CapitaLand Integrated Commercial Trust (OTCPK:CPAMF) Q4 2022 Earnings Conference Call January 31, 2023 8:30 PM ET
Company Participants
Allison Chen – Executive
Tony Tan – CEO
Lee Yi Zhuan – Head, Portfolio Management, CICTML
Jacqueline Lee – Head, Investment of CapitaLand Integrated Commercial Trust
Mei Lian – CFO
Conference Call Participants
Mervin Song – JPMorgan Chase & Co.
David Lum – Daiwa Securities
Brandon Lee – Citigroup
Derek Tan – DBS Bank
Yew Kiang – CLSA Limited
Rachel Tan – DBS Bank
Xavier Lee – Morningstar
Donald Chua – Bank of America Merrill Lynch
Allison Chen
Hi, everyone. A very good morning to you in the big picture and to those joining us online. I’m Allison from the CICT Investor Relations team, [indiscernible]. CICT released its full year to it results this morning, and we have the management team here with us to share the highlights of CICT’s results. I’ll introduce them later.
For today’s briefing, we’ll start out with a presentation by our CEO, Mr. Tony Tan, followed by a question-and-answer session. Please note that this session is live, recorded and will be uploaded later on our website.
Now I’d like to invite Tony to start his presentation. Thank you, Tony.
Tony Tan
Good morning. Just commented, there is a big place for a small crowd. So we released the results this morning. I hope you have a little bit of time to digest. I’ll just quickly run through some of the key highlights and then of course our management teams are here to take some questions.
Okay. So some — just a few key highlights, which can be elaborated in the following slides. A few things, I think, will work out quite well in 2022. We have seen some nice improvement in the operating metrics. Committed occupancy, for example, has been going up over the year, over the quarter as well. And we have achieved rental reversion positive both for the retail and office as well as a tendency that’s now already surpassed 2019 that includes downtown and suburban.
So I think we’re quite pleased with the overall general trends that we see in 2022, which is quite in line with what we talk about when we met in different occasion on a sequential basis, we think, trying to — towards the end of the year, which you see nice uplift, given there were a few momentum that has already triggered as a result of more relaxation from the COVID measures.
Shopper traffic has been rising as well over the years. And of course, towards the end of the year, we’ve seen the, in a way, leading to the festive period, we’ve seen quite nice uplift as well.
Throughout the year, I’ve been very, very careful about how we look at costs, very active managing the costs. Everyone knows the inflation is hitting us in all fronts. Interest rates have been going up. Utility rate has been going up as well. So we have been very proactively trying to manage all these different things and dynamics that have been hitting our expense line.
I think we have achieved a reasonable output given the — given a little bit of guidance on how the utility rate vis-a-vis 2021 has moved up, now almost 90%. And rough estimate on how that would impact on the DPU front, I think we came out better than that.
We also secured quite a bit of financing from the market, in total SGD 2.7 billion. They were secured in 2022. And we have hedged our energy rate throughout the course of the year. And 2023 is protected, albeit is a higher rate. 2024 is protected as well.
Given that we know that the volatility of the energy price is going to be still notwithstanding all the geopolitical and war issue that we see in the world, I think energy prices will continue to stay elevated for quite a while.
Capital management is going to be active this year. Hopefully, we are able to manage our balance sheet more effectively as well. We have done some proactive and very conservative management of balance sheet. I see the gearing came down a little bit, about 40.4% at the end of the year.
I’m really looking forward — we’ve been quite pleased to hear that China is opening up. At the end of the year, they talked about coming February, they’re going to release more or less the flight-gate to the rest of the world. That certainly will be helpful for the retail business and especially in the downtown business. So we hope to see the trajectory coming through in 2023.
Also improving on the hospitality side, we have a couple of hospitality-related assets in our portfolio, the hotel in Raffles City, lyf Funan in basically Funan. We have seen very healthy kind of RevPAR or occupancy. Yes. So that’s trending out pretty well.
So from a number of perspectives, full year, we achieved a — I mean almost a, let’s say, 1.73% improvement on DPU. That’s the — I know it’s below market consensus, but I think we have done a little bit of things. Hopefully, going forward, we have seen some improvement from there. Bear in mind that we also have certain, hopefully, potential measure that will help improve the operating number as well going to 2023.
On the revenue side — sorry, distributable income side is up by 4.1% to SGD 702 million. I’ll talk a little bit more later on. So overall portfolio of occupancy has creeped up to 98 — 95.8%. From third quarter, we reported 95.1%. So it’s going up as well.
WALE has come down slightly from 3.8 years to 3.7 years. From a retail perspective, the — earlier I mentioned and think that the number trending well quite well. Third quarter, we closed in — third quarter as in year-to-date September, retail sales was 21.3%. Today, we are looking at full year 22.5% is improvement as well. Suburban Mall — again Downtown Mall lead to Suburban Mall internally recovery but surely, because Downtown Mall has been getting a wider, a bigger hit during the — throughout the COVID period. And then you’ve seen the rebound very robust and all of our various measures like the relaxation of the mask mandate, think it’s a critical turning point. A lot of people have started to flow back the office and we’ve seen very healthy returning rate to the office. So Downtown Mall is seeing a little bit uplift. A little bit of tourists trickling in as well. So we’ve seen a little bit uplift from the tourist crowd as well.
And Suburban, as usual, remains pretty resilient. People are still working from — either 3 days, 2 days from home or for one, depends on which company you look. But overall, I think suburban has been pretty resilient.
Portfolio, overall traffic, has got, like I mentioned earlier and as led by downtown. Overall rental reversion, I did touch on earlier, I think it’s all positive now, both the office and retail and is, in fact, I think whether you measure it from an average perspective or incoming/outgoing perspective, I think the retail sale — retail reversion has gone positive as well.
Valuation. Overall — if you look at overall for the whole 12 months, it’s gone up by close to 9%, with a little bit of a portfolio adjustment we did in the year, we divested One George Street towards the end of 2021, and then we had a divestment of JCube. We acquired CapitaSky. We acquired and completed 3 Austrian assets. So a little bit of movement. But overall, I think, the valuation has gone up by about 9%.
In terms of geographical split, slight movement only. I think Singapore portfolio share has gone up about just 1%, 93% with 3% in Germany and 4% in Australia. This one I don’t touch it too much. I think it’s self-explanatory.
So second half full year, I think revenue has gone up quite nicely, 14.4% and NPI, 13.1%. Margin-wise, I think, we held steady. We are trying to guide the market a little bit, try to move it, given all the different inflation number that has been coming in. We are hoping that we are able to achieve more than 70% margin. I think we achieved a reasonable margin close to 72-plus percent overall. That’s for the full year, okay.
I think for the first time, we crossed our NPI by SGD 1 billion, that’s a big milestone. Of course, the SGD 1 billion is just a digit, but certainly, it’s a major milestone for CICT, yes.
We continue to be probably one of the most diversified REITs with — in terms of different revenue streams, as you can see our layout here. Singapore by far still the largest. And of course, we have some minor contribution from Australia and Germany as well.
So we’ll continue to build on that. Hopefully, we get even a wider diversification. Singapore will still be very prominent, dominant. And I mentioned before, we hope that over time, we are able to scale up in some of the 2 markets that we’re already in. Balance sheet is healthy. NAV closed about SGD 2.12 including the dividend, SGD 2.06 excluding the dividend. Funding-wise, I think, we can assure that it’s all covered, SGD 1.166 billion, more that covered. We had all the funding in place, it’s about timing drawing down, closing the documentation. And of course, at the right moment, we do the interest rate hedge.
And we also done a little bit of sensitivity on the interest rate movement and earlier, I was just discussing with some of you out there. Overall, I think we are quite happy because, I think, we had a pretty high hedge rate. And as a result, I think you see less volatility in terms of the impact from interest rate increase.
On the balance sheet-wise, we closed the year with some improvement in the metrics. Gearing has came down to 40.4%, a bit more proactive. Make sure we don’t have idle cash sitting around.
Total borrowing came down a little bit whichever I meant. Fixed rate has gone up slightly from September, 81%. And then interest cover came down slightly from 3.9% to 3.7%, a reflection of the higher interest cost that we are paying now. So average cost of debt creeped up by about 0.2% to — from 2.5% to 2.7%.
I don’t think I want to run through too much detail. All I can say that portfolio remained — occupancy remained pretty stable and it’s creeping up as well.
There was slight movement, nothing to shout about. And this again — the main thesis about diversification. I think the top 20 now contribute less than 20% of our overall contribution income-wise.
Okay. I won’t touch this. This one I did mention before. And, yes, I think overall, we’re still seeing a nice improvement in overall retail occupancy. REIT — Raffles City, I mean, because we have completed the AEI we took the entire space back into the market and hence we’re above 91%, not all the space in AEI has been fully let. It’s about 70-ish percent. Later on, I’m not sure whether you’ll be participating in the walk at Raffles City post-launch. Yes, so we have — kind of have a look at what we’ve done over there.
Overall reversion, I mentioned earlier, I think we have achieved a positive reversion even for Downtown Mall and that’s positive development. And in the fourth quarter, it’s gone positive for both downtown in either incoming or average-average, right?
I won’t talk about this too much. I think this one I mentioned before. Downtown continued to lead the uplift in terms of the sales improvement. And we surpassed 2019 sales overall, both Downtown and Suburban. I won’t say about this too much.
Office-wise, occupancy has improved, 94.4%. So in Singapore, is 96.2%, average rent is about the same as what we reported in September. Reversion remained healthy 7.6% compared to third quarter is about 7.9%. Retention rate remained very healthy, 81%. And this is just a breakdown, okay?
We’ve seen some creep up in occupancy at the Australia site as well, and we hope to be on the momentum. And as the return to office, hopefully, will pick up in the — throughout the course of this year.
Okay. I won’t break this, right. So all these are a little bit more things for you to digest at your free time. I won’t delve too much, okay? In terms of outlook, naturally, I think there’s a little bit of a dark cloud out there. Everyone knows about it. There’s no surprise. There’s been news about various job attrition, tech company, particularly. Some impact to Singapore. We have not seen a very wide spread impact in Singapore yet. But naturally, because the environment is in the mood of rationalization, we tend to see quite — in line with what the consultants are saying I think going to 2022, we see probably a little bit of slowdown in terms of rental growth. But nevertheless, there are other positive factor underpinning Singapore’s office market. Demand beyond the trade sector, I think, has been, I would say, quite decent.
FMCG — legal business support services are still expanding the legal fraternity, I think, are also looking at expansion. Some interesting things like the — which Singapore is anchored strongly in this part of the world as being a champion on ESG sustainability. And we see a lot of companies starting to move into Singapore as a base. So we have seen some nice traction. Hopefully, that will transmit into some real demand for space, yes.
I, think, retail-wise, trajectory-wise, hopefully, first quarter riding into the festive period, we’ve seen nice improvement and as the flight-gate I mentioned in China. I don’t know how many will fly into Singapore. Certainly, there will be more tourists coming in. And hopefully, Downtown Mall will continue to get that push momentum. Suburban Mall I emphasized it before it will remain pretty resilient, yes.
So overall, a little bit of dark cloud, some things to match on what we have been actively doing in 2021. Cost management is important. Interest rate cost management is very important. We’ll continue to do that. This is what I mentioned.
So we are looking also to hopefully complete our AEI in Clarke Quay this year. We are already planning ahead, what next. There are a couple of projects we are studying. And at the timely moment, we will just let you guys know, right?
Okay. I think I’ll stop it here. And our colleagues can join me. Yes. Very fast.
Question-and-Answer Session
A – Allison Chen
Sorry. I’d like to invite the rest of the management team up on the stage for the Q&A. Before we start, I would like to introduce the management team, to Tony’s right, we have Ms. Wong Mei Lian, our Chief Financial Officer. To Tony’s left, we have Ms. Jacqueline Lee, Head of Investment. And to her left, who have Mr. Lee Yi Zhuan, Head of Portfolio Management.
Some housekeeping rules before we start. (Operator Instructions) We’ll be limiting 2 questions per person per round. If you have more questions, we’ll come back to you. For those online…
Tony Tan
[Indiscernible] now your question. Sometimes I need to remember.
Allison Chen
Okay. If you are ready, we would like to invite the first question from the floor, please.
Tony Tan
Mervin. Yes.
Allison Chen
Mervin?
Mervin Song
Congrats on a good set of results and happy new year.
Tony Tan
Thank you.
Mervin Song
Maybe the first question from me is retail rental reversions. I think 1.2% average-average for the full year. Any sense on what was the number in the fourth quarter and the outlook from here? Are you having difficulty pushing through the high electricity cost service charges ?
Second question I have is regards to the distributable income adjustments. There’s been a negative SGD 36 million of rollover adjustments, I think, related to some tax issues. Maybe you can explain exactly what’s happening there.
Tony Tan
Okay. The fourth quarter overall, we achieved close to 4% reversion that’s combining the suburban and downtown thereabout. Whether it’s enough or not, like, I think, I was talking to you down there — I think this year going forward, not just the expense line, I think, of course, we tried to manage the revenue line as well. But we’re also very cognizant of the fact that the inflation is hitting the retail — retailer quite badly though. So they move up the CPI. I mean, basically, the retail sales price, I’m sure you guys feel the heat, right? But not all of them are able to fully absorb the call.
So we’ll be very cognizant, but more importantly is to be able to drive the sales. So we still think that the sales component of the rent would be very, very important. And that’s where I think we put a lot of effort into it. So it would be a little bit more, I would say, accommodating from a fixed rent perspective, but we’ll try to drive the turnover rent.
And we had the year pretty decent. I think overall, I think GTO rent is about 7-plus percent, which is slightly on the high side.
Second question of payment I’ll pass to Mei Lian. It’s not payment, we’re talking about the distribution adjustment.
Mei Lian
Yes. I think this disclosure was made earlier in the first half results. It’s noncash in nature. So this relates to the COVID-19 cash grant that was received in 2019. And it was actually distributed as tax-exempt income. And subsequently, we had the IRS came back to us to sort of confirm the position that it should be — should not be an exempt income. It should be under the taxable income. So there was a rollover adjustment to adjust for the over distribution of taxable income in 2019. Noncash in nature, has no impact on DPU.
Tony Tan
Something like reclassification.
Mei Lian
Yes, it’s a reclassification.
Tony Tan
Yes.
Allison Chen
Can we have David from Daiwa?
David Lum
Tony, you mentioned that last year, you were very proactive and prudent in the management of your balance sheet. But as a consequence, did it limit your ability to make our opportunity to take acquisitions because you gave a few major deals in this — in the second half of last year? So can you just remind us what is your stance on potential opportunistic acquisitions last year? And then looking ahead to this year, the fact that you’re gearing is still 40%, will that still limit the size of investments you can make?
Tony Tan
Yes, sure. Thanks. So I think we, of course, we look at holistically, portfolio reconstitution, what we want to do overall portfolio. We look at market condition. We look at opportunity out there. So it’s a triangulation of all things with factoring in any kind of your assessment. So it’s no different in 2022, 2023. So we’ll continue to be able to see whether we can fine-tune our portfolio construct. Market condition is allowable. Obviously, we would like to participate and hopefully can – in some kind of accretive acquisitions. So it’s triangulation of everything. So I don’t think that 2023 will be any different from the way we look at it in 2022.
In 2022, it has been very volatile, especially in the third, fourth quarter, you probably know. Market condition is not exactly there. Hopefully, 2023 market condition is a little bit more favorable.
Brandon Lee
Brandon here from Citi. Just one question. I think your past 2 quarters, you have mentioned that some feasibility studies are in the midst of some of these redevelopment opportunities. Can you share anything on that our progress? What kind of things are you looking at properties? Or is it AEI? Is it going to be a big major redevelopment here?
Tony Tan
Yes. So cut across different scale AEI ongoing. We just have to prioritize timing-wise. Redevelopment, certainly, we have put a little bit more effort into studying that both downtown and suburban, both retail and office offsets understudy.
At this moment, we can’t say more because there are different aspects of the redevelopment that we need to consider. Cost is one, obviously. The other one — the other fact is, of course, the scheme, whether the scheme makes sense in that — in the location. And ultimately, there’s a lot more time that will be required to negotiate, right? There is a negotiation time that you require to go through with the authorities. So it will take some time.
I think I’ve mentioned before, even we — I think last year, I mentioned a couple of times, that even if we say this is what we going to do, you won’t transpire in 2 or 3 years. It takes some time for things to work through especially it’s a mall, you don’t just do lfy mall, you need to plan ahead. Yes. Okay, it is something that we are working on it. Yes.
Brandon Lee
Okay. And just going back to the AEI part, right? I don’t see a lot of outstanding AEI actually. So is there a chance that, I mean any reason why you didn’t give back some of the distributions from CICT as well as central…
Tony Tan
For the 2 REIT holding.
Brandon Lee
Yes. I mean I know traditionally, you have always withheld. It’s like…
Tony Tan
I think it’s always been very helpful. We have the cash flow stream coming from these 2 REITs to help supplement the CapEx cost requirement. So I think we still maintain that stand. I don’t think we need to dig into that. We have enough, I think we have sufficient things we can work on, yes.
Allison Chen
Can we go to [indiscernible]
Unidentified Analyst
My question is on Galileo. Can you give us an update on that?
Tony Tan
So during the quarter, I’m not sure many of us, certainly some people have made up. I think we are still working on potential just came not ready to mention anything yet. So this year, we still have the income. By Jan 2024, officially, the lease will expire. Between now and then, we are looking at different potential kind of configuration if we were to do AEI or a major uplift. So I think we’re still working through the detail. Concurrently, I think there are prospects we are speaking to and hopefully, that will transpire into something more concrete, yes. At the moment, nothing more to say there.
Unidentified Analyst
And my second question is on acquisitions. I think earlier, you mentioned diversification. Does that mean you’re looking more at overseas acquisition? And also, what are your thoughts on sponsor assets that you’re on?
Tony Tan
Okay. We — I need to clarify. One of the major reason why we look at overseas diversification is precisely, we think we have growth in Singapore that we need to ride on. Earlier, as Brandon asked the question, sorry, AEI and redevelopment, all this will have a drag on income. And if you’re going to just depend on the one source of opportunity, I think, you’re just limiting your options. So for us, in the long run, I think it’s good to have the optionality in place in the market that hopefully, over time, we can scale up so that now you’ll get the economy of scale’s impact. At the moment, the 2 markets we are in there, we’re not there yet, yes. So Singapore has opportunity. We have obviously explored some different deals flow. We didn’t proceed — we’ll continue that in ’23, yes.
Allison Chen
Yes. Next, can we have [indiscernible] turn to the questions online?
Unidentified Analyst
Congratulations Tony, for the results. Can I just — Can I ask 2 questions, right? Okay. So the first one is, will you be writing down Galileo any further? That’s the first question.
And the second one is, you got Raffles City convention and hotels comprised of around 6% of the AUM. Can you remind us what the lease structure is like? Is there some any upside from the revenue if the hotels fill up, et cetera like you mentioned?
Tony Tan
So we certainly hope this time write-down would have most of the impact that Germany is facing, the inflation is one big one. Of course, the war is a risk, premium risk gone up, right? So overall, the — hopefully, that reflects the risk has been priced for the valuation.
Ultimately, it all depends on how we execute the plan. Today, the valuation taking into consideration the cash flow expected from potential CapEx that may be required. The downtime as a result, no income stream and hence, on a discount basis, and elevated — sorry, an elevated discount rate pricing in the risk premium. So that all contributing to a — from a DCF perspective, a low valuation. Hopefully, that has been fully captured, yes.
Whether there will be further write-down, I can’t tell. It all depends on how we execute the asset value, yes. I know of course the war in the Ukraine is still ongoing, yes. Yes.
Even though recent months are beginning to see less pessimism, more — less pessimistic in numbers coming out from the Eurozone and especially Germany, has been seeing a little bit of a surprise upside in economic activities. So maybe people got used to it. Maybe they got over the deep winter where the fear on the energy rationing will have a major drag on their economy. That’s not panned out as best they anticipated. Yes.
Allison Chen
I think [indiscernible] has the next question on the RC Hotel lease structure.
Tony Tan
So RC structure, well, if you recall, in 2020 when in the darkest moment, we had little of the readjustment on the lease structure with the hotel. We essentially in short, we really bring down like no different from what we have done for some of the retail — the most affected retail tenants, bring down the fixed cost, fixed rent and then bump up the turnover, and we adjusted the duration of the lease because the hotel state, we doesn’t need for them to have a longer lease period make up for the time line. So that’s been factored in.
In the course of the last 2 years, things sort of revert back, the fixed rate gone down a little bit, variable rate came down. Overall on a net basis, I think we have probably done the right thing because we have seen quite a nice uplift in the sales, the room rate and then F&B has been doing very, very well in a hotel. So in fact, 2023, RCS is one of the big boost in our performance. Yes. So I think we are quite pleased with the outcome.
Allison Chen
I’ll come back to Yew Kiang and Derek Michel. Turning to the questions on line we have on tenant sales. From Terrence, UBS, and Joel, DBS, so the question is, 4Q 2022 tenant sales? How does it compare to 2019 levels in terms of overall downtown and suburban? And also, how much of this came in November and December? Is it due to GST fund loading? Do we compute tenant sales net of tax and expectation on tenant sales in this year?
Tony Tan
Okay a lot luckily, I got — did my homework. So fourth Q, on its own versus 2019?
Allison Chen
Yes, that’s correct.
Tony Tan
2019 a number, I don’t know. But versus overall for the fourth quarter that means the whole 2022 and 2019 downtown improvement by about 4.4%, and then suburban is about 7.5%. Overall, it’s a portfolio about 7.2%, yes. I don’t have a 4Q number. Maybe our teams will chat later.
Allison Chen
And this is guidance for this year ?
Tony Tan
I hope I had — I mean, I also hope that we had the crystal ball gazing. Earlier, I alluded the — there’s some positive momentum, positive attributes that we can carry through in 2023. Overall, looks like inflation number has been tapering down. So hopefully, that will transpire into a less-than-expected adverse impact on consumer sentiment, right? Because ultimately is inflation that they are concerned about. Hopefully, economy will ride through well. marked down the economic growth this year. There are seeing some headline job attrition. But overall, the unemployment number is pretty low in Singapore,. still very tight, which certainly is going up, whether it’s enough to cover inflation to the extent where it will affect the consumption, anyone’s guess.
First quarter, we think we have a little bit more visibility, hopefully, Jan to February, things will be okay. People still in a bonus period, right? So there will be a bit of discretionary spending and, of course, the usual necessity spending will be still there.
Anecdotally, we — I do go around the property a lot and speak to tenants. While we see some media report that — in fact even today, some media reported that chicken people are selling less in the wet market, but I’ve asked around some of the retailers. And surprisingly, they are saying that this year Chinese, U.S. sales picked faster than last year. And overall, the number has been very robust, stronger than 2019. But we’ll see the number how that transpires, yes.
But from an F&B perspective, I’m sure you guys are on the ground, you know, right. It’s always full. Even leading up the Chinese — of course, now it’s pretty full, but leading up the Chinese New Year, it has been very, very packed. Yes.
Allison Chen
We have a next question from [indiscernible] from Macquarie. DPU lags behind revenue and NPI growth. Was this due to interest costs being higher than expected? Can you guide us on the borrowing cost trend in this year?
Tony Tan
Do you want to take it?
Mei Lian
I think borrowing cost is definitely one factor that is below NPI line. So that would be affecting DPU growth. The other element is that in late 2021, we also did a small placement. So there is an enlarged number of units. So that also is one of the factor as well. So these are the 2 key factors. Borrowing cost trend, I think we all know that we are in a rising interest rate environment. And going into 2023, I think there’s — all eyes are on the Fed. There seems to be some signs of cooling. But having said that, I think rates have stayed quite high. So we will be watching carefully over the next few months for the indication of where interest rates will be and we will gear accordingly for the debt maturities that we have in the next 6 months on timing of hedging, these fixed rates.
Tony Tan
I can also add to what Mei Lian said. If you look at 2022, we did some work, right, in terms of portfolio movement, right? So earlier, I mentioned we sold JCube in March. We did some placement in December 2021 in anticipation of the 3 Australian asset which was completed only in April and June. So it’s a little bit a timing difference. So we have naturally a couple of months of a DPU impact drag.
Then we sold Sky. We acquired — sorry, we sold JCube and we acquired Sky. So again, it’s a bit of a timing difference. So that’s one element.
The other element, if you do recall that when we acquired the Australian asset, we also had a bit of guarantee income, which we have not touched. So we keep it as an option that we can look at it in the future.
Then the other element would be some of the AEI downtime that was not on a pro forma basis you don’t build that in, so downtime from AEI as well, yes.
So going to 2023, you’ll see hopefully, the downtown effect from Raffles City in 2023 will be lesser, where some remaining space in the AEI space to lease out.
And Clarke Quay will go through a little bit of a quiet period especially first half, second half, hopefully, will catch up.
Some of the rent amortization effect will slowly taper off in 2023. Some of the bigger leases that we signed in 2021, ’22 forward commitment when lease commence, you recognize that the revenue, but there’s the cash — underlying cash flow has to amortize over the period of time. So that will taper down in 2023. And you’ll see more cash impact coming in. So just to give a little bit of hint where the potential trigger of the number will come.
Allison Chen
Okay. Coming back to the physical audience, maybe we can go to Derek first.
Derek Tan
Just one follow-up on the interest rate question. For fourth quarter, what was the all-in interest rat? And some of your peers have mentioned they expect to see 40, 50 bps increase in the all-in across this year? Would that be a fair statement to say as you refinance into higher rates?
Mei Lian
The 4Q interest rate is at about 3%, yes. So going into the new year, we are looking at higher average costs. 40 to 50 bp may be possible depending on where interest rate levels would be.
Tony Tan
All depends on your hedging strategy, right. If you take a neutral position 50-50, you say you’re not very sure how that will go, it can be a 50-50 of course, then your average hedge rate will come down, right? But we can live with it, assuming we unhedge everything, but those — the refinance as you acquired in 2023. Our hedge ratio will come down close to 70%, which is okay, right? That’s extreme. But of course, you hedge 100% that will remain at 81%. So it all depends on your hedge ratio. But on a neutral level, I think our average is about close to 3 — high 3s. Yes.
Derek Tan
Your expectation is for high 3s.
Tony Tan
I think so based on today, what we’re seeing, but of course things will change in the months ahead, yes.
Derek Tan
Sure. I’m just wondering on acquisition opportunities given the kind of valuation declines for Galileo, do you similarly see opportunities to buy at fairly best levels and which markets do you see that happening in?
Tony Tan
Jacqueline, you take that.
Jacqueline Lee
I think, yes, we have seen yields moving up in some of the markets, but I think we are still watching because they haven’t moved up as much as the interest rate increases. But we are watching to see when that will stabilize, but we are going to see some new move up in some markets.
Derek Tan
Which ones?
Jacqueline Lee
Say, Europe, Australia, yes, for example. Yes.
Tony Tan
Yes. Just a caveat, when we acquired 3 Australian asset, we actually when at our implied yield about 5.0%, so we have sort of based on the negotiated income guarantee that we get — implied yield is about 5.1%.
Derek Tan
5.1%?
Tony Tan
Yes. 5.1%, yes. So seeing the market now potentially creeping up in the office space, the yield. Yes.
Allison Chen
Yes. Can we go to Yew Kiang?
Yew Kiang
Can we talk about Australia, like what’s the long-term plan? Do we expect — can we expect to do retail in Australia over the long term?
And then secondly is on the next acquisition. I mean, do you think that the pricing is fair? Can you give some maybe some views on that? Is it a structure that you don’t like? Would you prefer to have full control of asset when it comes to acquisition, especially if it’s a nonrelated party.
Tony Tan
Okay, 3 questions, right? So Australian retail, I don’t think we’re around, right? We don’t think we will do well. If you look at some — again, this is all that diversification — still about diversification, right? We, so far, we have office assets and some small retail in one of the JV. So that’s not full retail to me, is a small retail, not so management intensive, even though it’s retail, a bit more challenging than we look at suburban retail.
But overall, management intensity attention spend on retail is a lot higher. That’s a given. So the question is whether we have the capacity to take it. So eventually, I think, we need to have an in-country level, so a bit more diversification eventually. Currently, it’s mostly office yes?
And not every, market, I think, okay, you talked about Australia. The Australian retail market and the retail-related real estate has gone through the adjustment a lot earlier than what you’re seeing now as a result of interest rate impact affecting the expectation on the cap rate line. But retail has been — since I can recall, 2018 or ’17 has been going through the adjustment because e-commerce, people are worried about Amazon going in. So there’s already a lot of repricing, and historically, with our asset very chunky owned by a lot and they also want to lighten the load right? So there’s been a bit of portfolio reconstitution, I’m not going to make you owner. That’s why you see the adjustment multiyear. So it has come to a point where I think the adjustments has come lesser now. And then the new trend as a result, COVID, working from home is not as prevalent, is prevalent in many markets, right, and suburban retail has been pretty resilient. We’ve seen some of the peers reporting the results, not bad. I mean, retail doing quite okay.
So there will be — it’s a recession cycle — no real estate cycle, that will come and go. But eventually, I will take this, in some — those countries outside of Singapore, first we must have the scale. Second, we must have the resource to be able to manage, and retail asset is highly, highly management intensive. So we must have that knowledge there. At the moment, we are not there yet.
Next move. You want to say anything about where you see or where — I think there are some reported transaction out there, which in Australia as well, not just in Singapore. So there are some reported transaction out there.
I earlier mentioned, we look at it holistically, right, is as a REIT manager, you manage your portfolio design, what the REIT represent, you manage your source of capital. And then you look at how you want to redeploy your capital. So again, it’s back to triangulation. And of course, when the market is conducive enough then we’ll reset the equity from there. As simple as that.
Allison Chen
Thank you, Tony. Next, can we have Rachel?
Rachel Tan
Just a few questions from me. I think firstly is on office — Singapore office. Do you feel that there’s a shadow space creeping up in your portfolio and also in your market? Yes.
And secondly, my question is on how do you see, looking at your portfolio, I think, everything seems quite stable. So what’s your thoughts? Where do you feel you could — you would prefer to add like retail downtown or suburban or the office and divestments? Are there still opportunities for you to divest? Is it retail or office in your portfolio?
Tony Tan
[Foreign Language], Mr. Lee.
Lee Yi Zhuan
Happy New Year to you, too. So portfolio space, I think, generally, in the market, we were a little bit of creeping up in the coming quarters. I think it’s quite known that the tech base, right? We will see some of these things coming up. I think roughly now, some of the statistics is around 600-plus thousand and so certainly will up. But notwithstanding that, I think CBD office generally is still quite tight. So even with this, I think it’s not something out of expectations it is something we can manage. Within our portfolio, I don’t think it’s a big challenge or problem at this point in time.
Tony Tan
Your question regarding whether downtown or suburban retail, is the ongoing iteration that we’re looking it through. And the more we are quite balanced 50-50. Somehow, I don’t think it’s by design, but it’s just panned out that way. We’re about 50% downtown, 50% suburban.
A few trends we watch out carefully. About the work from home will have some impact on how the consumer travel and behave, right. The reopening of border, certainly, we have a little bit of dynamics. The increased connectivity between Singapore and neighboring country is something you want to watch carefully as well. So there are big implication, right? And your implication on — our movement of local rather than the other way around. So I think we are watching all these different dynamics quite carefully, yes.
So I can only say that at the moment, we are in a nice sweet spot, quite balanced, whether we should swing heavier or the downtown is open. There are a few configurations that we’ve been through. And also it depends on the opportunity out there. And earlier Brandon asked about where the AEI a potential or redevelopment a potential. I mentioned it could be downtown, suburban, can be office and also can be retail that we are starting now.
Allison Chen
Okay. Next, can we have Xavier?
Xavier Lee
Can you help us understand for your integrated developments, those with office and retail component. How reliant are they on the office crowd or shopper traffic versus the tourist traffic is my first question.
The second question is on your office leasing activity. I think fourth quarter seems to be lowest number of new leases, a number of committed leases about 120,000 square feet. Is this a seasonal thing? Or do you think this is a sign that the market has been cooling off in terms of the leasing demand for office?
Tony Tan
So your question on the impact downtown integrated. I would say at the moment is still more return to office impact, less so from the inbound travel. It’s not very — of course, yes, it has gone up, right, but not very significant in my view yet. And in fact, you can read all the statistics coming out from the Tourist Promotion Board. The number has crept up, I think but still a long way from pre-COVID.
So my view, that’s why I mentioned the dynamics on the border restriction lifting, and many countries are lifting all the COVID measures, we should see a more healthy tourist flow and hopefully more inbound catching up with the pre-COVID level. The office leasing, maybe I will pass on to Yi Zhuan.
Lee Yi Zhuan
So for the office leasing I think if you look at the fourth quarter, there’s a couple of reasons why the number kind of a bit lower than usual, right, for portfolio because on one hand, it’s year-end also, of course, the market cooling down maybe a little bit of concern, but at the end of the year, it’s also a time when you’ll see festive season tend to be a bit slower. But notwithstanding that, I think we do still actually see demand from financial services and legal, real estate also for some of these things.
But actually, for our portfolio, there isn’t any avenues for the fourth quarter. So actually, we do expect some of this demand to come back a little bit more in the first quarter. If I look at it, I think we also talk to some of the renewals that actively, I think things are shipping out quite okay.
Xavier Lee
Got it. Just to clarify. So is it fair for me to think that with all this hybrid work arrangement right now for integrated developments, say, Plaza Sing, it may not recover — the shopper traffic may not recover back to where it was even with the tourist recovery.
Today, we are about 75% overall pre-COVID. About 75% — around 75% to 80% levels from pre-COVID traffic-wise. Yes, potentially, but they’re buying habit has changed, a bit more intentional. If you go to shopping mall and more intentional. That habit was cultivated during the COVID with all the restrictions, right? Whether that we got off and more leisure, I mean, those I think, it will come back whether it’s 2023 or 2024, I think we’ll go back to pre-COVID, yes. My firm belief it will be.
Allison Chen
Okay. I want to turn to the, some questions online. We have a couple on leverage. Are we looking to divest some assets to pay down? And what is the target leverage?
Tony Tan
So that’s part of the portfolio reconstitution I talked about. And when you look at investment, sometimes you look at that currently because it’s about how best we look at the portfolio, will it make sense to acquire some assets or partial [indiscernible] whether the market conditions is favorable.
So when you look at this type of a triangulation of course, you also assess whether this asset is one of the candidate. Maybe not this year, about [indiscernible] down the road for any type of average uplift. So those are factors that would be important before we look at whether we should swap the asset out into something different, yes.
So if market is okay, we can afford to hold the asset and drive through, catch and continue to essentially — I don’t have to use a crew but optimize further make sure asset half further is market condition is okay. There’s no real need for us to swap it out, then I think we don’t have to do it. It’s many, many factors that have to be considered, yes.
Allison Chen
Thank you, Tony. We have the next question…
Tony Tan
Of course there will be ideal position, we hope at some point in time, we will be able to. Today, we are okay. I always use the same analogy. We are managing the different stakeholders’ interest, equity stakeholder, the debt market stakeholder, the REIT agency looking at us and of course, the consumer, right? So we just want to find a position and make sure that we do not our balance sheet. And of course, it’s a factor of where your cost of capital in the different pockets of money is at the right moment whether we should lighten the balance sheet. So there could be different factors that may resolve for us instantly to look at readjustment on the balance sheet.
But in the long run, I think ideally, 35%, 40% kind of balance sheet will be pretty safe, pretty — which is what a lot of investors want, say, predictable, low [indiscernible] income stream with no stress on the balance sheet and give you that firepower even opportunistic opportunity came along where you had to react fast, right?
You have a 40 level, of course, you have less flexibility, you have 38%, 35%, 39%, when we are talking to have a lot more flexibility. But it’s all again about whether you are able to hold a 35%, 38% and continue to deliver the return you want that investors expect because technically, you may be underworking a balance sheet.
If you look at our private equity sales, quite easy to go 50%, 60%. They’re looking at balance sheet very hard. But in the public market, we have to weigh the different needs of stakeholders.
Unidentified Analyst
I have a question on CapitaSpring. Did CapitaSpring contribute any distributions for you last year? And in a steady-state normalized situation, like what type of annual distribution should you receive from CapitaSpring?
Tony Tan
2022.
Mei Lian
CapitaSpring don’t really contribute to 2022 DPU because there are a lot of rent fee incentive fee there, yes, in 2022. For 2023, we do expect some distribution to come back. Yes. On the question on steady state, I think we have to come back to you. Yes.
Tony Tan
Essentially, you’re asking the amortization effect as one. Of course, at the local entity level, the level where you’re bit upstream the remaining cash after settling all the different cost and expense, that’s another matter, yes.
Allison Chen
Okay. Jumping back to the online question. Sorry, Mervin, I’ll come back to you. We have asking on the profile of new tenants who have been taking up space in the past 2 years. And what’s the guidance on the rental reversions going forward for retail and office?
Tony Tan
Yi Zhuan, do you want to take that?
Lee Yi Zhuan
The first question is about…
Tony Tan
New tenant coming in office.
Lee Yi Zhuan
Well, I think just now just to kind of — okay. So for the fourth quarter, just to recap, most of the deals, the new demand that came to our office is actually the financial services and legal making up most of it. And of course, I don’t think it’s really that — it’s just a function that in the fourth quarter, we didn’t see impact, but I don’t think it’s anything very specific at this point to anything. We also see some real estate companies coming through. I think the co-working space. We’re also seeing some inquiries and demand. And of course, it depends on the kind of models that we are going to actually see going forward. Yes, that’s for the fourth quarter.
Tony Tan
And the next question is guidance on the reversion, retail and office.
Lee Yi Zhuan
Okay. So for the reversion, I would say the first quarter coming — going forward, we should still see pretty good reversions. And similarly, for office, I think, if you look at the rental growth, I think the market rents generally is higher than the expiring rents you are seeing for 2023. Hopefully, this works out well for us. But I think the rental growth is probably going to slow down a little bit for this year, especially second half of it is going to be a bit more uncertain. So I think it will should holding up okay.
Allison Chen
Okay. Mervin circling back to you.
Mervin Song
Yes, I got a question in terms of the borrowing cost questions from the investors who’s e-mailed me. I think , Mei Lian, you’re saying that borrowing costs could go up 40, 50 bps. Then Tony, you mentioned high 3s. Is the high 3s related to when you refi or the weighted average for the full year FY ’23?
Tony Tan
Refi. Refi.
Mervin Song
Refi. So it should be in line mid-3s with as per the other REITS that we’re seeing or if you’re lucky, carried around 3%.
Okay. Maybe you can touch on the occupancies for a couple of buildings, Capital Tower and Six Battery Road. We expect improvement in occupancy this year. What are you seeing terms of negotiations? And then turning to Australia. What’s the plan there? Are you aggressive with offering that incentives, given the income top-up that you have?
Lee Yi Zhuan
So for the occupancy for Capital Tower and Six Battery Road, right? Maybe I think Capital Tower I’ll start first, right, I think generally, we previously had and we have actually backfilled a big part of it. There’s interest in some of the balance space. So definitely being talked about or we can expect some of the occupancy to go up. I think Six Battery Road similarly, we’ll be finishing some of the upgraded floors and then we’ll start to actually fill out some of these spaces. So I think it should also be going up.
As for Australia, okay — so, for Australia, the occupancy, right now, we do see actually the return to office is a little bit slower compared to Singapore. So the plan there — for some of our assets, we are also trying to put in certain differentiating factors, and we are starting some of the plans to find how we can actually best position the asset to capture the return of office and the interest when it covers.
Tony Tan
Some of the trends we see in Singapore is also beginning to shape up in Australia like the prevalence of certain hybrid model, co-working space model seems to be shaping up. So one of the properties that we are working together with our JV partner is really looking at the utilization of the co-working space. So I think that as a result, we are upgrading some of the aspect of the office. The lobby thing is going to go through a major revamp. So we are bringing up the level higher.
The other one that we try to alluded to was I think mall 66 Goulburn Street, which is in the CBD, not North Sydney. And there has been some departure which allow us to fast track some of the planned CapEx when we look at our underwriting. We actually had some CapEx that we set provision to cater for the upgrade because they’re building — it’s a little bit a Capital Tower. I mean, it’s grade A, but it’s not premium grade, right? But we think that there are certain aspects of the building can be further improved, but they have a life of tenancy there, which we can’t do anything. So where the lease has expired and then tenant decided to move on, we decided to take back the space and do a major upgrade.
So we are quite reasonably positive on that you’ve gripped up again.
Mervin Song
This is final question for me. How should we think about the remaining stake in CapitaSpring? Is it just to — the cover is too low at this point?
Tony Tan
Well, it’s in our radar. We think about it as well, of course in the mix of different opportunity, we will see which makes sense. Yes.
Lee Yi Zhuan
Just to add on the point, I think I missed that earlier, maybe talk about incentives, right? I think for the Australian market, the incentives generally have crept in the past year or so, but I think it’s currently around the 30% to 40%, which I think is quite normal. Do we expect this to go up? It’s really hard to say because it’s really on a deal-by-deal basis. Yes.
Allison Chen
Yes, Rachel.
Rachel Tan
Just one quick follow-up question. For Clarke Quay, I saw you signed on 2 tenants. Just wondering what’s the precommitment level and what’s the interest like for the remaining space?
Tony Tan
At the moment, including those we are in deep negotiations around 80%, around 80%, yes.
Allison Chen
We have 2 online questions on valuation. The drop of valuation for the Germany asset, how much is it due to the weakening of the euro versus Sing dollar? And how much is due to the assets in euro terms?
Mei Lian
I think in terms of the FX translation effect, we have about $170 million of the loss due to FX devaluation of euro and Aussie dollar against Sing dollars, but this is largely mitigated by the corresponding fair value gain on the euro and Aussie dollar borrowings that we’ve taken to fund these overseas assets. So the impact on that asset overall is actually mitigated to a large extent.
Tony Tan
Maybe Yi Zhuan, you talk about the euro, well, valuation which I earlier in the presentation touched a little bit, maybe you want to give a little bit more color on valuation on our German assets.
Lee Yi Zhuan
Yes. So I think for Germany, we — this time around, it actually because a lot of the — we actually, the valuation dropped partly also because we took in some of the latest assumptions that what we are going to foresee in this property, so for example, there’s some higher CapEx actually taken in. It also reflects the kind of downtime that we’re really expecting. So as far as possible, we think that this valuation hopefully already kind of takes the hit that we will see in Germany.
And the — but of course, eventually, it’s hard to predict next year how the valuation because a lot of variables are moving. But by and large, let’s say, once we have a bit more certainty plans hopefully some of these things will reflect in the valuation at this point in time.
Tony Tan
So it’s a bit — if you look at purely for a reval gain or loss on the portfolio, it’s a mixed bag because you have the corresponding balance sheet effect, right, liability asset, netting off a little bit. And as a result of your natural hedging on your borrowing side so that communicated.
Absolute valuation number for individual property, I think range in Germany, it’s probably about 15% for Galileo. 15%, right? I think 15% markdown. And then the single-digit. I can’t remember the number by single-digit markdown. Yes. Yes.
Allison Chen
Another question on valuation from Andy Bank of Singapore. Why did this Bugis+ registered a slight cap rate compression while a couple of others had a mild expansion?
Tony Tan
Yi Zhuan, do you want to do it? Bugis+.
Allison Chen
Cap rate compression question.
Lee Yi Zhuan
The one for Bugis+, some of the valuation — cap rate changes actually more a function of change on valuers. Yes. So you will see probably a few of them actually have a very marginal expansion and the Bugis+ has a slight compression.
Tony Tan
I would suggest do not read too much into the cap rate. We had a change of value. It’s true rotation, right? Every 2 year, we do rotation. So some value, they are different views how they look at assets. They have different growth assumption, right? And then they will look at the risk premium adjustment in the discount. So by and large, different value or a different view in the specific asset in the specific locality.
But on a net basis, I think the adjustment on capital is like 5 to 10 bps is very much. So don’t read too much into it. More important, look at the trading basically operating yield of the individual assets. Current is all above the current cap rate as a representative.
Allison Chen
Next online question we have from Gerard. What is the physical occupancy for the offices in Singapore, Germany and Sydney? And what is the current trend?
Lee Yi Zhuan
For Singapore, right, we actually see a range across our properties, right? Some are actually as high as 90-plus percent. It’s almost like back to pre-COVID levels. Of course, something is trending a little bit lower. I think broadly, 70-plus percent. For Germany and Australia, the physical occupancy return to office rate is actually much lower. I would say that in Australia, if I will put a number to it, it’s probably around in the 50%, 60-plus percent range. And in Europe, it’s probably going to be a little bit lower.
I think it’s also the sentiments generally and how the return to office has — I think in Singapore, there’s a little bit more push for people coming back to office. And actually in this aspect, probably this year, we might even see more companies taking a clearer stand on the return to recent office. And hopefully, this will then translate to higher to return to office REITs.
Just to give you a sense, in terms of rate, there is different properties to different buildings to different building, it all depends on the companies, their policy. But generally, Monday, Friday is lesser. You can say Monday, Friday is far lesser. Tuesday, Wednesday, Thursday generally quite high, in the 80s and 90%, some building above 90% return rate, which is very healthy. But then, it can taper down to 60%, 50% on Monday and Friday.
On a portfolio-wide basis, on an average on a week, we’re looking at maybe 60-plus mid-60s kind of return rate, which is decent. We don’t really track so intensely the pre-COVID, so I’m not sure. I agree we have got a sense that’s not the building, it’s already back to pre-COVID days. 80%, 90% simply sounds very high given that it’s not the people will be either traveling or maybe they could be working from — looking at maybe the many clients out there, but it sounds pretty too much to me back to normal on a busy day, right? But that’s only on the 3 days I mentioned. Monday and Friday that will be a bit lower, yes.
Allison Chen
We have an online question from of Singapore. What is the retail occupancy cost? And for Australia properties, how long do we expect for occupancies to ramp up to above 90%?
Lee Yi Zhuan
For the retail occupancy cost generally it’s around 16-plus percent range. So it’s actually quite in line. Generally, within acceptable range of what we’re looking at.
As for the occupancy in Australia, right, I think I — to get it above the 90% range, probably it will take a little bit of time long given that’s how things are translating a lot of things actually relying on how things pan out in the North Sydney side of things, but I think it will come back. I think we’re not that far off. It’s just something needs a little bit more time to work on. Yes.
Tony Tan
Just to add what Yi Zhuan was saying. [indiscernible] in the 80s, 80-plus. mid-80s and above. That’s the retail office — retail space in Australia. And what — like what Yi Zhuan is alluding, the coming back to office is a little bit lower in Australia, ballpark, we don’t track the number, but anecdotally, from our guys on the ground, we say it’s probably 50%, 60% back, yes.
At the same time, we are together working with our JV partner, [indiscernible] looking at the retail space, and we need to rethink. So we started with the — good thing is an integrated project. Next, it’s connected to the mid-subway line, the metro line. So it’s — on a busy day it can be very busy.
But the car retail space configuration, I think needs a little bit of rethink. And at the same time because of the connection to the office building, and we started embarking on the upgrading or the office building, including the entire lobby area, so it makes a lot of sense for us to extend to the retail space, which is connected. So that will be well in progress. Yes. It may involve a little bit potentially, yes.
Allison Chen
I see Donald has a question.
Donald Chua
Donald from Bank of America. Two quick questions from me. First is, can we have an update on Twitter? Are they still paying rent? Will they be paying rent? And if we need to backfill the space. Are we expecting positive reversion on that or flat?
Tony Tan
So for Twitter, right. Are they paying rent? Yes, they are paying rent? Will they pay rent? I hope they continue to pay rent. But I would just say — I mean, just I said the — for Twitter, I think right now, they’re still a tenant of ours. But broadly across the board, I mean we constantly talk to our tenants about the expansion and rightsizing tenants along the way. And I would — I wouldn’t — so some of these discussions are happening broadly as a whole, right? I don’t think I will comment too much on Twitter itself, whether there’s any reversions. So I think it’s a little bit ahead of time.
Donald Chua
What’s the exposure to tech now for the portfolio?
Tony Tan
As a portfolio, our exposure to tech is actually quite manageable. It’s actually below 5%. And actually, if you look at it, right, Twitter is not on the, one of our top 10 tenants in terms of exposure. So I think the exposure is actually quite manageable.
Donald Chua
One last question is could you remind us on the utility costs for this year, again, the repricing? And what sort of are you expecting? And if there’s any mitigation from service charge?
Tony Tan
So I think — Yi Zhuan. So for utilities, we are probably looking at a tariff for loan is probably somewhere — I think the last time you mentioned it’s probably about over the current one, right. We have been actually increasing service charge from a few of these properties with effect of 1st January. Generally, across if we look at both retail and office, unfortunately, for retail, right, because of COC, we find immediately an increase in service charge really only take effect kind of in the next renewal cycles. But broadly, I think in terms of whether the service charge can actually cover the increase in tariff, I think coverage ratio is currently around 35%, 40% range. And then progressively, this number will go up as still — if you look at how the expiry lease profile, we go, we’ll start putting back some of these things in the subsequent renewals.
Donald Chua
When is the next contract, sorry, when is the next contract reward the rollover for the utilities?
Tony Tan
It already end 31st December. So we have another locked in 2 years rate.
Donald Chua
Two years, okay.
Tony Tan
Yes, two years rate now. Earlier I mentioned, I think it’s higher, potentially around 50% higher than blended 2022, but 2024 will taper down a little bit.
Allison Chen
Do we have any more last question? Okay. Then I think that we have all the questions addressed. Thank you for the time. We look forward to seeing you again.
Tony Tan
Thank you.
Lee Yi Zhuan
Thank you.
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