. I just looked like that's what we have under the former slight bit. So, just wondering what's the gap over there. Hi, Derek, according to our own internet estimates, right, I think for the month of July and August, average daily basis, compared to the quarter before the Hong Kong retail sales is actually minus 3%. Whereas for festival work, if you look at it, 3Q versus 2Q, we are up 3% for 10%

Oh, wait, that's not, sorry, 3Q. We are talking about 3Q versus 2Q. Like for life. Oh, no, I meant like year on year. Wait, year on year. Oh, yeah, I said it's down. It's down. No, it's underperformed. No, no, no, no. In January, we are in line with a Hong Kong retail sales performance. However, I think if you look at it from the 3Q versus 2Q perspective, we are actually outperforming Hong Kong retail sales numbers. That's all, yeah. Okay, I see, understood. Yeah, I just think that the year on year performance seems to be a bit weaker compared to the overall market. Yeah, sometimes- Okay, if you didn't talk about, so that means that is, what is dragged down is previous quarters as opposed to the current immediate quarters. The current immediate quarters are doing better than the retail sales index,

which is a better sign for me. As opposed to previously, I do better and now I'm worse. You know what I'm saying? Yeah. Okay, okay. In that case, how, are you gonna share, guess the occupancy cost for Festival Walk and Evo? 20. And how it compares to- 20. 20-ish? Yeah, only 20-ish, yeah. 20-ish, low 20s? Low 20s. Okay, how does that compare pre-COVID? Oh, it's also- Pre-COVID was slightly shy of 20-ish. Yeah, slightly shy of 20-ish. Evo is made of about 20-ish. Okay, so they're already above pre-COVID. Yeah. About it. And just lastly, I guess, me or your son's clear on pop-ups, but what about high-back,

especially since you already have that mandate back in July? The question is on shared buyback, yeah. And your question being, what about the shared buyback? No question is, what do you think about doing shared buyback, doing shared, actually carrying out shared buyback, especially since you have that mandate back in July? I do, I think our mandate is still there. Right now, I don't, not in our plan, but can be activated, yeah. Okay, on it. All right, thanks for your time, Evo. Yeah, just to clarify, I think what Sharon meant to say, that the shared buyback mandate is still eight, but currently we do not have the best to actually use it. So, Yukia from Kia Nasei, is your turn, Yukia. Hi, can you hear me? Yes, you can. Yeah, just on the Japan properties,

talking about divestments, is there any recent transactions and what are the kind of capris that's done in the Makuhari area? And the second question is on tenant sales, when can we expect improvement in tenant sales in the positive region for vivo and festival work? Okay, oh, yeah. So, for Makuhari, we are aware of one transaction, but the transaction, transaction details would not disclose, so we don't know what the capris and what the transaction pricing is. Okay, just maybe a follow up on that, right? Should we also expect further downward evaluation for your remaining Japan properties? I know Makuhari, I think the rest of our non-Makuhari is relatively stable.

Okay, and then tenant sales, and vivo and festival work. No sales, no office. Oh, you're talking about festival work, tenant sales? Yeah. Okay, I think it boils down to consumption needs to come back, right? And we do, I think there's a lot of write-ups and a lot of people moving to, not moving, spending and consuming out of Hong Kong. Like I said that the Forex will be a good trigger. When Forex moves, Hong Kong dollar less strong, not as strong compared to today, consumption will be definitely tilted more towards Hong Kong as opposed to out of Hong Kong. Then how about vivo? Is it also a Forex? I think vivo has, vivo, it was only one quarter,

the previous quarter, only previous one quarter due to I think it's holidays, more than anything else. Then this quarter, we shut down a lot of the cures, which is called zero sales that will be recorded. That we are doing all the works at, continue to do all the works at basement too. So I think the worry is not warranted so much for Singapore, Hong Kong, I think there is still some consumption out of Hong Kong, especially to Simpson, yeah. Okay, but we also have another school holiday coming up soon. So check it out. Am I, am I, am I, am I, am I, am I, I mean, there's a few, there's a few indicator when you run an, when you run a retail, I mean that you see a number of your old sharing your sales coming down, I will tell you a story, if you look at it, quarter and quarter is better, okay.

preceding quarter is better than, this quarter is better than preceding quarter. Second, I have shut down AEI, okay, due to AEI. So that's why it's not in the denominator at all. Now, am I already concerned with Singapore retail? Another indicator is the interest level for our unit. It's definitely way stronger compared to Hong Kong, okay. I think we have the good sense of when we manage it, okay. So am I anywhere worried about, about people? I would say no, okay. If I think Singapore has done well in terms of opening its borders early, and I think the tourism numbers has also come to a certain level, yeah. And activities are no less. The drop in traffic could potentially be due to the transient, okay. If I look at my sales as already pre-claw back way,

one, two years ahead, I mean, one, two years ago, we have already surpassed pre-COVID, okay. So that means that the sales itself is not anywhere near lacking. Border and border, okay. This border is better than last border, and definitely is better news, okay. The only border that was down was last border, okay. So I am not concerned on the performance of people city, okay, and when we start continuing to do our enhancement work, you will see that we'll be creating more value through our entire basement too, okay. And if you're talking about spending about 30, 40 million, but the vibrancy that we will be creating in the entire basement too will be very, very different. We're talking about converting about using unutilized GFA and converting 60 cut-off lot, increasing PIOs from 30 to 27, they're about then plus additional space

of about 10 over thousand, just at basement too which is our most prime floor. We are not stopping. I think there is a good indication of our confidence level in terms of people city continuing to widen, to lead ahead, okay. So if you're just stopping, slowing down, then you'll be concerned. We are not stopping. We still have a whole stack of things that we wanna do to people city because there's no end into S&E enhancements, okay. After we finish this, there's other things that we also want to upgrade. For us to start continuing flunking money, it means it's churning for us, okay. So from prospecting our outlook, the queue is still there, okay. There's a lot more foreign brands, F&B, especially trying to come in. Then from our stance of growing, injecting more, investing more into our asset, I think it's quite clear that our confidence level is very, very high.

Okay, that's it for me, thanks. Thank you Yuki-an. Just to take one question from Helen from online. She's asking for NBP currently, the occupancy is going to be extended. Expect this to change? How is it going to change going forward? So thanks for the question. There is some risk that the occupancy could come down. I mean, okay, so prior to the expiry of the master visa NBP, the master tenant as well as sub-laces took out about 50% of the building. When that master lease expired, more than 80% of the underlying visas continued with us. Now, whether those tenants will continue across after the expiry of their current visas, I think that once it remains to be seen, we do have one or two sub-laces who have already informed us that they will be committing the leases. So there is a little bit of down in occupancy

that will come across over the next six months or so. Then for the remaining sub-laces. We have two final questions from Rachel again. Rachel? Hi, thanks. Thanks. Just housekeeping, for NBC could you give us an update? How many percent of back-feeling have you done for the Google space, the Unilever space and also the JB space? And lastly, just some color-wide, the Pinnacle Gardens tenants are just last year. So, okay, so one by one, for Google, we are still, the space is still being marketed. We are talking to currently about two tenants, two or three tenants are potentially taking up part of all of the space.

That's the same for the BJP spaces as well. For the Unilever spaces, we have filled about 70% of the space currently. And so we have about one floor and a little bit left. So we are still marketing. We are in discussions with a number of small tenants for that part floor and for the larger one floor space, one tenant, so forth. For TPG, TPG, she was asking about the drop-in occupancy. Oh, okay. So the drop-in occupancy was likely due to one tenant giving up space at the building. The tenant had some legal problems. We actually pre-dominated the tenant before they had the legal problems. Okay, yeah, since it's got the rent,

is it under rented or is it close to market rent? Oh, rented. That particular lease was signed a few years ago, so that one is still a little bit under market. Okay, great. Thanks for the color. Thank you. Thank you, everybody. We are very well aware of the timing. It's close to eight o'clock. So thank you again for your time and participation at this tower. If you have any further questions, feel free to reach out to the investment relations team. Thank you and we wish you a great evening ahead. Goodbye.