Singapore Could 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 & Govt Director of Mapletree Industrial Belief Administration Ltd.

* Brandon I. Lee

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

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

I might now like handy the convention over to your first speaker immediately, 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 try the digital convention for the primary time, so bear with us if there are any hiccups or if something is slower than normal.

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

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

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

Hey, good morning, all people. I hope you’ll be able to 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 will meet nose to nose. So what now we have despatched out final night is our monetary statements and outcomes for fourth quarter and full 12 months and in addition a presentation deck. And I am going to run by way of the presentation deck and description a few of the key issues to look out for. We now have the standard 5 segments: highlights, monetary efficiency, portfolio replace, funding replace and, after all, outlook and techniques.

For key highlights, you’ll be able to see that on Web page 5 for the monetary 12 months ’19/’20. We now have, after all, seen a rise within the distributable revenue, 14.5% to $265.Three million. 12 months-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 feel 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 could be $0.0315 or a 2.3% year-on-year improve. So this might have been a enterprise as normal type of end result. We do not have the higher stage of certainty within the monetary 12 months 2021.

And a few of you might need learn in our earlier launch in the course 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 help our tenants, primarily the smaller tenants in our portfolio. The mixture quantity that now we have put aside is $13.7 million, which is able to in all probability be allotted progressively over the following couple of months this 12 months.

And the following level is portfolio replace. I feel 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 in addition completion of recent initiatives as properly. 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 properly. That is, after all, required by rules. We now have seen a rise 23.6% year-on-year to about $5.9 billion as on the finish of the monetary 12 months. After all, a giant 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, pleased to notice that each one the loans that have been due in monetary 12 months 2021 have already been refinanced within the fourth quarter. So we haven’t any excellent so-called borrowings that we have to refinance for this subsequent 12 months.

The steadiness sheet, I feel, 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 following 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 feel, is comparatively robust at $69.2 million.

And occurring to the following phase, speaking in regards to 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 an identical time — uptick, 2.5%. Web property revenue, we’re seeing an identical development as properly, 3.2% to $78.Three million. And in case you take a look at the share of three way partnership outcomes, after all, there was a reasonably large 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 web honest worth achieve, these are extra valuation positive factors. In case you again all of the numbers out, the quantity obtainable for distribution, you’ll be able to 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 following slide, web page — on Web page 9 for the total 12 months comparability. On a full 12 months foundation, after all, the expansion is a bit of increased. 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 saved it fairly properly below management; solely a 0.6% improve from $88.Three million to $87.Eight million. On account of that, the web property revenue has improved 10.5% from $287.Eight million to $318 million.

After all, borrowing price has gone up a bit of. Now MIT’s borrowing charges are pretty steady. So it is primarily on account 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 online honest worth achieve, you’ll be able to see down there, is actually the portfolio valuation achieve. We see a barely increased contribution from the event initiatives from $30.Eight million final 12 months. This 12 months, now we have recorded a $50.Eight million valuation achieve. In order that’s a 65% improve on a year-on-year foundation.

And transferring the figures down, placing the noncash valuation achieve figures in sight, quantity obtainable 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.

Transferring 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 on account of sure cyclical works which were recorded within the fourth quarter and the interval simply earlier than the tip of economic 12 months. So the web property revenue margin is a bit of decrease. However I feel in case 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 web property revenue has come down a bit of due to the property bills.

We’re seeing a 4.5% discount in internet property revenue from $81.9 million to $78.Three million. And once we examine the quantity obtainable 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 might 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 value of property, $1.6 billion value 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’ll be able to see the present valuation figures now we have in combination SGD 5.894 billion. After all, that features our curiosity within the North American portfolio, you’ll be able to 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’ll be able to see within the first bullet level, primarily is pushed by revaluation achieve of near $80 million, plus one other $32 million from the capitalized price of our growth and enchancment works. And naturally, the rise within the North American portfolio was primarily on account of acquisition of the 13 knowledge facilities only recently 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 executed a few of the refinancing a bit of 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 combination 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 in case you take a look at the following couple of economic 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 amenities to satisfy our wants within the foreseeable future. Greater than $380 million value of dedicated amenities obtainable within the present monetary 12 months.

And transferring on to Web page 15, the place we take a look at our danger and publicity. The quantity of debt that’s mounted is about 73.4%. So we expect that will, say, cut back quite a lot of volatility we might even see within the portfolio. Weighted common tenor of the hedge is roughly 3.Eight years, following fairly carefully with our debt tenor as properly. And weighted common funding price is comparatively steady, 2.9% for the fourth quarter of economic 12 months ’19/’20, partly helped by a bit of little bit of the bottom charge discount which you can see available in the market, and it is pushed by the Fed cuts as properly. Curiosity protection ratio has moved up a bit of, now at 7.7x. And on the precise, you’ll be able to 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 economic 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 combination, now we have about 21 million sq. toes of internet lettable space and, after all, the up to date chart for our portfolio, at the moment second, now we have greater than half of our property 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, over time, has been coming down. We’re seeing nearly 1/Four of our property which can be Flatted Factories; Enterprise Park, just under 10%; Stack-up/Ramp-up amenities, 8.3%; and a really small illustration, 1.3% in Gentle 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 a bit of little bit of enchancment from 90.5% to 90.7%. For the U.S. portfolio, primarily due to the brand new amenities that now we have taken on, that are at 100% occupancy, so the combination occupancy stage for the U.S. portfolio has elevated a bit of from 97.8% to 98.7%. And naturally, for the general portfolio because of these 2 parts, 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 properly unfold over time. General, weighted common lease expiry is 4.2 years. If we’re wanting on the present monetary 12 months, solely 17.7% of the enterprise are due for expiring. So we do not assume there shall be any massive publicity to anyone phase or actually any tenant lease for this monetary 12 months. So it is a enterprise as normal, engagement now we have with our tenants for the expiration of the leases and renewals.

And occurring to the following web page, Web page 20, the place we outlined our prime 10 tenants. We see them contributing just under 30% of our income. We now have a really giant tenant base, greater than 2,200 tenants. Largest, after all, is Hewlett-Packard, 8%. The remaining are very robust steady 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 possibly can see that no commerce sector accounts for greater than 80%. After all, Hewlett-Packard, our largest tenant, which contributes 8%, is the one largest commerce sector of about 18%. So the remainder have carried out an expansion of all of the completely different commerce varieties. InfoComm, which is represented by the blue sector, has been rising progressively over time as we tackle extra knowledge facilities, and quite a lot 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 possibly can see that the occupancy stage has moved up a bit of from 90.5% to 90.7% within the bar on the precise. And weighted common rental charge has come down a bit of 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’ll be able to see the occupancy ranges now we have registered for all completely different property varieties. You possibly can see reductions in Flatted Factories partly as a result of Kolam Ayer 2 redevelopment mission 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. Similar factor for the Gentle 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 varieties. 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 share level from 90.5% to 90.7%.

And occurring to Web page 24 is our rental revision. You possibly can see that it’s pretty steady throughout all of the property varieties. Among the price — or a few of the property varieties, 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 steady. And even for Flatted Factories, we’re seeing a really steady 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 a bit of 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 supplied 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 help exhibited within the fourth quarter. That is, after all, earlier than we see this extra stress coming into the market now. However I feel final quarter was fairly a great quarter for us so far as rental revision is worried.

Occurring to Web page 25, we define the retention charge. From the bar chart on the precise, you’ll be able to see 77.5% of our tenants have remained with us and renewed for the quarter. And in combination, 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 following phase, which is our funding replace on Web page 27. The important thing factor to spotlight 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 following web page, that’s our Kolam Ayer 2 redevelopment mission. The important thing factor to spotlight 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 various clusters. So work is on schedule. And by the point the final tenant leaves, round July, we’ll begin our redevelopment mission primarily based on the plan.

And eventually, we transfer on to our outlook and technique web page, that is on Web page 30. This time round, I feel now we have a bit of detrimental. The outlook, I feel, for Singapore, it’s difficult. Basically, 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 taking a look at minus 4% to minus 1%. However I feel we’re taking a look at 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 quite a lot of our tenants, who’re small and medium enterprises, are feeling the strain. 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 combination foundation, is about 45%. So we’re retaining a detailed eye on the well being of our tenants, and we actually attempt to see what we will do to be of help to our tenants who’re feeling these pressures.

Now in case you control 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. toes per thirty days. So I do not assume we will learn an excessive amount of on this set of figures but. However as I’ve outlined earlier, we help our tenants throughout this very tough interval. And as you already know, the circuit breaker interval has been prolonged, and so we shall be taking a look at 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 providers or in key financial sectors to proceed operations. However as a result of various our tenants are on this area, we saved our buildings open and operational. I feel as of our final verify, primarily based on our engagement with our tenants previous to the additional tightening, now we have about 70% of our tenants which can be nonetheless working. And naturally, over the following couple of weeks, we expect which will come down a bit of because the measures get tightened a bit of. 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 standard hire so-called restructuring and deferment concerns, we’re additionally taking a look at 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 following factor to notice, after all, is the COVID-19 Momentary Measures Act, which gives momentary reduction for companies and people. In our context, it might be our tenants, who’re unable to meet the contractual obligations and handle the rental fee. As of now, we haven’t any massive arrears difficulty 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 following 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 following web page, that is on North America. After all, all our amenities are knowledge middle amenities, 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 largest type of illustration now we have now’s Northern Virginia. The absorption has been pretty robust, and pipeline has continued to be strong, and we’re seeing transactions persevering with to be executed at increasingly more aggressive, compressed charges. So I feel in case you look throughout the trade — throughout completely different asset varieties, that is nonetheless one of many extra resilient asset varieties within the present state of affairs. So after all, as these are important amenities, all our knowledge facilities in North America have continued the operations.

So I feel, lastly, we transfer on to our technique. Usually, we wish to stay diversified and resilient, as on Web page 32. It is supported by a 3-pronged technique, retaining our portfolio steady and resilient. And in case 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 positively, particularly within the present time, we anticipate extra stress available in the market. We take a look at the strengthening our steadiness sheet and enhancing our monetary flexibility. And in case you take a look at the bullet factors within the center, we haven’t any 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 robust at 7.7x. We now have put aside some quantity, $6.6 million, from our tax-exempt revenue within the fourth quarter. And with out that, that can give us a bit of little bit of — a bit of bit extra flexibility in money administration on this present monetary 12 months. So the expansion of the portfolio, after all, we proceed to take a look at acquisitions and growth potentialities. 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 mission in Kolam Ayer could be — is on observe, and we expect this shall be a significant addition to the portfolio as soon as accomplished in about 2 years from now. So that is on observe.

And I feel 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 feel we will 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 Track from JPMorgan.

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

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Only a few questions. Thanks for the stat when it comes to 70% of the tenants who’re working. Possibly you may give us a stat when it comes to 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 & Govt Director of Mapletree Industrial Belief Administration Ltd. [3]

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Can I — am I in a position to communicate now?

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

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Sure, you’ll be able to. We will hear you.

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

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Okay. No drawback. Okay. The 70% of the tenants being in operations was — by way 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 already know, they needed to scale back nonessential type of actions after which the variety of nonessential staff transferring round. So quite a lot of these are MNCs, quite a lot of these are important providers, meals providers as properly. 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 have been beforehand thought of important providers to scale 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 a bit of, 10%, 20%, till the tip of this extra restrictive circuit breaker measures are eliminated.

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Mervin Track, 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 share of returns have began asking you? What is the quantity you anticipate?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Govt 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 when it comes to numbers, it is a bit of bigger. I feel it is about 800-plus as a result of we — various 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 in a position to assist or — I feel now we have articulated earlier than in our launch on this help and reduction program goes to be a bit extra focused and assist these in higher want of assist.

So for many who have checked out some type of deferment or type of delay in hire funds, I feel, 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 way of the applying of the act, this Momentary Measures Act. So this, after all, is newly launched, after which quite a lot of the small print are nonetheless being awaited now. However I feel because the state of affairs and the situations turn out to be a bit clearer, we do anticipate a few of the tenants that will ask for some type of deferment or delay within the hire, so-called funds over the following couple of months. However as of now, now we have not executed any…

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

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I suppose when it comes to the rental reversions, detrimental strain 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, when it comes to 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 & Govt Director of Mapletree Industrial Belief Administration Ltd. [9]

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Okay. I feel earlier than now we have this pandemic, we have been, at the moment, cautiously optimistic of perhaps the market bottoming up. As you’ll be able to 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 combination foundation. So we thought perhaps, sure, that help stage is there.

However now with this, the market being below this type of strain and with recession looming, I feel type of constructive end result on this state of affairs will in all probability be a minus 2%, minus 3% type of hire regression when it comes to the impression on the portfolio. However I feel on a person renewal foundation, typically we’re seeing a bit of 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 when it comes to occupancy, I feel the momentum for getting new leases in all probability will decelerate. And whereas we attempt very exhausting to work on our retention, as you’ll be able to see, now we have been all the time doing roughly the 75% stage of retention stage. So we’ll commerce off charges with occupancy, in different phrases, or whether or not we might trade-off rents with occupancy, so we’ll go for a barely increased retention stage, in all probability barely decrease rents or we’ll have some detrimental revisions in order that we will maintain our occupancy wholesome. So occupancy stage, we actually wish to attempt to preserve. We’re life like in regards to the new leases that we will safe for the present vacant area or area that will be given up by tenants who will naturally not renew with us. So occupancy might drift down one other 1, 2 share level from present stage.

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Mervin Track, 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 scale back area or rightsize area, though they might keep?

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

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Sure, they’re. We’re seeing circumstances of this type of request for area changes. And naturally, to be prudent, we might encourage the tenants to assist for, say, alternative tenants for the area so far as doable in order that we will 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 which may be capable to 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 have given thus far? I perceive 1.5 months is from 18 Tai Seng. And I feel 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 & Govt Director of Mapletree Industrial Belief Administration Ltd. [14]

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Okay. The $6.6 million put aside — quantity that’s put aside is just not 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 whole sum down there that now we have put aside. And we’re additionally wanting on the reduction 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 to 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 quite a lot of type of extra quantity that we will put aside.

And even when we don’t distribute the taxable revenue in 12 months from now, we nonetheless have to account for it anyway. If not, it’s essential pay tax. So wanting on the present state of affairs and looking out on the type of arrears situation, our arrears are nonetheless very properly below management. And searching 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 feel, as a portfolio, we’re not as badly affected as the opposite property varieties like hospitality or retail. So the — whereas the impression is there, it’s not as important. So we don’t wish to put aside an excessive amount of, and we might 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 ultimately and really quickly after in contrast to — attain with monetary 12 months ending December 31, 2020, now we have December 2021 to take 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 simply distribute no matter that’s the taxable revenue due for the total monetary 12 months ’19, ’20, perform the remainder in order that we haven’t any residual type of tax concerns or points. Then we take a look at the steadiness that’s obtainable, produces tax-exempt revenue coming from the North American knowledge middle portfolio. $6.6 million is roughly 2.5% of our distributable revenue for the final monetary 12 months.

It is not too giant an quantity. I feel 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 feel, as you rightly identified, our 18 Tai Seng retail tenants is a really small half, is near 0.5 million property, 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 move on of the property tax rebate. And the following group of tenants, our canteen and meals cart operators, I feel 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 alternative industries, small, medium enterprises and in addition the bigger firms in rising MNCs. We now have executed some tough allocation, however I feel we’re, at the moment second, taking a look at 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, contains our carpark operators as properly. As you already know, the carpark operators will even rely on the type of season plus hourly carpark expenses. 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 taking a look at that as properly.

However we’re unlikely to, say, allocate a lot to those who are nonetheless, say, working fairly properly. For instance, the info facilities that now we have. They’re very properly used throughout this time period and I feel fairly low, like circumstances of them needing extra help. Among the bigger MNCs, we expect they’re in all probability fairly properly ready and fairly properly cushioned. They’ve a robust steadiness sheet and possibly 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 comply with 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, bearing in mind COVID state of affairs already? Or is it purely pre-COVID and could possibly be revised afterward?

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Govt 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 reduction 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 present the rebate or the reduction. 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 completely different, however on the finish of the day, the $6.6 million that now we have put aside is, in a kind, a option to partially offset the impact of the decrease assortment from this reduction that now we have given. After all, a really pure query is did we wish to put aside an equal quantity, in different phrases, this complete equal $13.7 million or near $13 million from monetary 12 months ’19, ’20 in order that we will so-called fund totally no matter reduction that we expect we’re possible to make use of. So that’s doable.

However as I’ve outlined, I feel, in my earlier reply, if we have been to — this complete quantity past no matter is tax exempt goes into the taxable revenue half that ultimately we might want to sq. that off. And if we don’t sq. that off, meaning to say we might 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 executed with that, and we haven’t any difficulty. In order that leaves us with, say, setting apart the $6.6 million, which we expect could be enough to cowl about half of no matter now we have envisaged for this reduction. This $13.7 million, after all, relies 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 is just not as dangerous. Possibly actually Singapore is ready to get it below management. Another elements of the world are step by step opening up cautiously. Sure, perhaps we might not have to devour all the things. So I feel to be prudent, we additionally would not wish to over type of present for when it comes to withholding of this type of extra buffer. So it’s, in impact, a great 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 when it comes to 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 when it comes to DPU for monetary 12 months ’19/’20 over the earlier monetary ’18/’19, the 0.7% type of improve in DPU. So I feel, tremendous, that’s in regards to the type of steadiness that we’re taking a look at having some stage of provision that we might have for, say, the reduction program for this present monetary 12 months.

And I feel your subsequent query is on the valuation. It was an extended dialogue with our valuers and naturally, with our Board as properly. At a time the place the valuations have been assessed and executed, they’re, after all, conscious of a few of this strain or looming points, and so they have taken some consideration of that. However as you already know, valuations, they would want to take a look at transactions or want to take 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 way of our life forward. So whereas they could have taken a few of this near-term impact into consideration, I do not assume they’ve totally 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 in case you take reference from even official numbers coming from JTC, very marginal shift even till the tip of March when it comes to recorded hire numbers.

And I feel there’s only a few transactions on this interval as properly — throughout this time period. So it is tough 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 not possible to quantify on this present set of valuation. However I feel in case you look throughout the board from — many of the valuation statements or experiences from valuers the place they’ve put on this qualification that’s in all probability higher to evaluate it a bit extra often afterward if the market actually shifts considerably. However as of now, I feel 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 evaluate on the half yearly given the distinctive circumstance going the following 12 — 6 to 12 months?

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

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We — okay, I do not assume we wish to set a definitive time interval, however we’ll be retaining 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 executed, 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 control that. We control transactions. We control REITs. However I do not assume we wish to set a really strict, definitive time line, and say, okay, we will certainly evaluate it 6 months from now. So we’ll monitor the state of affairs a bit extra carefully 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, primarily based on what you may have deliberate for the help package deal, would their request be glad? Or do you assume they’re going to be hungry for extra?

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

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I feel you already know the reply.

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

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They’re all the time hungry, however simply wish to get a way.

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

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Okay. I feel once we outlined our intent to move on property tax rebate and assist a bit of 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 may ask is can now we have a bit extra and a few extra. So I feel it is tough to fulfill totally as a result of from the tenants’ perspective, in case you take a look at, say, even the nonretail tenants, perhaps tenants, after all are beginning to get — beginning to see the consequences in all probability from February, March onwards. So — and it’ll play out till finish of Could 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 will be fairly a number of months.

Might we accommodate 3, Four months of rebates or reduction? I feel in all probability not — we’re not ready for that. Now identical factor for the economic tenants. I feel most of them began to see some results across the Lunar New 12 months 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, skill to satisfy the demand even then after they nonetheless have some good stage of demand elsewhere on the planet. However I feel they’re seeing the consequences 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 elements of March, elements of April. Now we expect a few of them are in all probability experiencing in Could. From their perspective is, a few months, we’ll be capable to deal with like a few months of reduction, I feel, 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 reduction shall 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 shade 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 & Govt Director of Mapletree Industrial Belief Administration Ltd. [26]

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Sure. The collections in April, I feel is a bit of — considerably much less immediate in comparison with the last few months. I feel on the GIRO entrance our so-called profitable GIRO deduction charge from the financial institution accounts from our tenants has all the time been roughly 98% up to now. There’ll all the time be some tenants who do not find the money for in a checking account or forgot to prime up the account or for no matter purpose wouldn’t have the GIRO deduction being executed efficiently. So it is all the time 98%.

In April, we’re seeing a 94% quantity, so when it comes to share level drop, roughly Four share factors. So it’s, after all, an early indication on the extent of stress our tenants have. A few of them might need money move points. So after all, while you see this type of GIRO deduction so-called charge, it’s not indication that it will all turn out to be — say, these usually are not collected by way of GIRO or turn out to be higher to proceed to interact our tenants and see if they’ve any points on the checking account, whether or not they pays by way of different means or no matter. In order that’s a normal course of we have interaction, nevertheless it is a sign of the money move constraints our tenants have. And a few of it will in all probability ultimately ask for some type of help or reduction or deferments. So April could be a bit early to pin down that enterprise so-called the quantity or ratio of the — however I feel you will in all probability have a greater image Could, 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 notice that when it comes to the administration charges for the following 12 months, you may have talked about that you’ll be taking a decrease charges primarily based on the final 12 months’s valuation. Possibly are you able to give some sense when it comes to how a lot discount within the base charges this might be and the explanation — the rationale for utilizing such methodology in comparison with, as an instance, 5% to 10% discount in base charges? That is my first query.

And my second query is when it comes to the Kolam Ayer redevelopment plan — sorry, redevelopment possibility, how would this COVID-19 impression it? Possibly you — would you lengthen a few of the tenants who’re already there otherwise you could 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 & Govt Director of Mapletree Industrial Belief Administration Ltd. [29]

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Okay. Okay. So I feel the administration — base administration price 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 often adjusted 2 methods: first one while you do transactions or when you may have revaluations. So while you do transactions while you purchase or promote property, then your portfolio worth will change very naturally. And while you do revaluations, the second means this quantity will get adjusted is our year-to-year valuation. And in case you take a look at our year-to-year valuation, there’s all the time a bit of little bit of valuation achieve. In order that a bit of little bit of valuation achieve is the place that differential is. And in case you seek advice from the slides that now we have outlined, we speak about $80 million value of — I feel it was $79.7 million, so it was $80 million value of valuation achieve. So that’s the delta we’re taking a look at. So our base price 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 positive factors, is it?

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

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There may be. There may be. It is all embedded inside. As a result of our so-called acquisition value was, I feel, about 2-or-so p.c under valuation, the one which we did 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 — shall be solely be primarily based on the revaluation achieve of Singapore properties? Or wouldn’t it consider U.S. properties additionally?

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

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Complete portfolio, complete portfolio. So on an combination 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 & Govt 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, as an instance, 2%, 3% discount when it comes to base charges, which you’ll?

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

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Properly, I — that one, I feel, is partly a sponsor consideration as a result of the price is charged by the supervisor by way of the belief. So typically, I feel in — even now, I feel base charges ought to usually improve proportionately to your valuations and valuations or valuation positive factors have been registered over time. And the explanation why I feel the sponsor has taken that posture is that they acknowledge that many of the platforms could have some valuation positive factors registered. So as an alternative of paying the price to, say, increased 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 in addition indication of the type of methods, 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 possibly on Kolam Ayer web site.

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

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Sure. For Kolam Ayer, the present tenants, now we have down there, the 108 tenants which can be 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 quite a lot 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 a bit of increased and naturally, rents shall be a bit of increased in comparison with what the present tenants are paying.

So this isn’t a one-for-one type of alternative 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 mission, we might have that area locked away. The remaining, steadiness, 75% of the realm obtainable, we would want to search for different various tenants, and it is a time for the following 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 are going to 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 & Govt Director of Mapletree Industrial Belief Administration Ltd. [41]

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Sure. So I feel the time line stays the identical as a result of I feel, so far as the present 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 feel now we have already outlined in presentation, 67 out of 108 have already dedicated elsewhere. After all, 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 mission and plan is on observe. We now have vital clearance from the authorities for many of the pending approvals. So it is going in accordance with plan.

After all, one factor to look out for is the impression on building prices and time length. And now with quite a lot of the employees being held again from going to work websites naturally and building contracts, when it comes to contract interval, when it comes to contract value will in all probability be affected within the subsequent couple of months. So we’re taking a look at that carefully 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 serious about the payout ratio for each MIT to shareholders and in addition from the U.S. portfolio to MIT?

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

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Okay. I feel 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 steady. The property are having very lengthy leases in place. So I feel until there’s any change within the U.S. tax regulation, we’ll simply pay out as regular primarily based on what now we have been doing up to now. So all of the distributions coming from U.S. being tax exempt would come again to our Singapore web site.

Now the payout ratio is a bit more tough to calibrate, as you already know, in view of the present state of affairs. And we — at this second, whereas now we have some preliminary gauge, it’s extremely tough to pin down what number of of our tenants would look 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 tough to pin that down.

However I feel our basic guiding consideration is that we might not keep away from paying tax due to — or somewhat, we don’t wish to pay tax unnecessarily due to our incapacity to satisfy the tax transparency so-called guideline of 90%. And as now we have seen within the reduction 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 should be — nearly as good as taxable revenue will nonetheless should 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 not less than a minimal threshold or assembly a minimal threshold of 90%, there shall be tax implications. So we’ll wish to keep away from getting in that type of state of affairs, which penalizes unitholders unnecessarily. So we wish to see how massive that mismatch is between accrued taxable revenue and in addition precise money receipt.

So for the approaching quarters, so long as now we have ample distribution — ample assortment, we can pay out the distributions that may meet the taxable revenue. So in terms of 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 feel we’ll in all probability additionally launch that as properly. So it is a bit tough to pin the precise payout ratio now, and I feel it will likely be guided much less by mounted ratio as in a giant share 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 feel, 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, not less than, 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 simply pin a really particular share stage, share level.

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

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And if I can simply comply with 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 anticipate to materialize when it comes to deferrals? And if all of that materialized, then ought to we anticipate 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 & Govt Director of Mapletree Industrial Belief Administration Ltd. [46]

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Okay. After all, I feel the near 10% stage that we’re seeing and taking a look at tenants are asking for some type of deferral might be a headline quantity. It’s an aggregation of the type of impression simply primarily based on the primary look. Hopefully, when it comes to precise — the way it really performs out, we can’t see this type of stage, not less than in type of regular and we will encourage a few of them to not, say, e-book on a big quantity of deferral or perhaps simply e-book round 1 or 2 months of help or reduction. So that’s what we hope to work in direction of.

However neatly, you may have rightly identified. So if it seems that now we have a big deferral, sure, it could 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 a bit of 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 economic 12 months, which is 31st March. So we will nonetheless make some changes alongside the best way till the tip of economic 12 months. However after all, I actually acknowledge from the unitholders’ perspective, this profile will in all probability be a bit of bit extra risky 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 on account of purely the U.S. acquisition completion? And may you additionally replace us on the progress fee for Kolam Ayer when it comes to the schedule? How is it like over the following 2 years?

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

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Okay. Sure. I feel 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 feel, 37.6%. After all, if we had not had the valuation achieve, we shall be barely increased, marginally increased, however due to the valuation in — this has been saved a bit of under 38%. However the reduction 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 feel it’s on the schedule. I feel we’re nonetheless planning to stay to our unique schedule, about 2 12 months growth interval. And from the precinct shall be prepared second half of 2022. So after all, as I outlined earlier, the primary contractors are dealing with a little bit of difficulty as a result of manpower constraints and in addition doable provide chain disruptions on provide and supplies. So we’re retaining 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 mission, subsequently, only 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 important.

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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 immediately. I feel we had fairly a sturdy dialogue already. We shall be ending the decision. However Lily and I shall be pleased to take any questions that you’ve offline. Thanks, all people.

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Kuo Wei Tham, Mapletree Industrial Belief – CEO & Govt 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 great day. Bye.

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

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Bye-bye.

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Operator [53]

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Girls and gents, this concludes immediately’s convention name. Thanks for taking part. You might now disconnect.



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