Operator: Good morning, Analyst, Investors and Members of the Public. Welcome to Mapletree Pan Asia Commercial Trust, or MPACT Analyst Briefing and Live Webcast for the Fourth Quarter and New Financial Year 2024. I'm Li Yen and have the pleasure of hosting today's results briefing. Allow me to introduce our speakers for today's briefing. They are Ms.

Sharon Lim, Chief Executive Officer of MPACT; Ms. Janica Tan, Chief Financial Officer of MPACT; Mr. Chow Mun Leong and Mr. Koh Wee Leong, our co-Head of investments and Asset Management. They will be presenting our financial results, providing key business development and sharing market insights.

Pulling the presentation, we'll open the floor for a Q&A session where we invite you to ask questions and seek further clarification on our results. Without further ado, I will hand the floor over to our CFO, Janica.

Janica Tan: Good morning. Thank you for joining us today. Before we get into the details of our full year FY ‘23, ‘24 results, I would like to give more colors to the three key teams shipping our broad business environment.

So, first is the global market has been very much affected by the ongoing geopolitical conflict and economy uncertainty. Second, rates including impact are may be getting through a new era of high interest rates following that 11 rate hikes in the last two year in an attempt to curb ramp inflation. And this significantly impacted cost of financing for banks and businesses. Third, financial market has been volatile. Forex fluctuation has particularly impacted rates with overseas exposure affecting their earnings, distribution and asset values when they are converted back to Sing dollars.

Despite these hurdles, MPACT has shown resilience with our teams adapting their asset and financial management approaches to make these challenges hit on. For fourth quarter, FY ‘23, ‘24 MPACT’s gross revenue, MPI and VPU. Overcoming broad market head winds, including Forex challenges and high-interest rates. Broad revenue of S$239.2 million was 2.6% higher as compared to last year same period and NPI was S$183.1 million, 3.2% higher year-on-year. And this growth was primarily driven by Singapore Portfolio, which delivered positive contributions.

Hong Kong and Japan delivered daily performance on a local currency basis. Whereas China had underperformed as compared to last year due to lower occupancy, property operating expenses were 0.3% higher at S$56.1 million, mainly due to higher staff cost and property management fee offset by lower utility expenses, and on a constant currency basis the year-on-year growth in gross revenue and MPI would have been higher at 3.8% and 4.4% respectively. Finance expense for the quarter were 10.8% higher at S$56.4 million as compared to fourth quarter last year. And this was mainly due to higher interest rates on both Hong Kong dollar and Sing dollar borrowing. And this was partly offset by the Hong Kong dollar and CNH swap during the financial year.

Amount available for distribution rose 2.2% year-on-year to S$120.5 million, mainly driven by higher MPI, which more than cause increased interest costs. And consequently, 4Q EPU was S$2.29 up 1.8% year-on-year. This is the year-on-your contribution by properties. Singapore properties contributed S$6.6 million or 6.3% of higher MPI with better performance across all properties. Whereas Japan and China were impacted by the adverse -- movement and China lower occupancy contribution for festival work -- On the full year, gross revenue and MPI wrote 16% and 15.2% to S$958.1 million and S$728 million respect fees.

This increase was nearly due to the four-year contribution from the over two assets acquired in the merger. Although the merger gains were tempered by a stronger in dollar against our foreign currency. On a constant currency basis, the year-on-year growth in gross revenue and MPI would have been higher at 17.5% and 16.6% respectively. The finance cost for the financial year were 39% higher year on year, and this was also mainly due to the full-year impact on interest expenses from the merger assets, the acquisition debt, and the elevated interest rates on sing-dollar and Hong Kong dollar borrowing. For the full year amount available for distribution was S$468.6 million, 5.2% higher year on year, and the full year DPU S$8.91, 7.3% lower year on year.

And this was mainly due to the – unit, contribution from the overseas properties for 5.4% growth in gross revenue. With improvement across all major revenue categories, including fixed rent, CapEx income, and EMP income. And the higher MPI of S$15.7 million was after fully covering despite in utility expenses. The next two slides are on our independent valuation. There was a change of value for the year in complying with the property fund guidelines.

Changes to cap rate and discovery, if any, were due to the deferred house view of devalues. MPACT’s portfolio valuation was S$16.5 billion as of 31st March, 2024. The value of -- property increased by 2.7%, particularly diversity, which saw S$126 billion at least in valuation. The valuation decline in the Overseas properties was largely attributed to a stronger sing-dollar against all foreign currency about 87%. In operational valuation impact from of the oversee assessment accounted for a minor portion of the total valuation and this was merely due to the revised market expectation for China, and specific adjustment for SII Makuhari Building, which is undergoing conversion into a multi-tenanted building of when SE instruments lease expires on 30th June, 2024.

Consequently, NAV per unit was S$1.75, as of 31st of March, 2024 lower as compared to March ‘23. Really due to the impact from -- As of March, 2024, the aggregate leverage ratio was S$6.8 billion, average ratio 40.5% and at 40.5% the debt [indiscernible] was S$3.2 billion to 50%. And assuming total that remains unchanged, it will take S$3.2 billion drop in investment property value for gearing to 50%, which translates to a cap rate of 94 bps expansion across the entire portfolio. With the average all cost for the financial year was 3.35% per annum and the adjusted ICR approximately 2.9 times on the 12-month trailing basis. By the close of the financial period, MPACT has a financial flex of about S$1.5 billion in cash and undrawn committed facility ensuring sufficient liquid financial obligations.

The debt maturity profile remains well spread with no more than 21% of debt built in any financial year. The next slide, on the percentage of fixed free debt is at 77.1% as of March 2024 and at 77% fixed. Every 50 bps change in the benchmark rate is expected to impact the GPU by $0.013 per annum. As at the close of the quarter approximately 93% of MPACT's expected distributable income based on rolling fourth quarter was derived from or hedged into Sing dollar. On MPACT's unit price -- MPACT's unit price especially in the last year has been disproportionately affected by interest rate hikes and broader market conversion to these home system markets.

As a result, our unit price closed at S$1.28 as of March 2024. From the leasing unit price of S$0.88 and including total distribution of over S$1.07 to date, the total distribution to unitholder is approximately 168%. This slide is on the distribution detail. This is indeed on 3rd May and payout is on 6th June. Before I hand over to Li Yeng, I would like to emphasize our continued focus on delivering long-term sustainable returns to our unitholders.

While we expect ongoing headwinds in the broader market, especially in the new era of higher interest rates, our strategic objective is to position MPACT effectively for future opportunities. And to navigate this landscape, we have set three strategic priorities. First is to strengthen our capital structure and redefine our portfolio mix. We are actively pursuing opportunities to re-categorize our capital structure and this involves an agile portfolio management strategy that responds to current market conditions. We will also undertake initiatives to safeguard and enhance unit shareholders' value.

Second, continued proactive asset management efforts. Our operational backbone remains resilient. Our China asset market has unperformed against last year, but we are either at par or better than market. We remain focused on maintaining healthy occupancy and ensuring stable rental income. By adapting swiftly, we aim to stay ahead of the market changes, ensuring that our assets drive even through volatile conditions.

And third, our Singapore portfolio. Singapore is at the core of our stability, accounting for about 55% of our AUM and 60% of our MPI. Looking ahead, Singapore will continue to be a key component of our portfolio, providing a stable foundation, as we navigate through year. Thank you, Li Yeng. Thanks.

Unidentified

Company Representative: Good morning, everyone. I'll bring you through the portfolio performance before I hand over to -- Yang to cover the performance of our retail assets in Singapore and Hong Kong. If you look at, starting with occupancy. You see that on a quarter-to-quarter basis, we have had a very slight dip in occupancy that's largely due to reductions in occupancy at NDC where we had one of the tenants we had about two or three tenants move on over the quarter. the occupancy remains at 96% as we have good leases there in China which will commence over the next one to two quarters.

You will see that, there is a business in the China property. There is improvement over the last one year. One year ago, on 31st March '23, we were at 86.5% that's improved to a 87.5% that is largely due to improvements in our Beijing property Gateway Plaza, where the occupancy now stands at just over 90%. It was in the mid-80s, one year ago. Shanghai still remains a challenging market, both because of the economic headwinds as well as the amount of supply which is coming on stream, even within the sub market where Sandhill Plaza remains.

So, Sandhill now running at about low 80 in terms of occupancies and there is, it doesn't seem that we will be able to increase occupies from the paternity over the next few months. Japan now running at about 98% occupancy. However, we do have a master lease that is expiring on 31st of March. With that expiry, the commit occupancy will drop to 93.8%. Korea remains a strong market for us.

TPG maintains a very high occupancy of 99.1%. Looking at rental reversions, rental reversions are positive for the Singapore properties. MPC views and other Singapore all recorded positive rental reversions. You see that view are rental reversion is 14%, which improve over the last few years for sure. Festival work in China remains challenging for us.

Festival work still dealing with some leases which perform the pre-disturbance period and those have reverted downwards in the current period. China, it is a strange set of numbers and Gateway Plaza actually has slightly more negative rental reversion, and that's actually driven by more new tenants at the building where you generally have give a slightly lower rental as they generally have to incur CapEx and movement costs and moving costs. Sandhill Plaza direct to reversion, which is only very slightly negative is largely due to renewal tenants that have actually been very few new tenants at the building over the last one year. Japan is very slightly negative and Korea continues to show very positive numbers. But client profile remains very stable about 2.4 years for the portfolio, 2.1 years for retail, and 2.7 years for Business Park.

I'll try to give a little bit more. Sorry about that. Try to give a little bit more color on the performance of the office and BP assets across all different markets. So, for Singapore, occupancy continue to remain strong. However, that there are very few large space takers.

Gone are the days that you could expect 80,000, 100,000, 200,000 square feet tenant. The vast majority of our leasing deals are actually under 10,000 square feet. We do have a small number of 20,000, 30,000 square feet tenants which have came through at MBC. That's the one or two tenants that I mentioned. Pieces will be starting in the next quarter or so.

Tenant retention remains strong, largely due to the fact that tenants are reluctant to spend CapEx. Hence, they are a lot easier to retain tenants than finding tenants. Whether reversions line measure remains strong across the board. China, looking at the performance of our assets against the peers in the market, which especially for Gateway has as done well against the market, whereas occupancy across 90%, which is better than most of the other properties within the sub-market, as well as throughout the greater Beijing area. Sandhill Plaza is running a low 80% occupancy.

And that's powerful cost for nearly all of the assets in the central area. Vendor retention means very good, but that bear in mind that most of this is actually driven by central [indiscernible] Sandhill Plaza. Gateway rather than a new plaza. Rental reversion red flag is minus 2.7. Japan is a mixed market for us.

Half our assets are doing reasonably well, retaining very fairly high occupies, the three cheaper assets. Like I mentioned earlier, we have expiry of the masterpiece at MVP and that is expected to have a forward reduction of the comp occupancy to 94%. Well, Korea or one of our smaller assets remains continuous to perform well as the market dynamics in the dynamic area are fairly positive for office logs. Let me hand over to Leong Wee, who will run through the retail assets. Wee

Leong Koh: Thanks Li Yean.

Good morning everybody. This [indiscernible] move on the Slide 28. I think this is the snapshot of the performance of [indiscernible] assets in impact and [indiscernible] I think actually shared actually both I dealing leader in the very local markets condition. Far you look at VivoCity and festival, they have committed high occupancy VivoCity and close to 100% interest rate at 99.7%. Tenant retention rates are still pretty high in VivoCity 82.2, whereas festival is at the 63.2.

But I think, as we have also said previously, adding this, we exclude a short-term retention. If we include a short-term retention, short term lease, the retention rate would be 84.4% in the festival work. VivoCity it's actually achieving very strong outstanding 14%. Whereas over in festival work we see a narrowing negative gap if we recall the last few years was minus 20%, then last was minus 12%. This year we see minus 8.7%.

And as what low has alluded earlier, a huge part of this minus 8.7% is due to pre-COVID leases that has been signed, that renew and to date. There's still about 68% of the leases. There's still in pre-COVID recess and we'll continue to see some of these negative rental recess mix years. But you'll knowing [indiscernible]. Moving on to Slide 29, it's a detailed Charting New Heights in Tenant Sales.

Again, I think we are pleased to announce that actually has, again, chief record a year in terms of tenant sales of almost S$1.1 billion. This is the second consecutive year for the VivoCity to achieve these 1 billion tenants, which is represent 2.6% year on year. And you look at the quarter, first quarter sales came in very strongly at a 6.5% growth year on year. And on the other hand, shop traffic has still been increasing tremendously well and 10% year on year. For previous [indiscernible] we see this set of results compared to other Singapore listed assets and this compared to Singapore with 10 market as a whole, you can see actually we actually outperform all these other benchmarks.

So, I think, it's actually done very well for the full year 2.54. Moving on Slide 30, I think, as this is coming to the full year, you also summarized some of the AIs that you've done over the year. On the left, I think, the team, the analyst for me are very familiar. These are two we have actually successfully executed in the last year. First is what we call the [indiscernible] AEI.

What we did was we actually background the space from the space from -- and actually we created a new cluster with the cosmetics and F&B, right. They actually generated more than 20% ROI for us. On the right side, you have this, what we call internally the OCN plus because previously there was a few tenants which is the projected -- OC and Northern Steel. These are huge large spaces for F&B. What we did was actually took out the space and we subdivide optimized the retail space into like three to four F&B.

By doing that we also improved the F&B offerings in VivoCity which we think is a very important component for our sharpest F&B. Today this area has been successfully executed as well and then it is now a very vibrant corner of the VivoCity. It has delivered more than 20% ROI for us. Moving on, I think I'll just quickly go through, I think these are the sort of the new tenants that has been introduced to this in the last quarter. That's Mexican food, there's coffee and also ice cream.

I think most recently which is not just in the past, which is actually attracting a lot of attention from the media. It's a sixth house for Okinawa in Japan has recently opened in U.S. and attracting a lot of media attention being the first store in Singapore. I think just quickly jump over the next few slides, I think these are large markdown event that the -- has been released. These are our unique flagship events like the Chinese New Year.

I think recently we also have this collaboration with Kung Fu Panda 4 and we actually duplicated this picture of Panda over the city, very instrumental moments for our shoppers. Moving on to the festival walk. I think the environment in Hong Kong is slightly more challenging. I think you probably read a lot of news about Hong Kongers moving to short break. And then these bought a talent over the last quarter, where there is the Easter Friday, the last weekend.

A lot of people actually move to travel up north to Central for shopping. But I must say that, despite that, I think the mall has done pretty well. They have actually created very unique Hong Kong activities to actually retain some cost. I think there are still some shoppers to a bit lower amount, but there are still people coming to solve this unique Attract and Captivate that the vessel has been organizing. On the fact that before looking at the tenancies, I think despite a very challenging operating environment in Hong Kong, I think we are glad to say that, actually this quarter has kind of stabilized sales compared to year-on-year.

If you look at the chart on the right, you can see that, it's quite apparent in the fourth quarter there is a minus 10% drop for the fourth quarter year-on-year. And then this I got to do also want this for long-term where there is a lot of this hype in moving to center. In the shopping traffic again, I think again a very challenging environment. I think the shopping traffic has kind of stabilized at 6% year-on-year. That again if we bring our attention to the last quarter, there's indeed some job compared to the last year from 8.4% related to 7.2%, which is minus 14%.

We are continuing to monitoring, I think to see whether the loan is still weak and it's a one-off incident. I think on the team, we are continuously to come up with very creative and unique market entities to attract shoppers. Moving on to the next few slides, I think these are some of the core activities that the team has done including our flagship Chinese, Syria event. And then we also, like I mentioned, we actually organized this [Indiscernible], which I heard is a very famous anime series, right? And then this first product store in the fest in Hong Kong, in Hong festival, and was even managed to attract along a big across, despite them moving through centers for their long, super long shopping still coming through. That's why I can show from the [Indiscernible].

Then moving on, I think this also, I think what we believe is really we need to create all these experiences for the shoppers. So, these events will be one of them. Moving on to the next slide. I think cookie run to the tenant. I think, yes, you should select this MBC BMW, TaSTe, so maybe our updates on this as you along, I think, case expires in July ‘24.

We are in a negotiation. Is that based on the final legal documentation then moving to Seiko as the master lease is going to end in June 2024. To gain about 25% of day, we are still actively marketing the rest of the building. HP is in 2030, so it's not a use right now. Is not NTT I think we learned also mentioned earlier, NTT market living is expired March ‘24.

So just give a bit of color, NTT today actually occupies roughly about 50% of the building, NTT. About one quarter of the lease has decided to leave as the remaining three quarters has decided to stay, so I think we also mentioned earlier that, the occupancy of Japan, we will move to from 97% to 93% following the NTT expiry. Arab, we have also renewed, we previously, we have actually renewed 2030, so that's all.

Operator: [Operator Instructions]. First, we have Terence for JP Morgan.

Terence Khi : Could I ask on this revised strategy given that you're looking at the revised strategy how does it affect your asset recycling plan? How are you to bundle asset on divestment?
Sharon Lim : Thanks, Terence for your question. It is far and parcel of our three forms when we look at how we manage our asset. Number one, is definitely looking at operational, second, when you looking at capital management or constitutional portfolio, that has to be reviewed every year and a very serious review every five years. In terms of recycling, as I previously mentioned, anything that is not core, which is people and NBC, if it makes sense for the unit holders, I think we would definitely consider whether in relation to book, in relation to the impact on the balance sheet, in relation to the impact on the DPU, we are very, we will be open. I think we will take a very disciplined approach.

If the market is right, offer is right, and it is not the two core assets, we are definitely will definitely consider. The other issue that we are very mindful of is it Singapore will continue to be poor. It will unlikely come to a point where we're going to swing our asset constitution, where Singapore will only be a very, very small amount. Singapore will still be caught. We will not touch NBC and diversity.

Reason being, they have, in our view, very long-term longevity in terms of sustainable numbers. And we see the asset being able to sell to or good long period. I think we are committed. If it's right, we will do it. And when the deal is done or whatever relevant announcement will be done.

Janica Tan: just to echo on, this that we have taken out this quarter, it's not new, nothing is new. We are just emphasizing that we are focusing on this now and this is our priority.

Sharon Lim: I think that's a lot of people -- we have got a bit of feedback saying that our balance sheet, our gearing is high. I think we have always said that we are not that concerned with our work during at 40 point something. Number one, liquidity of refinancing is there.

Second valuation is not stretched to the point where it, it will break and, not being able to withstand any major shape. If you look at diversity in terms of its growth over a period of time and how the valuation has grown over the period of time, you know that the valuers are not stretched diversity valuation, a release of a couple of millions to bring down a during, I think that is -- during this level, we are comfortable. But I hear people saying that, I prefer you to show a three-handle as opposed to a full handle. We take notice of that, and we will con you'll definitely do something about it.

Terence Khi: And in terms of, since you did mention, first of all what -- I wanted to ask on the valuation for festival, what that actually very, very resilient, but on the back of, these negative reversions, is there that valuations could dip further? And could you share a little bit more on the like, how the extent of negative reversions this year and the lease renewal for TaSTe supermarket? Are they giving up space and what extent of the relationship expect from that?

Sharon Lim: Okay.

Valuation for festival work has been pretty much stable. I think the effects is majority, FX issue translation. The other thing is, other revenue has gone up significantly. The valuers do their typical thing, which is taking in all the committed and locked in pieces. Those are typical whatever that we sign, the values they get in other revenues, they see growth, they put it in.

I think there's nothing surprising about how the valuation has come about, but the cap rate has remained the same. I think if you are alluding to why cap rate has not changed, I think across Hong Kong, the cap rate has not changed. The valuation of our assets are very similar to those that is of similar class. The next thing is you're asking about TaSTe. The market is key to us.

They are a basement. We are more than happy if we can realign them to digital space a bit, but definitely we are very comfortable in the sizing. There is some space constraint at basement, in a way where if you say you want to make them two times, no, we are not a hypermarket. Just remember that flexible wall positioning is slightly one notch higher than VivoCity. The difference is 600,000 mall versus a 1 million square feet net lettable area.

The relevance of a supermarket at 31,000 versus the requirement for a higher one at a hypermarket is different, because of the size and because of our positioning. What we have in flexible wall is definitely very relevant, no need to downsize them. If you downsize them, it will not be effective at the supermarket. What I meant was, maybe just layout the position of where they are in the basement a little bit better that could be considered over the next few months.

Terence Khi: Thanks.

These short-term leases, should we be concerned on the short-term leases and on reversion? How should we look at reversion for festival season this year?

Sharon Lim: Reversion itself, I think you exceeded narrowing from 30 over to 30 over to minus 10. Now it's what minus single-digit and I think we are endeavoring to close the gap as much as possible. Even all these indicators, when you see that negative, you look at the MPI, you look at the MPI quarter-to-quarter, a reversion is not all the asset, that's one. The MPI itself is a combination of other things. If you seriously look at NPI, it has not decelerated as bad as what people are envisaged to be.

There is a lot of noise around Hong Kongers going away to -- Then a lot of noise about whether that will be the end of Hong Kong retail. I think we remain a little bit more optimistic than that. Our mall is actually in a way servicing the local. The other thing is, it could be a potential of a novelty effect and also a forward effect. If there is no forward effect, will you travel just to buy something, will you travel just to spend, is unlikely.

Back to this, first of all what reversion for over the year, minus 30, minus 20, minus 10, now single-digit, we are hoping to close the gap. But if you take a good stay at MPI over the period, it is not the same magnitude because other revenues have ramped up.

Terence Khi: Okay. Thanks. That's all I have for now.

Operator: Thank you, Terence. Next, we have Rachel from DBS. Rachel, please.

Rachel Tan: [indiscernible]

Sharon Lim: I need to articulate the valuers and numbers.

Rachel Tan: Maybe just a quick question from me.

I think firstly, would you give us an update on your new -- and Google back ceiling and what's the reversion that you're expecting with the back ceiling and is BNP taking out the Unilever or the Google space?
Unidentified

Company Representative: Rachel, of course, the Unilever space is currently about 60/40 ish to close to 50% and up we are in negotiations with a few other guys who most likely should be able to start their leases within the next half year. The comparison, again, you deliver these reversions are actually quite okay because you deliver lease for the expired rentals will actually sub S$6. So that's definitely positive for any tenant that comes in the pick spaces there. Those spaces currently we're still marketing the space. Like I mentioned earlier, there is actually a lack of large space and I think of large spaces.

We're still working on one or two prospects, but I think is still some time away before we can make any commitments. Google Lease was at market, so any lease that we signed on that site will probably see flat rental revision.

Rachel Tan: Okay, thanks. Then next question is on Festival Walk. I think some NPI has been less stable, but in fourth quarter seems they trend down a little bit.

I'm just wondering is one off quarter or do you expect this kind of tenant sales level moving forward?
Janica Tan : No. I think, I hope to believe that it is a one of quarter, as you can see from quarter one, quarter two, quarter three is actually -- there is positive. What is a little bit of putting us off track was 4Q number. I think that is a general number that is also reflection of other most in Hong Kong. The 4Q was a little bit unexpected.

But in terms of Q1, Q2, Q3, I think they started the year well then it dwindled right at the end of this quarter. So, I think this central Hong Kong phenomenon, I think each time to see how it's settled. It's definitely a trend that we have to deal with, but whether the magnitude of the impact of it having our Hong Kong retail sales today is a long stay and at the same impact or could be [Indiscernible]. I like to believe that the there's a little bit of novelty. There's also a little bit of Forex, let me, Forex plays a very big role in this trend.

Rachel Tan: Could you give the [Indiscernible] the GTO percentage for [Indiscernible]?
Janica Tan : GTO Rent, you mean?

Rachel Tan: Yes. Janica Tan : You just give me a second. I'll come back to you. Chow

Mun Leong: And then also, adding on to the earlier question on the fourth quarter was the one off, right? I think, uh, if you also look at the shopper traffic, I think the fourth quarter there was is normally it was a big drop. I think the team, we have also been monitoring these shopper traffic very closely on a weekly basis.

So, I think so far it seems to be okay. So, it's something I can share with you to be comfort. So, I think on the GTO rental rate…

Janica Tan: GTO is about for this current financial is about 2% of festival work. If you translate that into MPACT whole portfolio, including VivoCity is less than 2%.

Sharon Lim: Your question is about 2% of festival revenue.

The all leases are predominantly with fixed and send available rent. The available rent is actually not a very huge component, but it is always an indication of the sales that the shop so that we have a better sense of the trending at individual shop. But in terms of the percentage, it has never been big. I think even for Vivo it is always been the single digit maybe about three 4% for the longest time.

Rachel Tan: Just one last question on interest rates, what you expected for FY 2024 and in terms of with the delay in interest rate cuts.

Are you seeing buying interest, buying assets dingling or is it you are still able to find buyers of it?

Sharon Lim: I think if we have to segregate in terms of countries. Definitely interest level, foreign interest level or any interest level in China is a little bit new today. I think I've been seeing it for maybe a quarter two. In terms of the farm markets we in, I think if you talk about Hong Kong and our Hong Kong asset is because it's one big ticket item, the item is relatively heavy as a single asset. The investor interest, I think they will be a little bit more limited.

Now, let's look at the more positive months Korea, parts of Japan and definitely Singapore. Like I said, if the interest level remains elevated, definitely there will be a total return concern of potential bias. But if the investors are looking at the combination of reversion potential even look at the currency, that's how they typically make sense in terms of whether they buy an asset in a certain country. Yes, will they have a more negative impact? Yes, but I don't think that all our certain of our office in Singapore is definitely still there will be still people looking at it.

Rachel Tan: Okay.

And also, if you are asking for guidance for the interest rate for this FY ‘24 ‘25, the rates have been very, very volatile, but maybe based on this rate is maybe another -- and what we have now?

Sharon Lim: Because there's still legacy interest rates swap and unfortunately Japanese interest rate is going up and we do have some Japanese Yen for refinancing this year.

Janica Tan: I don't think any of the risks have gotten out the elevated interest. It will be -- maybe, probably along for at least a year or two before we leave. If there is a reprieve even at the end of the year, then you will see bit by bit the interest rate line improving over time. Right now, I think we have good hedges.

We also, in between the interest rate high also entered into so-called better rates today, but we will still have to backfill all those that is dropping off. I think we remain optimistic that today's interest rate environment is already at a very elevated level. We are not saying that it will go back to the good old times, but I think there should be some decrease closer to the year end of the year. That's what most of the consensus are think.

Operator: Thank you, Rachel.

Next you have Brandon Lee from Citi. Brandon Lee : Can you hear me?

Sharon Lim: Yes. Loud and clear. Brandon Lee : Okay. Great.

I just want to have a question on your China cap rates. Notice that you changed from gross to net. Can you give us a year on year change on a net basis?
Unidentified

Company Representative: Ben, that's not really an easy number to talk about, simply because we changed valuers last year to this year. I think the message we're going to bring across is that, we communicated the valuers on their cap rate trends. The understanding is that, over the years they haven't moved the cap rates.

Brandon Lee: Okay. But just on a forward basis, based on what you are seeing on the ground, do you think that this 1% to 3% decline FY '24 is sufficient?
Unidentified

Company Representative: This decline has already taken in the operational performance of the assets, so any reductions in rentals as well as a slightly elevated occupancy number. I think the key things driving the valuation for the China assets actually is the stability at Gateway Plaza. Bear in mind, Gateway Plaza is slightly more than two-thirds of our China portfolio and half of that is really anchored by BMW on a very long lease at very reasonable rentals. That helps to provide stability to the operating numbers as well as the valuations.

Brandon Lee: Got it. Just going back to Korea. Given that your sponsor owns 50% of the asset, do you need their approval to divest it?

Sharon Lim: No, no. I think the issue is a bit removed. The asset is not like humongous.

If any buyers were to come, why would they want to buy 50%. I think we are aligned in terms of our investment goals and also investment time horizon. For us, we the answer to your question straight is no, we don't need our approval. But the reality is, we even go out of market for 50%, the asset is at S$200 million on one share. it's not logical for any buyers to look at 50%.

Brandon Lee: Okay. Just one last question. I know you're gearing is still at 40.5%, but what's the optimal level now? Would you be open to just do a bit of share buyback to show the market how undervalued your shares are?

Sharon Lim: I think few things. Let me re take this away again. I don't think there should be any nervousness around our gearing.

I've always remained comfortable in our gearing. It's just that you are asking me, you're keep saying you are not comfortable. I hear you. But if you just, like I mentioned before, just look at our valuation, just take a bigger set, just take example of VivoCity and you'll see that how much is it per square foot and running you at 5%, is there any more room for valuation increases? I will tell you confidently, there is that. I'm asking the valuers if you look at this and this and this, it doesn't make sense.

But anyway, for us, we are not a company that we look at stretching the valuations and a pure NUV team. I think they're more focused on the GPU. That one aside. Now share buyback. Share buyback is not a strategy.

I mean, if we have a lot -- if we have the capacity and the cash, why not? Why not buy my own stock in the short term? But it's not a long-term strategy. It is always just to me, long term is always looking at real estate, building the bottom line, complimentary real estate as opposed to marking around with your own stuff. I think that is the message. But are we willing to do it? I would say that you either the capacity why not on a short-term. It is never a long-term or would I even call it a strategy.

Brandon Lee: Maybe, is it correct to say that you may include it as part of your resolution for the upcoming AGM?
Sharon Lim : Yes. Okay. I think it's just yes, why not. It's good to have that, no issue.

Operator: Thank you, Brandon.

Tan Xuan from Goldman. Tan Xuan : My first question is on, going into FY ‘25, right at the lease expiry, can you give some sense on portfolio reversion and also occupancy?

Sharon Lim: Sorry, if I may, repeat a question. You are asking about looking forward to the upcoming FY, how are we thinking about occupancy and reversion, right?
Tan Xuan : Yes.

Sharon Lim: Maybe I give you a very, very broad stroke. Occupancy in certain markets is absolutely key like China.

Our internal aim is at least to beat occupancy in our comparable properties. We are done. Today, although the number is -- although occupancy is at one is 90, one is 80 plus, it is still a very respectable number when compared to neighboring properties of similar quality. So, for that market is very clear. Maintain your occupancy, you lose one tenant.

Your downtime to replace will cost you more as opposed to having hanging onto your tenant. Then let's go to the next one. Singapore. Singapore, I think, whether it is a retail, we are still driving it ahead. And your sales is good.

There's still a queue. We are pushing the boundaries in terms of doing more asset enhancement. That may not show any reversion that will show up as the ROI. So, like what you see before city plus 14, it is, this is just renewable over on top of that. We also have done as an enhancement, we do not mix the two and double count.

So that is why VivoCity has actually more an additional front, which is more the asset enhancement over the year that we have done conversion to improve the past ran to the current incremental revenue. Then it comes to what is our focus? The entire market is not the best-looking market. But I would say that our assets have been relatively stable for the whole entire year. When we look seriously into our FY, Singapore, yes, done better, it more than offset the utility utilities 8 up 10 over a million dollars. But even though that the $10 million for even away by utility alone, the asset was to cover all things being equal.

The higher revenue of Singapore has more than offsets the down. Whether you hear in China or the little bit that you hear in Festival Walk, festival is pretty much flatish for the year. In terms of MPI, I think we are relatively stable. Are we out the woods? I would say China will take a bit of time. Focus has always been on occupancy and I think the team has done tremendously well in comparison to the market, especially with the renewal of BMW.

I think BMW is very, very key and BMW has derisked the assets by a tremendous, like I would say 80%.

Janica Tan: Occupancy for troubled market push all the way for rentals up and on for the rest of the market.

Tan Xuan: Can I ask a bit more about Festival Walk, right? Looking at your FY ‘24 reversion, what's the split between pre-pro visas and post-test visa that would be new in terms of reversion?
Unidentified

Company Representative: If we actually -- I think what we can share with you is that, we exclude the pre-COVID research -- the removing is actually a positive one, right? It's about a single digit positive rental. And then I think, of course, we see a varying range of reversion. The SMB we see a bit of a double-digit reversion there of the rest we see a bit smaller.

But to remind you again, that is only for the list that expiring for the year. It's not for the entire -- Probably hope if you inside. So, if you exclude the pre-lease remaining vendor is a positive single digit number.

Tan Xuan: Do you expect festival, what reversion become positive makes financial?
Unidentified

Company Representative: I mentioned there are still about 6% to 8% of the lease that's pre-COVID. They were happening in the -- flushing out in the next year.

We have to have to monitor [indiscernible] definitely the gap will narrow. We also hope positive, but we'll be and see. Because it's now actually -- it's only beginning of the year, so a lot of the leads are they still negotiation. It's where because us to come in right now.

Operator: And, Joy.

Joy Wang: Good morning. I just have one question, in terms of retail sales in Singapore, we've had quite a bit of incoming visitors’ sort of in first quarter. Do you see your far sort of tourism sales trending up? And can we get some sense?

Janica Tan: Actually, we are way surpass -- surpass COVID levels year on year, quarter on quarter. I do not pay attention that much anymore. Year on year, quarter on quarter is still flying.

Joy Wang: Tourism has anything that has got a tourism element, if you say that any positive from tourism, people, cities tend to a little bit enjoy it by virtue of it being near RWS and those you name it. There is, -- I won't be able to prove to you the amount, but when we look at our sales trending, it is quite difficult for over the last few years it's been tracking the inbound trending of the tourists. Unidentified

Company Representative: Yes, maybe John, I can also give you another perspective. If you look at the fourth quarter, some of the key contributors to the sales, actually largely contributed from the SMB. This is a combination of same-store increase and also new tenants increase.

You recall right, I think we have a lot of new F&B in the so called -- cluster and then we also have more F&B at this hosting cluster. All these new F&B customers has actually proven that, this delivered strategy of improving the F&B has been a good decision. On a same-store basis we're also seeing that some existing F&B are recording very high increases as well. I think in short, I think F&B is one of the key contributors in fourth quarter sales increase. Of course, I hope that will give you some insight.

Joy Wang: Yes.

Sharon Lim: I think back to your question on whether we are linked to tourism, definitely a little bit, but majority is still local. It's definitely trending in terms of sales to inbound tourism.

Joy Wang: Just on tourism, do you notice any change in shopping patterns, meaning more F&B entertainment focus rather than sort of just purchase of commodities?

Sharon Lim: I think what we noticed is, there's a lot more interest in the Chinese players trying to come into Singapore market. But you talk about case wise, if you look at all our F&B, I think now we have even a deeper mix of variety of the Japanese or the Chinese.

Overtime, I think Singapore love Japanese food. Now it's a little bit expanding towards Chinese food. You are talking about the -- you're talking about the Changpus and whatever you need. It's a little bit expanding towards the direction. On the leasing front, definitely, there's more interest from Chinese players trying to come in more into the Singapore market.

Joy Wang: Do they pay a higher rent?

Sharon Lim: Do they pay a higher rent? They're very smart people. You know? They know the market, right? But, anyway, they are not coming in for -- they know Singapore is definitely not a cheap market. They know what our typical market rents. A lot of more F&Bs are trying to come into Singapore. The fashion line, not the high end, we are talking about the mid-ish and fashion lines are also trying to come into Singapore.

F&B is a little bit more than, what we have experienced a couple, let's say, in two years or three years ago, definitely more. Unidentified

Company Representative: Maybe adding on to that. If you look at some of the most recent addition, like Tim Hortons and just want to make sure about how you like foreign SMB chose VivoCity as their first stock in Singapore. We also share a few, how they view VivoCity and as to you probably can get that book of vendor that we're willing to pay for the first point in Singapore.

Joy Wang: Okay.

Cool. Got it. Thank you.

Sharon Lim: I think Vivo has grown over the years organically and also on the real estate side, which is the asset enhancement. Year-on-year, we will continue to do something.

We are planning further, and I think by end of the year, we should start another piece. I think if you notice we have touched, corner A, corner B, corner C. So whichever corner you see that we are not touched, we will continue to do so and we will restart the cycle of different corners. So, I think that we have been very actively extracting value, but we are not just purely squeezing tenants for their rental. We're actually the adding space, subdividing space, really configuring the space and not just squeezing tenant’s rental.

We are actually adding more space and rationalizing the [Indiscernible] because like we changed some car, then we got the GSA from the library and stopped it to retail GSA, I think those are the things that we have done well over the years. So, if the music going to stop for people, I doubt it. I think in our horizon from the next three to five years, actually we have planned already for five years continuously there will be enhancement work. There will not be one day of breathing of stopping on the asset. We find that we have to continuously build the gap and to widen the gap to competition.

So, I think we done well. So, we'll continue to do what we have done.

Operator: We still have a few raise hands. The next one on the list is Derek from DBS. Derek Tan : Just two questions.

I just wanted, just circle back to festival walk, I mean, know the operating environment has changed only for Hong Kong, but also there's also competition. So, I'm just wondering whether, should we think about bigger kind of remix, 10 remixes festival work or is that in the plans or what your thoughts are?
Sharon Lim : I think that the current competition is something that we can compete with. Even down to, I think even though what I see in TaSTe today, I think it's something that we can take on. The positioning of the nearest mall. The new model is nearest to us is more suburban, definitely a very different crop.

That I think we are confident to be able to take on. Now, do we need to reposition? Retail is perpetually every two, three years. You switch a bit here, you switch a bit there. It's never constantly at -- remember how we first dealt with fashion, then came at leisure, then came a little bit more entertainment and came big on SMB. And if I take you 20 years ago, you will be big on department store for stability and big chunks of spaces and single rent all has changed.

So, I'm saying that we cannot stay put for retail. We always have to change specific to festival work. Very clear. They're very similar trend profiling in terms of Vivo and festival except festival is about half to not higher in terms of the brand positioning, they have ethnicity we don't have. Okay, just give you an example.

We don't have, so what I'm trying to say is they're same thing but slightly different. They have to a one notch higher in terms of positioning. Now, over the last few years, what has been building that we any months will have to deal with? Number one, fast moving session was last five years. Had to deal with fast moving fashion was definitely taken away by a lot more of the online non-brand buy control type of goods. That's what I not to be, but I mean like not luxury.

Second, came at leisure, which was a very, very good trend that everybody would, we wrote on it about maybe four to five years ago we started going big on it, because people wear exercise wear the home, casual, and sometimes half of their office outfit is actually exercise wear. Sneakers, you never knew that sneakers was allowed in the office. You take after job 10 years ago were you able to wear sneakers to the office. I think your boss will kick you out the room but right now, because needs to be quite an okay thing. So, what I'm trying to say is we, it's not just -- everybody got to adapt [indiscernible] the type of food, the quantum of health consciousness, what goes in, how much info is provided to the consumer is also changing.

I think it is not just a festival work issue. It is a typical business of running and retail. You just have to change every time. You don't change the whole more. I think a whole more is still relevant.

I'm talking about pockets here, pockets there that you improve over time, as opposed to changing big chunks. Maybe the big chunk that you have to think about is always the anchor spaces, whether the hypermarket makes sense. Whether a big cinema makes sense in today. Those, I think will be more significant, and whether a department store makes sense. I think we have gone through a department store phase in the -- Where a department store is far, I feel now for it to make sense to take expensive real estate at cheap PSF and consignment out.

That trend, I think the landlords have handled it well. You can see that department stores are taking big spaces in the mall. They rather go direct to the tenant and the tenants have their own shop and offset in the mall at opposed to running a low rental big space with the landlord and with the department store. And the department store. Back to your question, [indiscernible] What I like is, I think SMB seems for the last few years why people go to a mall is a little bit more great.

They like to be entertain, they eat and by the way they shop. So, I think the placement, the motivation of going to a mall has shifted over the last 30 years. That last time you say, let's go shopping. There's no such thing as, let's go shopping. It's for let's go have a meal, or let's meet up something.

Then by the way, it must be conducive enough for you to be able to extract money out the water. Food must be a draw. A couple of their key anchor must be a draw, and entertainment related experiential definitely will be a draw. Quite clearly, you see like our ice stream. Ice stream is from day one, I would ask myself, is ice stream in Hong Kong really sustainable, is it make justified it space as a retail user on a perspective basis of land use? We thought true.

We calculated and recalculated and calculated. We said yes, it's a repeat visit. People like that experience is a differentiator. Our ice stream is one of the, I think top two politics so they can take competitions and all. What I'm saying is, you need a combination of people purpose and motivation to draw family back over and over again.

It changes over time and it means that, our business is not easy to run. Like I said, my life is very difficult. My team is not easy running the ball. Every year, they have to come up and think of something. But this year, you just look at the amount of Malcolm events and the part of Malcolm events that Festival Walk has thrown out, this year versus the last 10 years is a world of difference.

It may be muted by the general market mechanism sentiment, but the effort and the focus and the thinking behind the way the mall is marketed and the activities that they bring in, the intensity is at least 5 times. We were very clear that, the market is rough. The only two things you can do, bring the people in. that's where the Malcolm team really stepped up again in terms of bringing up the assets.

Derek Tan: Got it.

Just a quick follow-up. I'm just curious about in Singapore. I mean, people are doing so well. How about training center? Have you started any? I know you are a fan [indiscernible].

Sharon Lim: Okay.

I think it remains a possibility, but it doesn't mean that, we haven't had serious conversation. I think there's still some time away. You see the Perry terminal still there, right? You see the building still there, right? I don't think anybody wants to listen to me right now.

Derek Tan: Okay. That's all for me.

Thank you.

Operator: Thank you, Gary. Next, Yew Kiang from CLSA. Wong

Yew Kiang: Yes. Finally, my turn.

Hi, Sharon. I just want to follow-up on questions I think which has been asked, but I just want more details. For your Korea asset, when I look at the per square foot versus some of your peers’ assets, it seems much lower. I think you’re on a per square foot basis is lower. If there are market transactions at much higher than your, it would incentivize you to focus on divestment in this market, in the Korea for your Korea exposure.

Is that a fair statement?

Sharon Lim: [indiscernible]. I think we if you say are we undervalued, are we overvalued, no. I think in the market, yes. I'm not sure which asset you're comparing the asset to. Unidentified

Company Representative: Maybe let me add here, I think there are few recent transactions in Ghana which I see 14 million per square foot, right.

But those if you look at the net leases, those are actually along the main Ghana Street, which are a good frontage. Some of those three things in terms of location. They are slightly better than our location. I think our valuation today is a fair valuation. Wong

Yew Kiang: Okay.

And then, my second question it's on Festival Walk. What the 33,000 square feet expiry for ‘24 and ‘25 beyond. That the entire amount is the 6% to 8% of leases signed in pre-COVID. Is that fair? So, which means after ‘25, assuming the market stabilizes, you should see positive diversions for festival work?
Wee

Leong Koh: So, sorry, I didn't quite get the question, but let me try. So, yes, but if I get your question, so actually right now.

Wong

Yew Kiang: I can rephrase again, 6% to 8% of leases, right, sign in, still have remaining 6% to 8% of leases signed in pre-COVID, and this is likely to be flush out entirely in FY ‘24/25. So that means going beyond that, it should be positive reversions, really, is that a fair statement? Because you also mentioned that right now, the 8.7 negative reversions for those lease that are signed, not the exclusive people release, you are still doing single digit?
Sharon Lim : I think anything beyond the year, because some noises in terms of 4Q in Hong Kong, I think, we will be less comfortable to make a statement, because when the tenant two years later, the reversion and whether people will renew will be very highly dependent on this year sales. Wong

Yew Kiang: But you paying so much market enrollment and [Indiscernible]. Sharon Lim : Yes. Every shop we go.

I said that I think, we have been there before. We are fighting off corners. We are experiencing not a festival work issue, it's a Hong Kong issue. I think that's not Hong Kong regulated format retail. I'm not talking about other forms of retail.

So why I'm not so committed to talk about in two to three years’ time. I mean, if we do textbook, I will tell you definitely we'll try to get there, right. But that's the reality is whether, how would the sentiments and the sales pan out this year is more important in determining why the rental reversion will lie the year after. But if everything continues that it is, it will not be as big now.

Operator: Thank you, Yew Kiang.

Jonathan. Jonathan Koh : Good morning, and encouraging to see you on your increase in DPU. Two short questions. Just firstly on Korea, retention is low at 17, but you have very strong rental reversion at 39. Agree that it's a strong market.

Could you give us some color on why this unique mix of number and then secondly on the leverage of 40%, you are comfortable with that, would you consider script dividend to gradually lower the leverage? And how do you see the, you have not used script dividend before you opened? Do you find -- how are you open to using script dividend or is there some disadvantage that you are that stop you from doing that?

Sharon Lim: I think, if you look at how much is your di per quarter and all, I mean, if you can gradually, like I think fundamentally if you're not uncomfortable, you giving her. Then the second part is [indiscernible] impact. Then if you look at how much is our total debt versus how much is our quarterly distribution is a bit slower. It's a bit slow. I would say, we do not go out, but we do not have the intention at the moment.

Jonathan Koh: A bit cautious about the dilution. Sharon Lim : No, I think that if you want to -- it's not a matter of cautious of dilution. How much is a distribution per quarter versus our debt? How many percentage points can you move zero point? I don’t know.

Janica Tan: I think is no know -- about 50% of us. It really depends on the take rate.

Not the cost is a fixed cost, but the take rate is uncertain. Sharon Lim : Then the dividend -- if you are talking about DRP, I think long ago, MCT, we already took the p for good reasons. When we look at rate and we look at the cost of doing so, it's easier that I go to a banker and say, basic minutes for me for cheaper. I remember doing the analysis myself called banker. If I need money, S$50 million raise for me, it'll be cheaper than me doing the DRP very cheaper.

Unidentified

Company Representative: On the question on the TPG, I think this retention rate. You should look at it together with occupancy rate. What happened last year was there was a few tenants who left us for various reason. I think one particular tenant, they rented the space because of a specific project, which the project has ended. They no longer need the space and that's why they move out.

The other tenant move out was because the renter was simply too high for them. As you know, that the reverse, because right now what we are facing in [indiscernible] is a shortage of space and then a strong demand. So, another tenant ally last because they can't afford the high rent. But you look at it together with our commit occupancy, today a TPG is 99.1%, which is pretty high. I think we should look at both numbers together, but that's crucial if you the details on why we have low retention rate, one because project has ended, the other one because they cannot offer the rent.

That's why they move up.

Jonathan Koh: The rental version 39 looks extremely high. Sharon Lim : Like I said, no metric in the way calculated. There's a lack of supply, good interest, but I think we are coming to the -- part of it already.

Operator: Just to round out, the final question from Derek from Morgan Stanley.

Before we proceed onto the last question that has been raised by the online participant, Derek?
Derek Chang : I'll just keep my questions brief. First questions on the divestment strategy. Sharon, you mentioned it's hard for Hong Kong and China, but what about Japan, where CRE transaction volumes have been at record high and it's still pretty robust? We see, I guess, the first investment coming from Japan, and could it happen sometime this year?
Sharon Lim : Japan is 10% of our portfolio. It is literally all or nothing. Even if I pick one or two, it's not going to change anything.

I think what we intend to do is, Japan, the issue more is to deal with our Singapore assets. But just to sell one or two also doesn't change the needle. Absolutely, it is nine assets, 9%, 10%, so no impact on whatever that we do. If you ask me Hong Kong, China, ideally that should be on the top of the list, but that has to wait. I think it will come back.

It's just when.

Derek Chang: Japan is not a $1 billion as well, so that could move the needle on the portfolio as a whole collectively?

Sharon Lim: Provided you get rid, mostly out of Japan. I think Japan long haul, we still want to see.

Derek Chang: Okay. Understood.

Sharon Lim: You know what I'm saying? If I don't say, if you're talking about Huawei means to throw everything out of Japan, means I exit Japan. I don't think we are comfortable to exit Japan today.

Derek Chang: So more piecemeal divestment.

Sharon Lim: Sorry. Piecemeal, possible, rotate it, rigid some of the assets where we can.

Japan will long-term be a small piece in our entire portfolio in whichever form. But it will not be a very big portion of our portfolio. If you are ask me, because of some of the parts and minuses that we are dealing in Japan for this specific cluster of assets that we have, it will be all another issue. But long-term, I still want to be in Japan for a small portion. It will be a state.

Derek Chang: Understood. Just my last question on occupancy costs at Festival Walk and Vivo. Can you give us some color on that?

Sharon Lim: Minus or minus 20.

Derek Chang: Still plus minus 20%. Okay.

Sharon Lim: Sorry?

Derek Chang: Still 20%. Okay. Got it. Thank you.

Sharon Lim: One is plus, one is minus.

So, you get the plus.

Derek Chang: Understood. Thank you. Unidentified

Company Representative: Just quickly moving on to one question that has been raised by Jamie from Rondell Investments online. Jamie's question is what is the occupancy cost of [indiscernible] which I believe we have just answered.

The next question from Jamie is actually when should we expect the effect of pre-pandemic leases to ease in the mall? Maybe Li Yeng can just recalibrate that. Unidentified

Company Representative: Sorry again?
Unidentified

Company Representative: When should we expect the effect of pre-COVID?

Janica Tan: Yes. Like I mentioned earlier, today, we get about 6% to 8% of the pre-COVID, just on partial year. Hopefully, next year when we actually renew that, I think this minus 8% active 100% you see today. Hopefully, it will be narrowed rapidly as we move towards the next year.

Operator: I think we are we have approached the end of our full-year results briefing. Thank you so much for your questions and active participation today. Again, if you have further questions, please feel free to reach out to the Investor Relations team here. We are always there in service. Thank you again for your support and the time today.

We wish you a great day ahead. Goodbye.

Sharon Lim: Thank you.