Singapore Might 10, 2020 (Thomson StreetEvents) — Edited Transcript of Mapletree Industrial Belief earnings convention name or presentation Tuesday, April 28, 2020 at 1:30:00am GMT

Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd.

* Brandon I. Lee

BofA Merrill Lynch, Analysis Division – Head of ASEAN Actual Property Analysis and Director

Women and gents, thanks for standing by, and welcome to Fourth Quarter and FY 2019/2020 Outcomes Briefing. (Operator Directions) Please be suggested that at the moment’s convention is being recorded.

I might now like handy the convention over to your first speaker at the moment, Ms. Melissa Tan from Investor Relations. Thanks. Please go forward.

Hello, good morning, everybody. Thanks for becoming a member of us this morning. It’s a difficult interval for everyone. And we are attempting the digital convention for the primary time, so bear with us if there are any hiccups or if something is slower than ordinary.

So at the moment, now we have the administration workforce of MIT. We’ve Kuo Wei, our CEO; Lily, our CFO. We’ve Peter, the Head of Investments; Serene, the Head of Asset; and now we have Khim, who’s the Head of Advertising. And at the moment, we even have Paul, who’s the Head of Property Administration. So now we have the total workforce right here at the moment.

Allow us to start with the presentation by Kuo Wei. Kuo Wei, please.

Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [3]

Howdy, good morning, all people. I hope you may hear me loud and clear. That is the primary time we’re doing it. And hopefully, we needn’t do it so usually, and we are able to meet head to head. So what now we have despatched out final night is our monetary statements and outcomes for fourth quarter and full 12 months and likewise a presentation deck. And I will run by means of the presentation deck and description a few of the key issues to look out for. We’ve the same old 5 segments: highlights, monetary efficiency, portfolio replace, funding replace and, after all, outlook and techniques.

For key highlights, you may see that on Web page 5 for the monetary 12 months ’19/’20. We’ve, after all, seen a rise within the distributable revenue, 14.5% to $265.Three million. Yr-on-year foundation, now we have a 0.7% improve in DPU to $0.1224. And the distributable revenue has gone up 15.4% year-on-year foundation for the fourth quarter. DPU on a year-on-year foundation, you see a 7.5% discount to $0.0285. So that is, after all, due to us having withheld $6.6 million in view of the uncertainty, and we needed a bit extra flexibility in managing our money move for this present monetary 12 months.

So I believe now we have the second bullet level on the slide. If we had included the $6.6 million, which is the tax-exempt revenue we obtained from our three way partnership in North America for the fourth quarter, the DPU for monetary 12 months ’19/’20 would have been $0.1254, that is a 3.1% improve year-on-year foundation. And for the quarter, fourth quarter, the DPU can be $0.0315 or a 2.3% year-on-year improve. So this may have been a enterprise as ordinary type of final result. We do not have the higher stage of certainty within the monetary 12 months 2021.

And a few of you may need learn in our earlier launch in the midst of April, 15th of April, when now we have outlined a program, we name it the COVID-19 Help and Reduction Programme, to assist and assist our tenants, primarily the smaller tenants in our portfolio. The combination quantity that now we have put aside is $13.7 million, which can in all probability be disbursed progressively over the subsequent couple of months this 12 months.

And the subsequent level is portfolio replace. I believe occupancy has seen an enchancment from 90.9% to 91.5% for the quarter, pushed by higher leasing in a few of our new initiatives and likewise completion of latest initiatives as nicely. And the common lease expiry for the portfolio has additionally elevated 3.9 years to 4.2 years on the finish of the monetary 12 months. We did the portfolio valuation as nicely. That is, after all, required by laws. We’ve seen a rise 23.6% year-on-year to about $5.9 billion as on the finish of the monetary 12 months. In fact, an enormous a part of this improve was from the portfolio that we acquired and accomplished in November and January.

And for the capital administration half, we’re, after all, joyful to notice that every one the loans that had been due in monetary 12 months 2021 have already been refinanced within the fourth quarter. So we have no excellent so-called borrowings that we have to refinance for this subsequent 12 months.

The steadiness sheet, I believe, is comparatively wholesome. Curiosity protection ratio remains to be at a reasonably good stage of seven.7x as on the finish of the monetary 12 months.

So transferring on to the subsequent slide. That is the profile of our distribution, that is on Web page 6, the place you see a dip within the distribution per unit of $0.0285 in comparison with, say, $0.0316 within the earlier quarter and $0.0313 within the earlier quarter. However the distributable revenue, I believe, is comparatively sturdy at $69.2 million.

And occurring to the subsequent phase, speaking concerning the monetary efficiency, that is ranging from Slide Eight onwards. For the fourth quarter, year-on-year foundation, now we have seen a 3% improve in gross income. Property bills, following the same time — uptick, 2.5%. Web property revenue, we’re seeing the same development as nicely, 3.2% to $78.Three million. And should you take a look at the share of three way partnership outcomes, after all, there was a pretty big improve primarily pushed by the brand new portfolio that now we have taken on from $13.2 million within the earlier 12 months to $60.9 million this — fourth quarter for this 12 months.

So, after all, you see the online truthful worth acquire, these are extra valuation beneficial properties. In case you again all of the numbers out, the quantity accessible for distribution, you may see in direction of the underside of the web page, is 15.4% improve from $59.9 million within the fourth quarter of final 12 months to $69.2 million for the fourth quarter of the monetary 12 months that simply ended. And due to the holding again of the $6.6 million, we see the DPU being 7.5% decrease and $0.0308 within the fourth quarter within the monetary 12 months ’18/’19.

So we transfer on to the subsequent slide, web page — on Web page 9 for the total 12 months comparability. On a full 12 months foundation, after all, the expansion is just a little larger. If you examine that with the fourth quarter, we’re seeing a detailed to eight%, 7.9% improve in income from $376 million to $406 million. Property bills, now we have stored it fairly nicely beneath management; solely a 0.6% improve from $88.Three million to $87.Eight million. On account of that, the online property revenue has improved 10.5% from $287.Eight million to $318 million.

In fact, borrowing price has gone up just a little. Now MIT’s borrowing charges are pretty secure. So it is primarily because of extra borrowings for our new initiatives and has elevated by 12.2% from $40 million to $45 million for the monetary 12 months. The web truthful worth acquire, you may see down there, is actually the portfolio valuation acquire. We see a barely larger contribution from the event initiatives from $30.Eight million final 12 months. This 12 months, now we have recorded a $50.Eight million valuation acquire. In order that’s a 65% improve on a year-on-year foundation.

And transferring the figures down, placing the noncash valuation acquire figures in sight, quantity accessible for distribution, we’re seeing a 14.5% improve from $231.Eight million to $265.Three million. So on a year-on-year foundation, you see a 0.7% improve within the DPU from $0.1216 to $0.1224 for the monetary 12 months ’19/’20.

Shifting on to subsequent web page, Web page 10, the place we examine the quarter-on-quarter efficiency. Change from third quarter to fourth quarter is pretty small, is 0.8% dip in gross income from $102.6 million to $101.Eight million. However property bills, now we have seen a slight improve, 13.7% from $20.7 million to $23.5 million. That is primarily because of sure cyclical works which have been recorded within the fourth quarter and the interval simply earlier than the tip of monetary 12 months. So the online property revenue margin is just a little decrease. However I believe should you take a look at it on a full 12 months foundation, it is nonetheless across the 78% stage. So particularly for this quarter, after all, the online property revenue has come down just a little due to the property bills.

We’re seeing a 4.5% discount in web property revenue from $81.9 million to $78.Three million. And once we examine the quantity accessible for distribution, the hole is pretty small between quarter-to-quarter $69.Four million within the earlier quarter, down 0.4% to $69.2 million for fourth quarter. So for the DPU comparability, we’re seeing a 9.8% discount quarter-on-quarter foundation from $0.0316 to $0.0285. If we had added within the tax-exempt revenue of $6.6 million, which now we have withheld, we’d see a $0.0315 quantity, so very near the third quarter’s quantity.

And transferring on to Slide 11, the place we define the steadiness sheet. As at 31st March, finish of the monetary 12 months, now we have about $5.2 billion price of belongings, $1.6 billion price of liabilities. And NAV, we’re seeing a $1.62. NAV per unit in comparison with final 12 months was $1.51, a 7.3% improve in NAV per unit.

And subsequent we transfer on to our portfolio valuation, that is on Web page 12. Within the center, you may see the present valuation figures now we have in mixture SGD 5.894 billion. In fact, that features our curiosity within the North American portfolio, you may see in direction of the underside of the desk, SGD 1.446 billion. That is equal to about USD 1 billion. And the rise within the portfolio worth for the Singapore portfolio, as you may see within the first bullet level, primarily is pushed by revaluation acquire of near $80 million, plus one other $32 million from the capitalized price of our improvement and enchancment works. And naturally, the rise within the North American portfolio was primarily because of acquisition of the 13 knowledge facilities only in the near past accomplished.

And on Web page 13, we give a snapshot of our steadiness sheet. Complete debt is about $1.Four billion. And since now we have performed a few of the refinancing just a little forward of time, our weighted common tenor on debt now has elevated from 4.1 years as at 31st December to 4.7 years as at 31st March. And mixture leverage ratio, only a shade under 38%, 37.6%.

And transferring on to our debt maturity profile, that is on Web page 14. You will notice that now we have nothing that is new for refinancing within the monetary 12 months 2021 as at 31st March. Even should you take a look at the subsequent couple of monetary years, now we have little or no that’s due, monetary 12 months ’21/22, solely $100 million. And the monetary 12 months ’22/’23, 2 years out, we’re speaking about one other $220 million. In order of now, now we have greater than ample dedicated services to satisfy our wants within the foreseeable future. Greater than $380 million price of dedicated services accessible within the present monetary 12 months.

And transferring on to Web page 15, the place we take a look at our threat and publicity. The quantity of debt that’s mounted is about 73.4%. So we expect that might, say, cut back a variety of volatility we may even see within the portfolio. Weighted common tenor of the hedge is roughly 3.Eight years, following fairly intently with our debt tenor as nicely. And weighted common funding price is comparatively secure, 2.9% for the fourth quarter of monetary 12 months ’19/’20, partly helped by just a little little bit of the bottom fee discount that you could see available in the market, and it is pushed by the Fed cuts as nicely. Curiosity protection ratio has moved up just a little, now at 7.7x. And on the best, you may see the capital hedge now we have in place for the U.S. greenback investments, about 81% hedged, and for the revenue for the primary quarter of monetary 12 months ’20/’21, about 70% has already been hedged into Singapore greenback.

And subsequent, we transfer on to our portfolio replace, that is on Slide 17. The AUM quantity, after all, at $5.9 billion displays the present elevation or up to date valuation determine. In mixture, now we have about 21 million sq. ft of web lettable space and, after all, the up to date chart for our portfolio, at this time second, now we have greater than half of our belongings in Hello-Tech, 55% of Hello-Tech Buildings, out of which you’ll see 31.6% of information facilities, 24.5% within the U.S. and Canada and, after all, for Singapore, we’re seeing a 7.2% illustration. Flatted Factories, after all, through the years, has been coming down. We’re seeing nearly 1/Four of our belongings which are Flatted Factories; Enterprise Park, slightly below 10%; Stack-up/Ramp-up services, 8.3%; and a really small illustration, 1.3% in Mild Industrial Buildings.

And occurring to Web page 18, portfolio overview. The extra fascinating half, after all, is the occupancy figures. Singapore portfolio, we proceed to see just a little little bit of enchancment from 90.5% to 90.7%. For the U.S. portfolio, primarily due to the brand new services that now we have taken on, that are at 100% occupancy, so the combination occupancy stage for the U.S. portfolio has elevated just a little from 97.8% to 98.7%. And naturally, for the general portfolio on account of these 2 elements, Singapore and the U.S. portfolio, each experiencing a little bit of occupancy development, seeing a rise in total portfolio occupancy to 91.5% from 90.9% within the earlier quarter.

And occurring to subsequent web page, Web page 19. We take a look at the lease expiry profile, very nicely unfold through the years. General, weighted common lease expiry is 4.2 years. If we’re trying on the present monetary 12 months, solely 17.7% of the enterprise are due for expiring. So we do not suppose there will probably be any massive publicity to anybody phase or actually any tenant lease for this monetary 12 months. So it is a enterprise as ordinary, engagement now we have with our tenants for the expiration of the leases and renewals.

And occurring to the subsequent web page, Web page 20, the place we outlined our prime 10 tenants. We see them contributing slightly below 30% of our income. We’ve a really giant tenant base, greater than 2,200 tenants. Largest, after all, is Hewlett-Packard, 8%. The remainder are very sturdy secure firms. And progressively, you see smaller and smaller type of publicity as we have gone on to the ninth and tenth, just a bit bit above 1% contribution.

And transferring on to our tenant diversification chart, that is on Web page 21. You may see that no commerce sector accounts for greater than 80%. In fact, Hewlett-Packard, our largest tenant, which contributes 8%, is the only largest commerce sector of about 18%. So the remaining have carried out a ramification of all of the totally different commerce sorts. InfoComm, which is represented by the blue sector, has been growing progressively through the years as we tackle extra knowledge facilities, and a variety of our tenants and knowledge facilities are represented within the InfoComm area.

And transferring on to Web page 22, the place we define the portfolio efficiency. You may see that the occupancy stage has moved up just a little from 90.5% to 90.7% within the bar on the best. And weighted common rental fee has come down just a little bit from $2.12 to $2.11, that are outlined within the subsequent few slides, particulars within the subsequent couple of slides.

On Web page 23, you may see the occupancy ranges now we have registered for all totally different property sorts. You may see reductions in Flatted Factories partly as a result of Kolam Ayer 2 redevelopment challenge as a result of now we have been progressively transferring tenants out of the cluster whereas we put together the positioning for redevelopment. In order that resulted in low occupancy in Flatted Factories cluster. Identical factor for the Mild Industrial Buildings, now we have seen a slight drop in occupancy as a result of now we have some tenants who had not renewed with us, however it is a very small a part of our portfolio, simply 1.3%. So aside from that, now we have seen will increase in occupancy ranges for our different property sorts. And extra important one is the Stack-up/Ramp-up facility, 90.4% to 94%. In order that helped to enhance our total portfolio occupancy stage by a 0.2 proportion level from 90.5% to 90.7%.

And occurring to Web page 24 is our rental revision. You may see that it’s pretty secure throughout all of the property sorts. A few of the price — or a few of the property sorts, like Hello-Tech Buildings, we proceed to see enhancements within the revisions, rental revisions from earlier than renewal to after renewal, $4.44 to $4.55. Enterprise Park may be very secure. And even for Flatted Factories, we’re seeing a really secure illustration down there, $1.88, down simply by $0.01 to $1.87. We’re seeing barely decrease revision or detrimental revision for the Stack-up/Ramp-up facility from $1.40 to $1.32, partly as a result of a few of the tenants that now we have renewed in that quarter, a few of the bigger ones that we accommodated at pretty decrease rents. And one factor to notice for the Flatted Factories is that the brand new rents are just a little decrease than renewal rents, simply $1.73 in comparison with our renewal rents at $1.84, however that is primarily due to preferential charges that now we have provided to our tenants from the Kolam Ayer 2 cluster, who’ve relocated to different Flatted Factories clusters. So if now we have excluded these new leases and preferential charges, the common rental charges for the brand new leases would have been about $1.87, which is similar to our renewal hire stage. So we’re seeing some stage of assist exhibited within the fourth quarter. That is, after all, earlier than we see this extra stress coming into the market now. However I believe final quarter was fairly a superb quarter for us so far as rental revision is worried.

Occurring to Web page 25, we define the retention fee. From the bar chart on the best, you may see 77.5% of our tenants have remained with us and renewed for the quarter. And in mixture, about 64% of our tenants are with us for lengthy intervals of time, greater than Four years. And proper now we’re seeing near 30%, 28.6% of the tenants stick with us greater than 10 years. So it’s actually a sign of the extent of stickiness of some tenants they’ve in our portfolio.

And occurring to the subsequent phase, which is our funding replace on Web page 27. The important thing factor to focus on is simply the completion of our Powered Shell portfolio that is in direction of the underside of the desk, 14th of January 2020. So it has began to contribute meaningfully to the portfolio, and from this quarter onwards, you will be seeing a full 12 months type of impact of this contribution.

And occurring to the subsequent web page, that’s our Kolam Ayer 2 redevelopment challenge. The important thing factor to focus on is that now we have proper now 67 out of 108 tenants, that is the fourth bullet level within the desk on the backside, 67 out of tenants who’ve dedicated new leases at our different clusters. So work is on schedule. And by the point the final tenant leaves, round July, we’ll begin our redevelopment challenge based mostly on the plan.

And at last, we transfer on to our outlook and technique web page, that is on Web page 30. This time round, I believe now we have just a little detrimental. The outlook, I believe, for Singapore, it’s difficult. Primarily, the pandemic has created fairly a little bit of stress within the surroundings. As you’d have learn, GDP development forecast has been revised out a few occasions. And even in March, we’re minus 4% to minus 1%. However I believe we’re a few of the figures outlined by analysts. We’re seeing — we’re anticipating additional cuts to the GDP development. So enterprise confidence, after all, is affected fairly considerably. And a variety of our tenants, who’re small and medium enterprises, are feeling the stress. And because the ratio now we have outlined in a bullet level, in a sub-bullet level, about 55% of our portfolio, SME tenants, on an mixture foundation, is about 45%. So we’re holding a detailed eye on the well being of our tenants, and we actually attempt to see what we are able to do to be of help to our tenants who’re feeling these pressures.

Now should you regulate the median rents for the economic area in Singapore, after all, that is anticipated from JTC. Multiuser area, pretty flat, $1.77 per sq. foot. So now we have not seen any massive downward shift in any of the rents but. So it is in all probability too early to see any of those figures being affected. Enterprise Park area, a really marginal 1.2% quarter-on-quarter adjustment, however nonetheless at a reasonably wholesome rental stage of $4.20 sq. ft per 30 days. So I do not suppose we are able to learn an excessive amount of on this set of figures but. However as I’ve outlined earlier, we assist our tenants throughout this very troublesome interval. And as you realize, the circuit breaker interval has been prolonged, and so we will probably be June 1 for the circuit breaker interval to finish. And through this era, after all, not all tenants can function of their premises. And the federal government actually allowed tenants in important companies or in key financial sectors to proceed operations. However as a result of numerous our tenants are on this area, we stored our buildings open and operational. I believe as of our final verify, based mostly on our engagement with our tenants previous to the additional tightening, now we have about 70% of our tenants which are nonetheless working. And naturally, over the subsequent couple of weeks, we expect which will come down just a little because the measures get tightened just a little. However we expect a wholesome stage of operations remains to be being registered within the portfolio in contrast to sure segments like retail the place the impression is much more important.

And so far as help is worried, after all, aside from the same old hire so-called restructuring and deferment concerns, we’re additionally direct assist, which is the COVID-19 Help and Reduction Programme, now we have put aside near $13.7 million within the type of primarily rental rebate that can assist cushion a few of this impression for our tenants.

And the subsequent factor to notice, after all, is the COVID-19 Non permanent Measures Act, which offers momentary aid for companies and people. In our context, it could be our tenants, who’re unable to satisfy the contractual obligations and handle the rental cost. As of now, we have no massive arrears problem but as at March 31. The arrears ratio remains to be comparatively low, 0.2% of the earlier 12 months gross income. So nothing important as a result of — not but, however we anticipate this ratio to creep up over the subsequent couple of months if the state of affairs would not enhance and the tenants run into money move points. So we have to maintain a detailed eye on this ratio.

And transferring on to the subsequent web page, that is on North America. In fact, all our services are knowledge heart services, very wholesome demand. And we’re seeing continued type of development in the important thing markets that we’re in, massive absorptions even in — the most important type of illustration now we have now’s Northern Virginia. The absorption has been pretty sturdy, and pipeline has continued to be strong, and we’re seeing transactions persevering with to be performed at an increasing number of aggressive, compressed charges. So I believe should you look throughout the trade — throughout totally different asset sorts, that is nonetheless one of many extra resilient asset sorts within the present state of affairs. So after all, as these are important services, all our knowledge facilities in North America have continued the operations.

So I believe, lastly, we transfer on to our technique. Typically, we need to stay diversified and resilient, as on Web page 32. It is supported by a 3-pronged technique, holding our portfolio secure and resilient. And should you take a look at the weighted common lease expiry due to the lengthy leases that now we have in place on a quarter-to-quarter foundation, now we have improved it to 4.2 years. And tenant base may be very diversified. And definitely, particularly within the present time, we count on extra stress available in the market. We take a look at the strengthening our steadiness sheet and bettering our monetary flexibility. And should you take a look at the bullet factors within the center, we have no loans due that we have to take a look at refinancing in monetary 12 months ’21 — ’20/’21. Protection ratio, curiosity protection ratio is pretty sturdy at 7.7x. We’ve put aside some quantity, $6.6 million, from our tax-exempt revenue within the fourth quarter. And with out that, that can give us just a little little bit of — just a little bit extra flexibility in money administration on this present monetary 12 months. So the expansion of the portfolio, after all, we proceed to have a look at acquisitions and improvement prospects. And naturally, the primary bullet level, now we have outlined the ultimate completion of the portfolio acquisition round January 14 this 12 months. So the portfolio will begin to contribute meaningfully. And naturally, our redevelopment challenge in Kolam Ayer can be — is on monitor, and we expect this will probably be a significant addition to the portfolio as soon as accomplished in about 2 years from now. So that is on monitor.

And I believe that sums up what now we have for the presentation. We will transfer on to query and solutions.

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Hwei Leng Tan, Mapletree Industrial Belief – VP, IR [4]

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Operator, I believe we are able to transfer on to Q&A.

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Questions and Solutions

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Operator [1]

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(Operator Directions) Your first query comes from the road of Mervin Music from JPMorgan.

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Mervin Music, JP Morgan Chase & Co, Analysis Division – Head of Singapore Property [2]

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Only a few questions. Thanks for the stat by way of 70% of the tenants who’re working. Possibly you may give us a stat by way of the distinction between Flatted Factories tenants and the Hello-Tech Buildings in Singapore. And the 45% of SME tenants, how a lot — what number of of these are literally working at this time limit?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [3]

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Can I — am I capable of communicate now?

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Hwei Leng Tan, Mapletree Industrial Belief – VP, IR [4]

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Sure, you may. We will hear you.

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [5]

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Okay. No downside. Okay. The 70% of the tenants being in operations was — by means of the engagements and checks now we have with them when the federal government outlined the circuit breaker measures as a result of, as you realize, they needed to cut back nonessential type of actions after which the variety of nonessential employees transferring round. So a variety of these are MNCs, a variety of these are important companies, meals companies as nicely. The meals factories, after all, proceed to function and a few of our bigger tenants which we proceed to function. So I might say a bigger illustration within the Excessive-Tech area than your Flatted Factories area. However our sense is that with the additional tightening of a few of these measures, we perceive that Ministry of Commerce and Business is asking a few of the firms that had been beforehand thought of important companies to cut back the type of workforce they flip up for the actions and operations. So we expect, after all, some could also be requested to droop the operations in the meanwhile. That 70% stage, we expect, will in all probability come down just a little, 10%, 20%, till the tip of this extra restrictive circuit breaker measures are eliminated.

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Mervin Music, JP Morgan Chase & Co, Analysis Division – Head of Singapore Property [6]

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When it comes to the rental deferrals, clearly, you are giving half a month and a bit extra for the retail tenants at Tai Seng. However have you ever — what proportion of returns have began asking you? What is the quantity you anticipate?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [7]

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As of now, now we have requests for help from barely greater than 1/Three of our tenants by income. So by way of numbers, it is just a little bigger. I believe it is about 800-plus as a result of we — numerous these are coming from the smaller, medium enterprises. So about 1/Three have requested for some type of help. So we’re evaluating whether or not we’re capable of assist or — I believe now we have articulated earlier than in our launch on this help and aid program goes to be a bit extra focused and assist these in higher want of assist.

So for individuals who have checked out some type of deferment or type of delay in hire funds, I believe, as of now, we’re seeing in all probability decrease than 10% of the tenants who’ve requested for some type of deferment. However none of them have really put within the type of request by means of the applying of the act, this Non permanent Measures Act. So this, after all, is newly launched, after which a variety of the small print are nonetheless being awaited now. However I believe because the state of affairs and the situations grow to be a bit clearer, we do anticipate a few of the tenants that might ask for some type of deferment or delay within the hire, so-called funds over the subsequent couple of months. However as of now, now we have not performed any…

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Mervin Music, JP Morgan Chase & Co, Analysis Division – Head of Singapore Property [8]

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I suppose by way of the rental reversions, detrimental stress was type of lowering, bottoming out, however this was earlier than the the total impression of the lockdown and, I suppose, the recession that we’ll have. When it comes to sensing, by way of spot hire declines or occupancy — sorry, emptiness will increase, what is the intestine really feel at this time limit?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [9]

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Okay. I believe earlier than now we have this pandemic, we had been, at the moment, cautiously optimistic of perhaps the market bottoming up. As you may see in our hire revision figures final quarter, which is the third quarter and fourth quarter, we’re seeing a flat hire revision profile actually on an mixture foundation. So we thought perhaps, sure, that assist stage is there.

However now with this, the market being beneath this type of stress and with recession looming, I believe type of constructive final result on this state of affairs will in all probability be a minus 2%, minus 3% type of hire regression by way of the impression on the portfolio. However I believe on a person renewal foundation, typically we’re seeing just a little extra important adjustment within the hire, typically as much as minus 10% or so relying on what rents our tenants have in place previous to the expiration of the lease. So that’s the have interaction now we have now.

And by way of occupancy, I believe the momentum for getting new leases in all probability will decelerate. And whereas we strive very onerous to work on our retention, as you may see, now we have been at all times doing roughly the 75% stage of retention stage. So we’ll commerce off charges with occupancy, in different phrases, or whether or not we’d trade-off rents with occupancy, so we’ll go for a barely larger retention stage, in all probability barely decrease rents or we’ll have some detrimental revisions in order that we are able to maintain our occupancy wholesome. So occupancy stage, we actually need to attempt to preserve. We’re sensible concerning the new leases that we are able to safe for the prevailing vacant area or area that might be given up by tenants who will naturally not renew with us. So occupancy might drift down one other 1, 2 proportion level from present stage.

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Mervin Music, JP Morgan Chase & Co, Analysis Division – Head of Singapore Property [10]

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Okay. Simply lastly for me. When it comes to the occupancy pressures, are tenants coming to you to cut back area or rightsize area, despite the fact that they could keep?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [11]

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Sure, they’re. We’re seeing instances of this type of request for area changes. And naturally, to be prudent, we’d encourage the tenants to assist for, say, substitute tenants for the area so far as doable in order that we are able to cut back the downtime. And hopefully, the tenant themselves would have a barely higher sense of who else within the trade, who else in their very own ecosystem that may be capable of take up that area and assist us additionally maintain the area used and occupied. However now we have seen extra situations of downsized requests from a few of the tenants.

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Operator [12]

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Our subsequent query comes from the road of Brandon Lee from Citi. (Operator Directions)

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Brandon I. Lee, Citigroup Inc, Analysis Division – VP & Analyst [13]

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Simply 2 questions. Principally, are you able to quantify for us the explanation for retaining $6.6 million? That is my first query.

And my second query is, may you additionally break down for us the $13.7 million in rebates that you’ve got given thus far? I perceive 1.5 months is from 18 Tai Seng. And I believe that works out to barely above $0.5 million. Sure. And the way is that being damaged down between canteen operators, 18 Tai Seng retail tenants in addition to your industrial tenants?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [14]

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Okay. The $6.6 million put aside — quantity that’s put aside shouldn’t be a magical quantity. That is primarily the tax-exempt revenue now we have coming from the North American portfolio for fourth quarter. So it’s the complete sum down there that now we have put aside. And we’re additionally trying on the aid that the Minister of Finance, MAS and IRAS take a look at for REITs. They speak about permitting REITs to defer distribution for as much as a 12 months, so across the monetary 12 months 2020, of their type of definition is till December 31, 2020. So REITs would be capable of defer the distribution of the revenue to the unitholders for as much as a 12 months. However for — in our context, our monetary 12 months has already ended 31st March this 12 months. So we do not have a variety of type of extra quantity that we are able to put aside.

And even when we don’t distribute the taxable revenue in 12 months from now, we nonetheless must account for it anyway. If not, you have to pay tax. So trying on the present state of affairs and looking out on the type of arrears situation, our arrears are nonetheless very nicely beneath management. And looking out on the type of requests we’re getting from our tenants, we expect we have to put aside an quantity. We needn’t put aside an excessive amount of as a result of I believe, as a portfolio, we’re not as badly affected as the opposite property sorts like hospitality or retail. So the — whereas the impression is there, it’s not as important. So we don’t need to put aside an excessive amount of, and we would choose to not fiddle with the taxable revenue bit for monetary 12 months ’19, ’20 as a result of that’s we have to make good anyway finally and really quickly after in contrast to — attain with monetary 12 months ending December 31, 2020, now we have December 2021 to have a look at the distribution. So we do not have that type of lengthy timeframe to work on to handle this type of deferment of distribution.

So our consolidation on the finish of the day was to only distribute no matter that’s the taxable revenue due for the total monetary 12 months ’19, ’20, perform the remaining in order that we have no residual type of tax concerns or points. Then we take a look at the steadiness that’s accessible, produces tax-exempt revenue coming from the North American knowledge heart portfolio. $6.6 million is roughly 2.5% of our distributable revenue for the final monetary 12 months.

It isn’t too giant an quantity. I believe it helps — has constructed a little bit of cushion. And we expect this being tax exempt and never being sure by the tax transparency consideration would give us a bit extra flexibility, say, once we can and will apply this quantity. So that’s the consolidation for setting this apart.

And now on the breakdown of the $13.7 million, I believe, as you rightly identified, our 18 Tai Seng retail tenants is a really small half, is near 0.5 million belongings, what now we have outlined. So our intent is to, after all, to assist the tenants who’re extra affected by this present circuit breaker measures, particularly the retail tenants. So now we have put aside that 1.5 months along with the total cross on of the property tax rebate. And the subsequent group of tenants, our canteen and meals cart operators, I believe they’re equally affected perhaps to a barely smaller diploma in comparison with a few of the retail tenants who’re very a lot depending on this footfall and the patronage of delivers. So we put aside a month.

For the remainder of the tenants, there are throughout many, many various industries, small, medium enterprises and likewise the bigger firms in rising MNCs. We’ve performed some tough allocation, however I believe we’re, at this time second, perhaps as much as 0.5 month first for the tenants who, say, in higher want, particularly a few of the small, medium enterprisers. So the 7.5% is a reference stage. That is, after all, along with the property tax rebate that’s handed on.

And that half is what we see as a bulk of our so-called allocation, and that additionally, consists of our carpark operators as nicely. As you realize, the carpark operators may also rely on the type of season plus hourly carpark prices. After which throughout this time period, the utilization of our carpark is pretty low, and now we have already obtained requests from the operators to ask for some type of help. So we’ll in all probability be that as nicely.

However we’re unlikely to, say, allocate a lot to people who are nonetheless, say, working fairly nicely. For instance, the info facilities that now we have. They’re very nicely used throughout this time period and I believe fairly low, like instances of them needing extra help. A few of the bigger MNCs, we expect they’re in all probability fairly nicely ready and fairly nicely cushioned. They’ve a robust steadiness sheet and doubtless much less prone to require this type of help.

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Operator [15]

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Our subsequent query comes from the road of Donald Chua from Financial institution of America.

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Donald Chua, BofA Merrill Lynch, Analysis Division – Head of ASEAN Actual Property Analysis and Director [16]

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That is Donald. So a few questions from me. So to observe up on that, the discharge that was introduced, is that this $6.6 million that’s being retained a part of the supply for that $13.7 million, i.e. it has already been partially supplied for from the $6.6 million? And in your valuation, the revaluation for this monetary 12 months, is it, at some stage, making an allowance for COVID state of affairs already? Or is it purely pre-COVID and might be revised afterward?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [17]

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Okay. Now the funds that now we have put aside, after all, it is a cushion, on the finish of the day is fungible. And the aid that we’re providing to our tenants is definitely a type of rental rebate. We don’t give money out immediately. So in impact, it’s simply us giving type of credit score not equal to a few of the rents that is due in a month that we intend to offer the rebate or the aid. So it’s primarily a decrease quantity that we’re amassing for income — or rental income for the tenants.

So the impact may be very totally different, however on the finish of the day, the $6.6 million that now we have put aside is, in a kind, a solution to partially offset the impact of the decrease assortment from this aid that now we have given. In fact, a really pure query is did we need to put aside an equal quantity, in different phrases, this entire equal $13.7 million or near $13 million from monetary 12 months ’19, ’20 in order that we are able to so-called fund absolutely no matter aid that we expect we’re doubtless to make use of. So that’s doable.

However as I’ve outlined, I believe, in my earlier reply, if we had been to — this entire quantity past no matter is tax exempt goes into the taxable revenue half that finally we might want to sq. that off. And if we don’t sq. that off, which means to say we’d have tax due on the quantity that now we have not distributed. So as an alternative of going into problems and type of residual, type of long-tail points on the tax entrance, now we have determined simply to distribute no matter now we have for the taxable half and be performed with that, and we have no problem. In order that leaves us with, say, setting apart the $6.6 million, which we expect can be ample to cowl about half of no matter now we have envisaged for this aid. This $13.7 million, after all, is predicated on some gauge on how a lot every of the tenants may require and the way most of the tenants would require the assistance. And now we have put aside some broad allocation. That is, after all, not the precise science.

And hopefully, behind our thoughts, we hope that the state of affairs shouldn’t be as unhealthy. Possibly actually Singapore is ready to get it beneath management. Another components of the world are steadily opening up cautiously. Sure, perhaps we might not must eat all the pieces. So I believe to be prudent, we additionally would not need to over type of present for by way of withholding of this type of extra buffer. So it’s, in impact, a superb offset, as a result of, on the finish of the day, it is only one type of money — allocation of our money. So it’s one method by way of mitigating the impression of our so-called downward drag on distribution in monetary 12 months ’20/’21. And it simply occurs in order that this tax-exempt quantity that now we have put aside nonetheless permits us — having put aside, this quantity nonetheless permits us to ship a small development by way of DPU for monetary 12 months ’19/’20 over the earlier monetary ’18/’19, the 0.7% type of improve in DPU. So I believe, fantastic, that’s concerning the type of steadiness that we’re having some stage of provision that we’d have for, say, the aid program for this present monetary 12 months.

And I believe your subsequent query is on the valuation. It was an extended dialogue with our valuers and naturally, with our Board as nicely. At a time the place the valuations had been assessed and performed, they’re, after all, conscious of a few of this stress or looming points, and so they have taken some consideration of that. However as you realize, valuations, they would want to have a look at transactions or want to have a look at, say, proof of charges and leases being locked in, in place for them to evaluate and calculate the type of burn stage, the valuation ranges by means of our life forward. So whereas they could have taken a few of this near-term impact into consideration, I do not suppose they’ve absolutely taken in future impression past 31st March on what sort of, say, cap charges would have moved to, what sort of hire ranges would have been adjusted right down to as a result of should you take reference from even official numbers coming from JTC, very marginal shift even till the tip of March by way of recorded hire numbers.

And I believe there’s only a few transactions on this interval as nicely — throughout this time period. So it is troublesome for the valuers to pin down. And that — what they are saying is that they’ve taken this into consideration, however the full impact in all probability not straightforward and inconceivable to quantify on this present set of valuation. However I believe should you look throughout the board from — a lot of the valuation statements or studies from valuers the place they’ve put on this qualification that’s in all probability higher to overview it a bit extra frequently afterward if the market actually shifts considerably. However as of now, I believe they’re hard-pressed to get transaction proof and knowledge to make massive — any massive changes to the numbers.

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Donald Chua, BofA Merrill Lynch, Analysis Division – Head of ASEAN Actual Property Analysis and Director [18]

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Would you overview on the half yearly given the distinctive circumstance going the subsequent 12 — 6 to 12 months?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [19]

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We — okay, I do not suppose we need to set a definitive time interval, however we’ll be holding a detailed eye on the transactions and hire ranges. And naturally, on the finish of the day, you in all probability would see another so-called valuation performed, particularly for a few of the different platforms with monetary 12 months ending — in direction of the tip of the 12 months with some ending third quarter calendar 12 months. So there could be some references for us as a result of these are printed and clear references. So we regulate that. We regulate transactions. We regulate REITs. However I do not suppose we need to set a really strict, definitive time line, and say, okay, we will certainly overview it 6 months from now. So we’ll monitor the state of affairs a bit extra intently in the meanwhile.

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Operator [20]

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Our subsequent query comes from the road of Derek Tan from DBS.

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Derek Tan, DBS Financial institution Ltd., Analysis Division – VP [21]

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Simply 2 questions from me. First query in your earlier commentary that 1/Three of tenants requested for help, proper? Simply questioning, based mostly on what you will have deliberate for the help package deal, would their request be glad? Or do you suppose they’re going to be hungry for extra?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [22]

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I believe you realize the reply.

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Derek Tan, DBS Financial institution Ltd., Analysis Division – VP [23]

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They’re at all times hungry, however simply need to get a way.

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [24]

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Okay. I believe once we outlined our intent to cross on property tax rebate and assist just a little with the rental rebate, the primary response, after all is “Sure, sure. Good, good. I am grateful — from tenants grateful that you’re doing this.” However the subsequent factor they’ll ask is can now we have a bit extra and a few extra. So I believe it is troublesome to fulfill absolutely as a result of from the tenants’ perspective, should you take a look at, say, even the nonretail tenants, perhaps tenants, after all are beginning to get — beginning to see the results in all probability from February, March onwards. So — and it will play out till finish of Might earliest. And we can’t be seeing their very own clients going again in a short time or they will not expertise the total restoration in June. So it’s going to be fairly a number of months.

Might we accommodate 3, Four months of rebates or aid? I believe in all probability not — we aren’t ready for that. Now similar factor for the economic tenants. I believe most of them began to see some results across the Lunar New Yr time and past as a result of that is when China began to close down, and a few of their very own provide chain would get affected. So that they have a slowdown of their volumes and capacities, means to satisfy the demand even then after they nonetheless have some good stage of demand elsewhere on the earth. However I believe they’re seeing the results in direction of the tip of March and early April when the remainder of the world closed down and the demand shrink.

So the — for the economic tenant, they’re going to in all probability be seeing components of March, components of April. Now we expect a few of them are in all probability experiencing in Might. From their perspective is, a few months, we’ll be capable of deal with like a few months of aid, I believe, as I mentioned, in all probability not one thing that we’re ready to do on a full-scale foundation, however we’re delicate to the challenges they’re dealing with. So any aid will probably be welcome from the tenants, and we’ll proceed to do within the meantime this 12 months.

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Derek Tan, DBS Financial institution Ltd., Analysis Division – VP [25]

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Some coloration in your collections for April, and most of your collections are in GIRO, proper?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [26]

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Sure. The collections in April, I believe is just a little — considerably much less immediate in comparison with the previous couple of months. I believe on the GIRO entrance our so-called profitable GIRO deduction fee from the financial institution accounts from our tenants has at all times been roughly 98% previously. There’ll at all times be some tenants who do not come up with the money for in a checking account or forgot to prime up the account or for no matter motive wouldn’t have the GIRO deduction being executed efficiently. So it is at all times 98%.

In April, we’re seeing a 94% quantity, so by way of proportion level drop, roughly Four proportion factors. So it’s, after all, an early indication on the extent of stress our tenants have. A few of them may need money move points. So after all, while you see this type of GIRO deduction so-called fee, it’s not indication that this may all grow to be — say, these usually are not collected by means of GIRO or grow to be higher to proceed to interact our tenants and see if they’ve any points on the checking account, whether or not they will pay by means of different means or no matter. In order that’s a ordinary course of we have interaction, nevertheless it is a sign of the money move constraints our tenants have. And a few of this may in all probability finally ask for some type of help or aid or deferments. So April could be a bit early to pin down that enterprise so-called the quantity or ratio of the — however I believe you will in all probability have a greater image Might, June.

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Operator [27]

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Our subsequent query comes from the road of Vijay Natarajan from RHB.

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Vijay Natarajan, RHB Analysis Institute Sdn Bhd – Analyst [28]

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Vijay right here. Simply 2 questions from me. One, I be aware that by way of the administration charges for the subsequent 12 months, you will have talked about that you may be taking a decrease charges based mostly on the final 12 months’s valuation. Possibly are you able to give some sense by way of how a lot discount within the base charges this may be and the explanation — the rationale for utilizing such methodology in comparison with, to illustrate, 5% to 10% discount in base charges? That is my first query.

And my second query is by way of the Kolam Ayer redevelopment plan — sorry, redevelopment choice, how would this COVID-19 impression it? Possibly you — would you lengthen a few of the tenants who’re already there otherwise you can be delaying the redevelopment plans? Possibly are you able to give some sense on this?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [29]

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Okay. Okay. So I believe the administration — base administration charge that you’ve talked about is actually, after all, tagged to the deposited property worth. And that, after all, will get adjusted over time, each month because the deposited property worth will get adjusted. And they’re normally adjusted 2 methods: first one while you do transactions or when you will have revaluations. So while you do transactions while you purchase or promote belongings, then your portfolio worth will change very naturally. And while you do revaluations, the second method this quantity will get adjusted is our year-to-year valuation. And should you take a look at our year-to-year valuation, there’s at all times just a little little bit of valuation acquire. In order that just a little little bit of valuation acquire is the place that differential is. And should you seek advice from the slides that now we have outlined, we speak about $80 million price of — I believe it was $79.7 million, so it was $80 million price of valuation acquire. So that’s the delta we’re . So our base charge is 0.5% on that. So mathematically, you are speaking about $400,000 of — type of differential.

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Vijay Natarajan, RHB Analysis Institute Sdn Bhd – Analyst [30]

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Okay. However for U.S. properties, there isn’t any revaluation beneficial properties, is it?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [31]

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There’s. There’s. It is all embedded inside. As a result of our so-called acquisition worth was, I believe, about 2-or-so p.c under valuation, the one which we did just lately, so there was some valuations gained from acquisition.

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Vijay Natarajan, RHB Analysis Institute Sdn Bhd – Analyst [32]

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Okay. However the calculation of base charges solely — will probably be solely be based mostly on the revaluation acquire of Singapore properties? Or wouldn’t it take into consideration U.S. properties additionally?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [33]

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Entire portfolio, entire portfolio. So on an mixture foundation that delta is $80 million. So there may be…

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Vijay Natarajan, RHB Analysis Institute Sdn Bhd – Analyst [34]

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Okay. Okay. And perhaps why — sure, sorry?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [35]

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Sure.

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Vijay Natarajan, RHB Analysis Institute Sdn Bhd – Analyst [36]

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No, no. Sorry, simply needed to say why such methodology could also be in comparison with, to illustrate, 2%, 3% discount by way of base charges, which you’ll?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [37]

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Properly, I — that one, I believe, is partly a sponsor consideration as a result of the charge is charged by the supervisor by means of the belief. So most often, I believe in — even now, I believe base charges ought to usually improve proportionately to your valuations and valuations or valuation beneficial properties have been registered over time. And the explanation why I believe the sponsor has taken that posture is that they acknowledge that a lot of the platforms could have some valuation beneficial properties registered. So as an alternative of paying the charge to, say, larger valuations of the deposit of property portfolio, they only use the earlier one, which is a bit decrease. So that’s a part of alignment. So on the finish of the day, it’s extra of a signaling of the alignment and likewise indication of the type of programs, and the sponsor would have as a supervisor — as proprietor of the supervisor on this present situation.

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Vijay Natarajan, RHB Analysis Institute Sdn Bhd – Analyst [38]

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Okay. Okay. And doubtless on Kolam Ayer website.

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [39]

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Sure. For Kolam Ayer, the prevailing tenants, now we have down there, the 108 tenants which are transferring out from that premise, none of them, after all, are going into the redeveloped cluster as of now after all as a result of a variety of them have moved to different clusters inside our portfolio as a result of the operations will proceed on, and we redeveloped a precinct positioned as a high-tech precinct and specs are just a little larger and naturally, rents will probably be just a little larger in comparison with what the prevailing tenants are paying.

So this isn’t a one-for-one type of substitute premise for the cluster or that precinct that we’re redeveloping into. 1/Four of the area is already dedicated by a German biotech firm. So we, after all, have a really lengthy lease dedicated. And as soon as we full the challenge, we’d have that area locked away. The remainder, steadiness, 75% of the realm accessible, we would want to search for different different tenants, and it is a time for the subsequent 2 years or so for us to search for appropriate type of area customers that worth the situation, worth the specs and configurations that we’ll be having at that precinct.

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Vijay Natarajan, RHB Analysis Institute Sdn Bhd – Analyst [40]

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Okay. So there isn’t any change within the time line as it’s?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [41]

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Sure. So I believe the time line stays the identical as a result of I believe, so far as the prevailing tenants are involved, they’ve already moved away. And from the precinct, after all, they’ve one other Three months or so earlier than the final of them will transfer away. As of now I believe now we have already outlined in presentation, 67 out of 108 have already dedicated elsewhere. In fact, inside our portfolio, some have moved to different premises. And as on the fourth quarter, 31st March 2020, now we have about 30% of our tenants nonetheless remaining. So most have moved out already, and it is only a final bit for this present quarter earlier than we begin taking current constructing down. And the — after all, the redevelopment challenge and plan is on monitor. We’ve vital clearance from the authorities for a lot of the pending approvals. So it is going in accordance with plan.

In fact, one factor to look out for is the impression on development prices and time period. And now with a variety of the employees being held again from going to work websites naturally and development contracts, by way of contract interval, by way of contract worth will in all probability be affected within the subsequent couple of months. So we’re that intently in our contract administration and tender administration.

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Operator [42]

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Our subsequent query comes from the road of Tan Xuan from CLSA.

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Xuan Tan, CLSA Restricted, Analysis Division – Analysis Analyst [43]

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My first query is on payout ratio in FY ’21. Are you able to elaborate extra on what you are eager about the payout ratio for each MIT to shareholders and likewise from the U.S. portfolio to MIT?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [44]

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Okay. I believe the U.S. distribution or payout from the three way partnership round there may be, after all, the second order type of consideration. That one, I take, we see as pretty secure. The belongings are having very lengthy leases in place. So I believe except there’s any change within the U.S. tax legislation, we’ll simply pay out as regular based mostly on what now we have been doing previously. So all of the distributions coming from U.S. being tax exempt would come again to our Singapore website.

Now the payout ratio is a bit more troublesome to calibrate, as you realize, in view of the present state of affairs. And we — at this second, whereas now we have some preliminary gauge, it’s totally troublesome to pin down what number of of our tenants would search for deferment or run into actual points and whether or not there is a massive hole between accrued income and so-called precise money receipts due to the deferment of funds. So it is troublesome to pin that down.

However I believe our normal guiding consideration is that we’d not keep away from paying tax due to — or reasonably, we don’t need to pay tax unnecessarily due to our lack of ability to satisfy the tax transparency so-called guideline of 90%. And as now we have seen within the aid given by Minister of Finance and by the Commerce Authority of Singapore and IRAS, concession is just for monetary 12 months 2020, and our monetary is over. So virtually talking, no matter that’s accrued will nonetheless have to be — nearly as good as taxable revenue will nonetheless have to be paid out earlier than the tip of the monetary 12 months, which is, for our case, 31st March 2021. If we don’t pay at the very least a minimal threshold or assembly a minimal threshold of 90%, there will probably be tax implications. So we’ll need to keep away from getting in that type of state of affairs, which penalizes unitholders unnecessarily. So we need to see how massive that mismatch is between accrued taxable revenue and likewise precise money receipt.

So for the approaching quarters, so long as now we have ample distribution — ample assortment, we pays out the distributions that may meet the taxable revenue. So with regards to the tax-exempt revenue, so now we have to see whether or not that’s wanted to prime up that distinction between the accrued and money receipts. Whether it is ample, I believe we’ll in all probability additionally launch that as nicely. So it is a bit troublesome to pin the precise payout ratio now, and I believe will probably be guided much less by mounted ratio as in an enormous proportion than the profile of the type of income we get from the tenants within the coming 1 or 2 quarters.

We take — it could be a bit early now to repair a 7-figure quantity. We would have higher readability, I believe, within the first quarter after we get a greater sense of how the tenants will behave within the present state of affairs. And by that point, we’ll know whether or not our enhanced faster measures in Singapore, at the very least, would have labored and whether or not issues are returning to regular. There’ll in all probability be a greater judgment then. So now it is in all probability a bit early for us to only pin a really particular proportion stage, proportion level.

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Xuan Tan, CLSA Restricted, Analysis Division – Analysis Analyst [45]

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And if I can simply observe up on that, proper? Earlier that you just talked about about 10% of tenants have requested for deferral. That is roughly round $40 million. How a lot of this $40 million do you count on to materialize by way of deferrals? And if all of that materialized, then ought to we count on the chunk — massive chunk of the U.S. tax-exempt revenue to be deferred?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [46]

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Okay. In fact, I believe the near 10% stage that we’re seeing and tenants are asking for some type of deferral might be a headline quantity. It’s an aggregation of the type of impression simply based mostly on the primary look. Hopefully, by way of precise — the way it really performs out, we can’t see this type of stage, at the very least in type of regular and we are able to encourage a few of them to not, say, guide on a major quantity of deferral or perhaps simply guide round 1 or 2 months of help or aid. So that’s what we hope to work in direction of.

However neatly, you will have rightly identified. So if it seems that now we have a major deferral, sure, it might be as much as $10 million or $20 million. And we must see whether or not it’s significant for us to make use of the tax-exempt revenue to cowl that differential in order that we do not get into any tax transparency points afterward or we only for the approaching quarters, payout on money receipt foundation and monitor the state of affairs just a little longer earlier than we launch the remainder of the funds as a result of, on the finish of the day, the type of the interval that’s for due, there the interval we have to use for — to reckon the tax transparency impact remains to be on the finish of monetary 12 months, which is 31st March. So we are able to nonetheless make some changes alongside the best way till the tip of monetary 12 months. However after all, I actually acknowledge from the unitholders’ perspective, this profile will in all probability be just a little bit extra unstable already due to this uncertainty available in the market.

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Xuan Tan, CLSA Restricted, Analysis Division – Analysis Analyst [47]

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I perceive. And the final query is on gearing. The Q-on-Q motion, is it because of purely the U.S. acquisition completion? And may you additionally replace us on the progress cost for Kolam Ayer by way of the schedule? How is it like over the subsequent 2 years?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [48]

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Okay. Sure. I believe your straight reply to the leverage is due to the completion of our Powered Shell a part of the portfolio on 14th of January, in order that resulted in quarter-to-quarter improve within the leverage stage, I believe, 37.6%. In fact, if we had not had the valuation acquire, we will probably be barely larger, marginally larger, however due to the valuation in — this has been stored just a little under 38%. However the aid of what now we have is — and now the leverage ratio threshold has been raised from 45% to 50%. So it’s actually very useful for us.

Your query on the Kolam Ayer, I believe it’s on the schedule. I believe we’re nonetheless planning to stay to our authentic schedule, about 2 12 months improvement interval. And from the precinct will probably be prepared second half of 2022. So after all, as I outlined earlier, the primary contractors are dealing with a little bit of problem as a result of manpower constraints and likewise doable provide chain disruptions on provide and supplies. So we’re holding a detailed eye on that. And on the finish of the day, now we have some stage of flexibility as a result of whereas now we have a precommitment of build-to-suit challenge, due to this fact, just one/Four of the area, we nonetheless have some flexibility for the steadiness of the area the place we may handle the time line and timeframe is critical.

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Hwei Leng Tan, Mapletree Industrial Belief – VP, IR [49]

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Okay. Thanks very a lot. Thanks, Tan Xuan and everybody, for becoming a member of us at the moment. I believe we had fairly a strong dialogue already. We will probably be ending the decision. However Lily and I will probably be joyful to take any questions that you’ve offline. Thanks, all people.

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [50]

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Okay. Thanks.

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Hwei Leng Tan, Mapletree Industrial Belief – VP, IR [51]

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Thanks and have a superb day. Bye.

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Government Director of Mapletree Industrial Belief Administration Ltd. [52]

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Bye-bye.

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Operator [53]

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Women and gents, this concludes at the moment’s convention name. Thanks for collaborating. You could now disconnect.



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