Capitaland Integrtd Unit

A very good morning to all of you. Welcome to Capital Land Integrated Commercial Trust First Half FY2024 Results Briefing. CICG released our results this morning and the materials are all uploaded on SGXNet and on CICG's website. So similar to what we have done for our full year briefing, we are conducting this session as a fireside chat instead of a formal presentation. So focusing on certain key themes and topics before we move on to the Q&A session. So before we start, we would like to introduce the panel. I am Mei Peng, the Head of Investor Relations. And in the center is our CEO, Mr. Tony Tan. And on Tony's left is Ms. Jacqueline Lee, our Head of Investment. And on Jacqueline's left is Mr. Lee Yi Chuan, our Head of Portfolio Management. On Tony's right is Ms. Wong Mei Lien, our Chief Financial Officer. So to kick off today's fireside chat, we would like to invite Tony to share with us some of the highlights of CICG's first half performance. Tony.

Good morning. Hope you all have a little bit of time to digest the announcement this morning. Needless to say, I think we're quite pleased that we are able to deliver a resilient result in the first half. Bear in mind the performance of first half, number can be a little bit noisy. We have embarked on our AEI program in Galileo from February this year, which means that we have no income from Galileo from February onward. And at the same time, we have been able to ride on a positive active no rent discussion over the last 12 months or so resulting in a higher reversion rate so that slowly would translate into the income stream so while we actively work towards our active portfolio bear in mind that second half January macro environment is a little bit uncertain So we will pin our strategy actively to ensure we try to reduce as much as possible. Looking at some of the key metrics, I think it's been relatively stable other than the MPI they have grown, which is backed by higher rental growth and also inclusion of Club T started to contribute. We will also be actively managing our costs, which is very important, resulting in MPI growth of 5.4% for the first half. Portfolio vacancy remains relatively stable. On and off you may see some kind of movement here and there, but generally I think we are actively managing our portfolio, planning ahead, not just the second half of the year, but also looking beyond 2024 to try to de-risk as much as possible, knowing that the environment out there can be highly uncertain. So our team will touch on later on as we move along. So overall, Other than the property level that we managed to secure a higher NPI, we have also stabilized our financing cost at around 3.5%, which is quite similar to the first quarter. We are hopeful that with the general market consensus that we're beginning to see some easing of the interest rate, that hopefully it will translate into a positive outcome from an average cost perspective. Nevertheless, in July, we already announced that we did a bond issue. We did a 10-year placement at 3%, 5%. So that sort of replaced some of the debt that would be coming due in third and fourth quarter. On the passing level, I think it's just a marginal creep up. But importantly, also managing the short-term interest exposure is equally important so that holistically, we try to maintain a reasonable, stable overall average cost of debt. Rental reversion, quite pleased that actually we managed to gain the confidence of our retailer. Very high retention rate, reasonably good rental reversion. We are clocking in about 9.3% for the retail and 15% for the office. Thanks to the team who worked very hard to ensure we are able to strike a reasonably good deal with our tenant. balancing the risk as well as the well-being of our own tenant as well. They need to survive to be able to do well in a very uncertain environment. But overall, I think we are quite pleased to achieve an outcome that we have shown here. So as a result, I think the first half, unitholders should expect to see a distribution of 5.43 cents. Factoring within the DRP, if you remember, in the beginning of the year DRP, it would have been about 5.48 cents. So if you look at it sequentially, actually we are still also growing our cash flow on a sequential basis. We are trying to work very hard on the rest of the period this year as well as making sure we are able to secure a stable return in 2025 as well. But that I passed on.

Yeah, thank you, Tony, for the overall highlights. So maybe going to some of the specifics, I think just now Tony touched on the positive rent reversions, which we have achieved for the first half of this year. So I think the question will be that, so are we likely to continue to achieve such positive rent reversions for the rest of 2024? And also whether you can share a bit on 2025?

I think we are reasonably... I would say cautiously optimistic. I don't like to use the word, but based on those discussions we are engaging with our tenant, we should end up high in 2025. Nevertheless, I think 2024 should be high as well. I think earlier we guided, we were looking at around high single digit. We stand by a high single digit. Hopefully we can outperform, but I think that's the number we're looking at overall. That's for both the retail and the office.

Okay. So other than we have also been touching a lot on the growth from the portfolio, so do you think now that it will be a good time for CICT to look at external growth opportunities?

This one I think is everyone's question in the mind, right? Certainly, I think as a responsible portfolio, management we definitely got to ensure that we are able to look at opportunity in the market but also bear in mind we want to be very prudent and be disciplined in how we're going to deploy any kind of investment compared to let's say six to 12 months ago certainly the market becomes a little bit more constructive we see how things flow from there Naturally, when there are good opportunities, I think we would want to take a look.

I think now it's timely for us to move on to get Jacqueline to share with us what's happening and what she's seeing in the investment market in this first half.

In the first half of 2004, we continued to see reasonably strong investment activity, both in Singapore and Australia. as evidenced by the larger ticket-sized assets in both the retail and office space being transacted and also being put on the market. And of course, the flight to quality theme remains. In terms of pricing levels, for Singapore, it remains resilient, whereas in Australia, we continue to see some discounting, and as such, cap rates have expanded, affecting asset valuations. Frankfurt office market has remained very, very quiet with very few transactions and very, very small deals. So the huge gap between the buyer and seller expectations there remains. Even though interest rates have started to come off slightly in Europe, the market is still trying to find the right level, coming off a very low cost of borrowing environment that they would have experienced before. However, prime office rents in Frankfurt are still holding up. Thank you, Jackie, for the sharing.

Maybe I just want to add. Certainly the investment activity seems to pick up a little bit compared to 12 months ago, but we're still nowhere near back to the pre-COVID days. There's a little bit of wait and see. I think there's a little bit of wait and see in the market as we're sensing, but we can feel that the vibe seems to be coming back a little bit, partly in response to a general less hawkish kind of central bank tone. And then some of the central bank already started to cut rate, right? But generally, we feel that the market will take some time to come back, but we'll observe the market carefully.

Thank you, Tony. Next, we are going to move on to capital market, capital management. So I think the question to Maylian would be, are you happy with our financial ratios as at the end of June?

Okay, in terms of CICT's financial ratios, I think they are a fairly steady and healthy set of numbers and also reflect the current gearing level of around 40% range. Given the current interest rate levels, We hope to lower this leverage ratio over time. This could be from driving asset performance and in turn improving the asset values. We also look at selective capital recycling opportunities as and when they arise. This could also help us to give us the opportunity to lower gearing. And meanwhile, we will do our best to manage the overall costs with prudent capital and active cash management measures.

Okay.

So noted that actually most of CICT's debt expiring as at the 30th of June have been actually refinanced post-June. We have actually made the announcement. So what kind of interest rates are we seeing and what should we expect the average cost of debt to be by the end of 2024?

Okay, we have addressed the bulk of our refinancing that's due in 2024, almost 80%. either refinanced already or in advanced stage of loan documentation. So we have recently issued 300 million 10-year fixed rate green notes at 3.75%. So this would give you an indication of the interest rate levels that we are getting from the capital markets nowadays. So with the refinancing at rates that's higher than our previous borrowings, we expect average cost of that to be around the mid-tree areas for FY2024. And we also have about 24% of our borrowings in floating rate. So this could be a positive factor should the Fed cut rate and also depending on the magnitude of the rate cuts. So we do have a sensitivity that every 0.5% movement will move interest expense by about 11.5 million per year for the floating rate debt portion.

So, I think they have also been concerned about spread of the debt in currency. So, the next question will be, what will be our percentage breakdown of our total borrowings in the respective currencies?

We have about 80% of our borrowings in SING dollars. Even when we raise foreign currency bonds, we have swapped it back into SING dollars. The balance 20% is the equal split between Australian dollars borrowings and Euro dollars. And this is largely taken to fund the investments of the overseas portfolio for natural hedging purpose.

Thank you, Mei Lian. So I think now we move on to portfolio performance from each one. So each one, the question would be, I think we noted from our presentation that the tenant sales The square foot for the portfolio growth is about 0.1% and downtown sales is a slight negative in the first half of 2024. What do we look at in terms of tenant sales going forward in second half of this year?

For CICT, we actually report on a per-square-foot basis for tenant sales. So the lower downtown sales we see here on a per-square-foot basis can be attributed mainly to the stabilizing of CQ post-AEI. So if we look at the first half of 2024, again, first half of 2023 on a quantum basis, actually the portfolio is up on 1.1%. where the downtown is actually up by 4.3%, whereas the suburban is down by 1.3%. So the suburban sales, when we see why there's this slight easing, it's really because of the ongoing AEI at IAM, which should improve with the progressive completion towards later part of this year and next year. So for the second quarter of Go24, increased outbound travel definitely play a part in impacting some of the tenant sales. On the other hand, we also do see government support programs like the climate voucher, you know, the CDC voucher, which support consumer spending, particularly in some of our suburban malls. So we are cautiously optimistic that the second half of Toll24 should still remain relatively healthy, supported by resilient domestic spending. And then as well, we do see tourist arrivals for the upcoming events such as F1 in September, as well as continued active promotion by STB.

Maybe just let me just add so that we explain why the numbers are a little bit like that, right? So downtown, we typically report per square foot basis. In a way, we measure the efficiency of the space. So downtown is a little bit lower because Clark Key is one component. We just opened up TOP, right? So it's a stabilizing stage. But yeah, in the total quantum basis, actually the downtown outperforms suburban, absolute reversion. Whereas Star Urban, conversely, the other way around for Star Urban, because we have the IMAEI, if you were to remove the space of IMAEI, in fact, overall quantum is lower compared to what we reported on per square foot. But nevertheless, I think just to give you some clarity, for us, we always check on the per square foot because we're sure it could give us an indication of where the health for the trading of our respective tenants.

Thanks, Tony. So moving on to the next topic would be, I think the other information that we will share on our slides is the office occupancy. So do we expect the CICG office occupancy rates to improve over the next six months? And then which geography occupancy are we most concerned with?

I think we have anticipated and shared in our previous sessions, we do expect some volatility in our office occupancy this year. So for Singapore portfolio, generally the occupancy remains relatively healthy and above market. And so some of the easing we see in some of our properties is really more transitional in nature. So there's actually a lot of easing inquiries and we are in active discussions with a lot of the prospects, as well as engaging our tenants ahead of time for the upcoming expiries. And for the German, sorry, maybe I touched on a little bit on this. So actually the completion of Central Boulevard has also contributed this quarter to increase in vacancy rate for the CBD office. And subsequently, the secondary stock may increase also in the coming quarters because we see some of the large tenants start to move from their existing locations into Central Boulevard. but internally we do still reiterate our view that in the mid-term, the supply of new quality CBD stock is still relatively limited and that should help to lend some support in our office portfolio in the longer term. As for the overseas portfolio, Galileo is not actually in our calculations for the occupancy as it is currently undergoing AEI works. But we are pleased to share that actually the committed occupancy for Galileo has actually improved to 96.7% up from 93% previously. So effectively we have erased this asset from an occupancy standpoint. But there will be definitely some sub-markets, for example, our Frankfurt Airport District as well as the North Sydney sub-markets, which are a little bit more challenged with the elevated vacancy levels that we still see. And these markets may take some time to regain footing and backfilling of spaces in some of these assets will take time, in particular for Main Airport Centre, where we probably may see a little bit more impact in the vacancy in the coming months. We do expect a bit of longer decision making in some of these prospects and the situation that we see, like for example, longer fit-out period and elevated incentives should persist in the coming quarters also. But nonetheless, our team is working hard on the grounds. We do have recent refurbishments done to provide fit-out spaces, improving amenities, just to make sure that we help to improve some of the leasing momentum that we see in our portfolio.

So on a lighter note, where do we see demand for the malls and offices in this second quarter?

For the second quarter alone, we secured more than 650,000 sqft of new and renewed leases across both our retail and office portfolios, and of which about 110,000 sqft of that is new leases. So for the new retail leases we signed, mainly from trade sectors such as F&B, your fashion and accessories, as well as your beauty and health. So this is actually quite in line with the enquiry levels that we do see in our portfolio. We also continue to see new to market interest coming from overseas. So we see brands from China, Indonesia, Malaysia and also other international brands. And thanks to our strong leasing team, we managed to secure some interesting concepts that's new to our portfolio as well as to the market. For example, in the second quarter alone, we see the opening of Sushi Samba in Capital Tower, Lola's Cafe at Tampines Mall, which is a win for those Easties. And of course, we also see M&G Live as well as Hokka and RCS. So, our office. The new leases we sign mainly so far this quarter is actually from real estate and property services. We have also investment and financial services. Probably it's not on the screen, but we do see the interest level indicated there. But probably just to give a bit more colour, for some of these new leases and enquiries that we receive, they also include new setups as well as relocations.

Okay, thanks. And then I think the last question for portfolio is, I think it's a trending question. So are we concerned with the increasing ease of access from Singapore to the shopping and the services at Johor Bahru in Malaysia? How are we mitigating this risk?

I mean generally not just RTS, generally when we look at the market, we do monitor opportunities and tracks in these markets that we operate in and also of course some of these evolving trends. So specific to RTS, it will definitely improve some of the access between Singapore and JB. While we expect short-term impact in terms of sales leakage, given our portfolio of downtown malls and suburban malls, Any impact we see is likely just going to be incremental in nature. Over the longer term, the effect on the various retail trades is probably going to vary, so it takes time to play out how the situation evolves. Nonetheless, we will fine-tune our malls' positioning and trade mix, as well as we will have to work quite closely with our retailers to make sure that they enhance their offerings to make sure that our malls remain differentiated. I mean, our asset management team has a very good track record so far in creating very vibrant destinations for our malls, innovative retail concepts, experiential offerings. So definitely we'll continue to curate that diverse trade mix to ensure the relevance of our assets to our shoppers. One example I think we have seen already in play is actually our ongoing AEI at IMM, which will strengthen its positioning as the regional outlet destination and also the largest outlet mall in Singapore. But on the other side of things, I also put things in context. The increase in cross-border traffic will also present us with opportunities, it's not always just threats, to really showcase our malls to tourists coming from Malaysia, while also potentially elevating some of the manpower issues that are faced by some of our retailers as well as our suppliers.

Thank you. So before we open up for Q&A, maybe it's Tony, anything you want to wrap up the session before we open?

Not much. Hopefully, I give you a little bit of flavor how we look at our business and how we're managing the risk and potential opportunity as well. What we are doing is to try to optimize our asset performance as much as possible, even a fairly competitive environment at the same time also, headwinds that we face on and off. For us to ensure that CRCTA continues to be able to deliver sustainable return, naturally we've got to plan way ahead, which is what we are doing. We have been quite proactively looking at our asset positioning, our renewal, we stretch out as much as possible. As we speak today, we are already looking at 2025 expiry, make sure that we're able to secure that stability going forward. So that as a base, we are able to maintain the kind of sanity in the portfolio. On and off, there may be opportunity for us to look at any kind of inorganic growth, but like all things, many hands has to clap, right? The market has to come back, hopefully we can recycle some capital, and then hopefully the opportunity that comes along fits in our portfolio. We will be tactical and we will be strategic in our thinking, looking at the short-term requirement for investors, but also planting a milestone along the way. Hopefully, give some stability, give some confidence to our very long-term shareholders. So in a nutshell, I think we've been doing that, notwithstanding some of the challenges we face overseas, some of the assets, for example, MAC. In Galileo, it's the risk. Australia, I think specifically, is 100 after, which is a little bit more difficult, but we make some strides. When we bought over, it was about 60% occupancy. Today, we are close to 77%, about there, almost 80%. So it's treading along the way, but headwinds in Australia. The other two assets generally in a better shape, 101 Miller. Location-wise, it's fantastic, although it's in North Sydney, but it's prime. We're putting a little bit more effort to ensure we are ready with market return, which is why in one of the slides I can show them the uplifting of the lobby, giving the residents there in our building a nice feel-good factor that befit a premium-grade building. and yet offering at a very competitive rate compared to a new supply that comes to the market. The other one is 66G. It's a different story. It's very, very resilient. In fact, we close to 100% occupied. That's in the main core CBD, but at the southern end. So I would say the overseas assets, we have to deal quite actively with 100 after. In Germany, we have to deal actively for MAC. I think there's a bit more headwind over there. But nevertheless, we will deploy the same technical and strategic thinking to make sure that our assets are in a good position, which means that we can't compromise on the quality, can't compromise on safety. Because ultimately, you want to bring the residents back to the building, which a lot of companies are trying to do that. You need to have a building, office space that befit the environment that warrants them to make the effort to come back to office. So along the way, hopefully we can get it right. Perhaps even the oversea aspect could be the icing on the cake, 2025, 2026, for example, hopefully market return. Then while we stabilize the other part of portfolio, that could, in fact, may potentially give us an uplift in the future. I think in short, I hope we can have a little bit, you know, pictorial-wise, some clarity how we are planting different milestones, different seeds in our journey to try to drive performance.

Thank you, Tony. After hearing from the panelists, we will open for the Q&A session. Hold on. Yes, you will raise your hand and then we will hand you a mic. And then we also ask that you keep your questions to two each time. We will come back to you, Nick B. And for those joining us on the webcast, you can type your questions in the chat box and we will ask them on your behalf at the appropriate time. So, yes, first question is Brandon. That's the one behind. Okay, okay. Okay, Yukiang is.

I'm Yukiang, not Brandon. You came from CLSA. Two questions. First one is on your margins. You managed to do quite a good job on this, but going forward, should we expect this kind of level? I mean, when you recontracted some of your property management services, is it for the next two years, three years? So that's the first question. Second is on your downtown mall tenant sales. uh second quarter seems to be weak and you had sort of attributed that to space uh the new space created from some of the aeis uh is it purely due to cq kaki or you know should we also expect a sort of downtrend when you start to do some of your other aeis for example imm that's coming up and all this yeah you want to address the second question guys

Probably I'll address the second question first. Of course, there's a lot of different factors that adds into a downtown dip. But I would say the majority is really because of the CQA post-confliction. When we take in the full NLA back, but the increase in sales, because some of the, like for example, you have some of these pop-up event shops, we have some of the tenants who also take a bit of time to ramp up. in terms of their sales. So it's just a matter about your sales catching up to your NLA. So your NLA impact is definitely more immediate rather than your sales catch up. But notwithstanding that, if we do have to drill down a little bit of like some of the sub-trade categories, of course there are some sub-trade categories in some malls probably see a little bit of negative, but in the context of the downside, it's not really the main contributor. For example, we have sporting equipment, probably in one of the malls came off a little bit because they were just doing so well last year. We also see that when a lot of people actually did a lot of their shopping for travel essentials last year and so when it comes to this year after that, this year is the part that they travel, last year is the part where they buy to travel. So some of these things will come off. So if we look at the AEI of IMM, I think that's why we said earlier that if we look for quantum basis, there's a little bit of impact to the sales for IMM. But if we strip out the IMM impact, definitely then you can see on quantum basis, suburbans doing actually okay.

Maybe just add to the point that I mentioned in question too, right? Certainly certain trade may be moving through a little bit of time adjustment. I think June has been a bit quiet. I'm sure you all can feel it yourself. There's a lot more travel during the holiday. You can see that generally the mall is a little bit quieter, and hence I think the sales does get impacted, whether it's downtown or suburban. Certain trade, we are watching carefully. Like I say, it's part and parcel of adjusting the trade exposure. And we think that if we need to make a major change, naturally we'll do that. The other thing to bear in mind, maybe you want to show the slide on the trade sales. There's a slide.

Which one?

The trade category sales. I mean, a few things that sort of give us a bit of reading. For instance, you see the... The education one is a big jump, 8%. It came from nowhere. In a way, it's a little bit reflective of some of the things that are a little bit more resilient. As you start to think about how you want to deal with any kind of sales leakage that may come, right? As a result of same dollar, people travel a little bit more. Perhaps the education one now seems to stand out quite strongly. There will be others that I think will think too. On the contrary, the home furnishings seems to be a bit soft. And that's across the downtown of South Urban. It could be because the general property market has been also going through a little bit of a softness. But I think that is a bit more cyclical. So we may not overreact, but we'll see how things go from there. I think on the question of margin, I mean, we're hopeful that we can maintain it. In fact, 2025, we are already locked in. We hatched when the rate came off, energy rate for the entire 2025, looking at more than 10% savings from the tariff. So hopefully that will translate into a proper savings in utility bill overall. The new PME has kicked in. It does help to remove some fixed cost element, the leasing activity. So that fixed cost will come off. But the variable cost may go up depending on our level activity in the leasing. But overall, I think directionally, we should probably see over time a more efficient way of managing the property expense. And hopefully that over time with scale will translate into even better saving. But I think we will certainly aim for improving margin over time.

Thank you. I think we have a random city from behind. Last row.

Hey, morning Tony and team. Brandon from Citi. Just two questions, right? The first one would be, can you share with us your first half 24 occupancy costs? At this stage, I mean, obviously we've seen sales slowing down and your rent reversion has been so strong. So do you think that we can really normalize back to the pre-COVID level of 17% to 18%? That's my first question. The second question would be on your capital recycling. We have obviously seen a lot of assets being sold over the past six months, but it's still pretty quiet on your front. Do you think it's a matter of the quality of your assets or is it you're being a bit too aggressive on your asking prices? Thanks. Offer to currency cost ratio, we are about mid 17% overall. Downtown is a bit higher, it's still sub 20. Suburban we are looking at 16% there about. So blended about 17.5%. I think it's a level that's maintainable. Key thing, like you rightfully mentioned, our tenant need to trade well. And that's something we are putting a lot of effort to ensure. our tenant be able to trade well, and we have different tools that we can deploy to at least make that a higher possibility, right? So we'll do that, yeah. About 17.5%, I think it's a reasonably okay level. Then on the question about capital recycling, generally, I think the market, of course, has seen some pickup activity like All things like for deals to transact, there has to be a meeting of minds. We will watch the space. You asked whether we are too high on price. We will be very pragmatic. I think it's more important to think about not just recycle back to the portfolio. Obviously, it will help on your overall gearing and your interest expense. But also think about replacing the income stream, which is more long-term in nature. So we have to factor that all in together. And of course, ultimately, the investment community must switch on again, right? At the moment, I think it's a little bit on and off. It's very reactive to the market condition.

Thanks. Thank you.

Melvin, I saw you raised your hand, Melvin.

okay then derek yeah hey morning tony derek from dvs just two questions right for your sales efficiency for retail in your portfolio i'm just wondering could you give us a quantum number for suburban and also downtown just to get a sense where sales are if possible if you see nothing we will yeah yeah don't share all this discussion anyway The second question, right, is on office, right? I understand the market's very focused on IOI Central Boulevard, right? But in the background, we have Kepa South Tower also completing 4Q. I'm just wondering whether looking at your portfolio and your expiry profile, should we turn a bit more defensive on office or do you think you're still fairly optimistic about take-up rates, reversions, etc? Yeah, just these two questions. Okay.

I think fundamentally, CBD stocks has a limited supply. I mean, that's That's a given, right? Any new supply coming up, most likely will be a refreshed, upgraded or even redeveloped new supply from old stock. So that's more at the fundamental level. In terms of where they are located, there will be pockets of competition, naturally. Peppal, that's one, that's closer to Tanjung Bagar. The precinct is slightly different. uh maybe you can compete a little bit with our capital tower that location uh location-wide obviously we would have a little bit advantage so we will factor that into into how we look at engaging tenants then it's also a question of whether the tenants are new tenants coming in or existing tenants who are looking at a renewal and they are considering options so in today's setting i think most tenants especially for relocation, the total cost is one major factor, total cost of relocation. So bearing that in mind, when we look at how we should engage with our tenants, when we talk about renewal, we have to be pragmatic. Overall, striking the right balance from a positive reversion, hopefully we want to grow our income. At the same time, looking at the total cost perspective, And sometimes if they need more space, ability to provide total solution in a short to medium term, that could be also one advantage we may have. So I think we're dealing with in many fronts. We have a good portfolio of offerings, both in the core CBD area and also at the site, Rafa City, Kofunan. I mean, even consider the HM, which is today fully occupied. AM is Orchard Road location. And then we have Keptosky, which is very, very new. So we would try to manage as much as possible to retain our tenant within our ecosystem.

Maybe I just... Just a bit, so building a bit on that right, so definitely retention has always been one of the key priorities that we are doing. So if you look at our retention rate, it's actually pretty healthy. We have actually engaged quite advanced with a lot of our 2025 expiries. In fact, a good thing is some of the expansion requirements are also coming through from some of our existing tenants. If we look at just the first half alone, in terms of net expansion within a portfolio and net downside, actually it's quite evened out quite a fair bit. So I think generally that works well. uh if you have the opportunity to really visit some of the newer buildings uh what actually if you look at it even if i take my capital green i think my capital sky generally the quality of assets it's not inferior compared to some of the new builds i think generally specifications is one thing uh location our locations are very good so it helps to build in some residents i think the other bit that we are differentiated, it's really that we have that whole suite solution. So a tenant can come in, they can look at a flat space, core space together in all sorts of combinations, and we have a portfolio that they actually can expand within. So in that sense, if we look at some of the new deals that we are taking, at the start I mentioned about us getting some new tenants coming through, we do see new setups as one. We also actually see a lot of relocation, right, from previously like Central, prior Libra quarters and a few other locations coming into city and they are actually choosing our properties. So by and large, I would say we are actually quite okay. Yeah.

Thank you. Do you need to give to the other side first? Yes.

I just want to follow up on the office question. For reversions, given that your rents are north of $12, it's probably above market already. I was wondering what kind of reversions are you expecting in the second half? I mean, even if it's flat or negative, you'll be high single digits for a full year.

Yeah, I think just generally what we are guiding, high single digits, even though it may be lower than 15%, but I think we'll likely end up high single digits.

So for second half, it's probable that you'll see flat reversions? Potentially, yeah.

In any case, we do have a slide that shows the expiring rent for the rest of this year?

Even as we talk about rental reversion, we are also including leases that are expiring in 2025. Because you have to start engaging them now. So looking at 2025, expiring rent, generally they are still slightly below market. But having known that what we explained earlier, including each one talking about how we engage the tenants, we will be very cognizant. We want to ensure that we keep it within our ecosystem, depending on the budget overall of the tenants.

I think I would say that we have to be careful about this for the second half only because of the competitive landscape they're operating within. So as I alluded earlier in the Towards the end of this year, what we will expect is to see that the secondary stock that will come up and how the landlords of those secondary stock reacts to the market. So if they are actually able to hold on to rents, actually all is good. But if they start to go dive on rents or drop in rents, then of course we have to react accordingly. So I would say that high singles is still a good guidance for a year end. Of course, on a case-by-case basis, potentially some of the leases may have to be competitive. Depends on how the situation goes. We're looking always as a basket.

Whether retail or office is just a basket. There could be some with very solid retail reversion because it's a catching up. But there'll be those that will take a little bit of position, maybe just flat.

We'll move on. For retail reversion, second half, you're still expecting high single digits, right? Yeah.

Thank you. Yes, Joy, you have the mic. Okay.

Joy from HSBC. I just want to follow up also on office. Could you just share, you know, in terms of demand, what are the typical size you're seeing at the moment? And also you mentioned about sort of being competitive. Are you likely to throw in more tenant incentives, including sort of renovation costs just to help the, you know, the overall costs? for relocation. That's one. Second question, just specifically on your JCE line, there's quite a bit of a drop year on year. Which one again? JCE and joint ventures. JVs. Can I assume that's entirely due to interest rate increase? And for that tranche, is that a floating rate? Thank you.

Interest cost, the thing about JVs. Second question, can you repeat? Couldn't hear it.

your JV line. So the JV line actually came off quite a bit right?

Contributions from JV.

So is that entirely due to interest in cost increase or is there other factors in that?

You want to take the first question? Okay so January is both an effort to retain some cash for AEI with some work in overseas including Australia as well as MAC, for example. The gallery, obviously, is funded externally, but the contribution coming back distribution, I think we retain a little bit of cash over there just to make sure we have some capital to look at refreshing the assets.

In terms of the demand for office, generally, what we see is smaller size tenancies if we talk about new to markets. I mean, generally, 3, 5, 10,000 square feet But anything above that, it's a bit harder. But nonetheless, we do see some expansion requirements, especially within our portfolio. Maybe just some examples like one of the demands that we actually saw, especially from a co-working or service office kind of space, they initially was taking just about 20 desks, but now they're looking at 5,000 square feet of space. so the kind of demand that we do see a lot more in the market compared to the really big deals now which i think from from a portfolio perspective it works generally quite okay right half a floor one quarter floor because there's a kind of vacancies that we do have now mostly within our portfolio okay thank you In terms of incentives, I would say that for Singapore, we don't really have to go all out yet on terms of incentives. Generally, it's really the general fit-out, probably a little bit more fit-out period. But rather than giving incentives for tenants fit-out, which is not our primary, what we may look at is, I think generally, I would say probably generally in the market, is that we also see some tenants, actually landlords, sorry, starting to do fitted out suites to help, you know, overcome that bit. So, actually, when we see some of the rents going up at some point, right, some of these rents could be because they kind of price in that fit out into the leases for the tenant. So, that's why we see in the market a little bit more gaining popularity to help some of these tenants who have a bit of KPEX constraints, right, to kind of make that case to do the relocation.

Thank you. Hi, Tan Shen here from Goldman. Two questions on capital recycling. So looking at your gearing and also size of deal, is it fair to assume that we should see divestment before any acquisitions come through? And second question is on acquisitions. In terms of opportunities, can you walk us through what's more interesting in terms of overseas versus Singapore and also sponsor versus third party? Thank you.

First question, not easy to answer because it all depends. We can't time everything to instinct that perfect. That is your blue sky. That's our blue sky environment. Recycle back, get capital back. But we can't predict. Things will go in that kind of sequence. Certainly, monetizing part of the portfolio is an important source of capital for us to look at redeployment. besides looking for potential other equity partners, whether it's in the public market or in the private market, there will be other sources of capital. But put them in line nicely, quite difficult task to manage. But in an ideal scenario, yes, the sequence should be that way. But again, I don't think we can make a prediction how that sequence will pan out.

Yeah. Yeah.

Opportunity overseas, I'll touch a little bit, maybe I'll pass on to Jack. I think market overseas generally still trying to find a footing. Overall, I'll talk in general. Of course, we only have Germany and Australia, these two markets. In terms of the journey, Australia may have come a longer way in terms of how the market has reacted and there's some, naturally, some price adjustment. Australia rates unfortunately stay very elevated. So on an overall basis, this is how we look at deals, right? On the net, after tax, after tax cash flow, where do they land? Vis-a-vis what we can do outside Australia, whether in Singapore. So I think we have to take into consideration that factor. Germany, unfortunately, I think they are harder hit by the war effect. And as a result, I think the economy is going through a tough time. In fact, probably a tough time in Australia. So I think we need to see the economic cycle gaining a bit more momentum before we see some kind of stability over there. But overall, you can find that the investment market in Germany is less active. Definitely very, very few transactions went through.

I think for Australia, I mean, although we have seen like discounting, I mean, probably may not have totally bottomed out. So we are still watching because like Tony said, interest rates remain high, even though, you know, their yields have come up a bit in terms of what has been put on the market and being transacted. But I think we are still watching to see some kind of stabilisation. I think their interest rates remain high and I think even the RBA, right, said that they were not going to reduce interest rates for the next six months. So I think interest rates remain elevated. For Germany, of course, it's come off slightly, but really there are no transactions in the large deal space. So especially like in Frankfurt, people are not putting things out on the market. And so there's really no benchmark or pricing level. So it's quite difficult to pay. Once If there is going to be some kind of, let's say, for sale or something that comes along, we might see some kind of activity coming in. But so far, everyone seems to be holding up well. And so because of no transactions, actually there's no pricing level that has been established at the moment. So I think for overseas markets, it's a bit more challenging.

Thank you. Yes.

Morning, thanks. I'm from Bloomberg. Just two questions for Yishuan first and then for Tony. Yishuan, on office specifically, in terms of foreign firm demand, in terms of office spaces, is it still holding up or has it come down at all? And in terms of the retail side, in terms of both tenant mix, on the tenant side, do you see demand more coming from small-scale foreign brands now? And or in terms of, I think Tony mentioned a little bit of it just now, but in terms of demand from consumers, has interest in luxury spending, things like that, come down at all? And for Tony, two questions. On the pricing gap, do you see that coming down at all in Singapore? Obviously, you mentioned a little bit of that just now, but I was wondering, do you see that resolving at all in your favor or in terms of buyers' interest at all in the next few months? And in terms of the... One broader question, obviously I mentioned a bit about Malaysia and stuff like that, but what is the biggest risk you see right now for, or what's keeping you up at night right now? Is it Malaysia? Is it interest rates? Is it a war? Or what else is keeping you up? Thank you so much.

Three questions. So pricing, generally, I think it's been stable in Singapore. In fact, we look at some of our peers have reported In a way, the valuation of their portfolio, to a large extent, reflects, to some extent, the stability of the value of their assets. I think our peers all reported a higher valuation in Singapore's portfolio, especially. In terms of transactable market, there have been a few transactions that have gone through. But every transaction is very different. Very hard to say this is a very rich price. it buy at 4% or 4.2% yield because buyer come in with a different view. It could be a, and also the nature of the buyer may be motivated quite differently. So I would say the, I'll split into the two, the retail and office asset. I would say retail asset on a net basis has been very stable. The transactable kind of view possibly already reflected into those transactions that you've seen in the last 12 to 18 months that are done by our peers. I would imagine that level would be probably what a market would expect. On the office side, the range is also quite wide. Also, our peers have sold at 3.8%. Bear in mind, it's a different kind of dynamics. And the nature of the buyer is quite different. They're looking at a bit of a value-add play. So we have to factor in. And they're actually selling above valuation, ultimately, still. And the valuation cap is not any major change from the year before. So I would say, in a nutshell, office has strong footing. But because of where the apps are in you, then it depends on what kind of buyer they are prepared to come in.

Okay, thank you. Can you give us a specific kind of buyer for your properties and like, I mean, office?

We would, we would, okay, so office and retail are quite different, right? We definitely will engage the potential investment market pragmatically, you know, what kind of thing they're looking at and bear in mind also what I mentioned earlier, how we should look at redeploying the capital. So, we try to find the right point where we want to do a deal. But naturally, I think the guiding principle is that it has to be something that makes sense for us and also makes sense for the buyer. And the buyer motivation can be quite different.

We just want to add on the yield that's reported for all these deals. Sometimes it's actually quite difficult to compare. property to property or transaction to transaction because it's the yield that's reported is at a particular point in time. So it really depends on whether that property is under-rented at that point in time or whether there's additional enhancement work that can come in maybe in the next few years. But that yield that's reported is that particular point in time. So it's not that like for like when we compare between properties, property to property.

Thank you.

Four more questions. What keeps you awake? Many things, right? The volatility in the market is certainly keeping us awake. Like you said, we are trying to deal with any kind of headwinds that come from operational level and we actively try to ensure we are able to still drive revenue growth and at the same time manage the costs effectively. So that tap us on our toe. That means you can't sleep SLIP, not SLEEP. But this is a broad picture. As you know, REIT is a new product. Investors, we are very cognizant of the fact that investors, in fact, especially our richer investors are highly dependent on our distribution. So I think that's something we bear on our chips and try to be able to deliver the kind of distribution stable as fast as possible at the same time over time you can drive growth so and that your loan itself keep you awake now yeah thanks Tony we have a question from Mervin to answer then we have to go online and come back to you Gula you want to address the Malaysia change of trade maybe just you want to actually

Probably just touch on a little bit on the demand side of things, right? So office and retail, I'll touch on office quickly. So for office, I think generally financial services, investment services, professional services, these are still the drivers of most of the demands we see. But interestingly, we also see that, for example, in our portfolio, we do get some requests coming from overseas, kind of like co-working operators again. So that's something that we do have to, you know, that's one area that we look at things. As for the retail side, generally a lot of the new to market still F&B from Chinese brands coming in, but we also do see international brands. Just that unfortunately for the international brands, they take a little bit longer time because for them, sometimes they have to find the right partners first, they have to find the right location before they can actually progress. So the lead time in terms of conversion to pursue and convert takes a little bit longer. For the large brands, of course, I think we see how the large companies have been performing generally in this past couple of quarters. In terms of expansion, it's something that probably they may not be as aggressive in this coming year or so. We will continue to watch this space.

Arvind?

Arvind from David Morgan. Maybe we can touch on asset level performance and outlook. Maybe Bugis Junction and Bugis Plus, we see a lot more offices being built in the area, potentially in upcoming residential can you touch on opportunities for that property raffle city seems to be doing quite well on this occupancy side can you talk about the upside for that property with that level of mice activities coming through hotel performance therefore junction 8 it's not that close to the malaysian border but it's closer than your downtown sorry your downtown properties and i know Based on personal experience, immigration clearance is significantly much faster this year. Many AIs hold that property. My other question would be electricity costs. What have you been able to sign this year and then next year as well?

I think last one I earlier mentioned, maybe you missed it.

So this year it's more like... I know it's down 10%, but do you have the absolute rate?

I think we share the absolute rate because the other component is the consumption. So we can only just get a general trend.

Okay. Broadly, I think there are opportunities in those assets we were looking at. I can let each one address specific assets.

Okay, so I hope I remember all the assets that's listed there. So for Bplus and BJ definitely, we do expect some of the shopper traffic as well as sales to improve. We are working with some of the retailers to kind of reposition their offerings to capture that, improve the kind of catchment area that we see in that area. So of course, we all are quite aware that Grokos office tower has came up. The residential part is probably, if I'm not mistaken, end of this year or next year, sometime then. And of course, that will be another bit of a boost for some of the retail. Probably I would draw attention to B+. If you look at B+, we recently have actually opened up Have Fun. I'm not sure how many of us managed to go, but it's really changing the kind of... sales performance. It's doing very well sales. It also improves a lot of the traction in terms of the shoppers that we get, especially in the night time. So that will actually help to improve the performance of the asset. So it injects a bit of new life to that floor, to the upper floor. In the past, it's been relatively quiet. But now I think on most Thursday, Fridays or Saturdays, if you go, it's pretty well packed. So hopefully we can actually bring that energy, continue to improve on that energy for BB Plus and DJ in the coming quarters when the rest of the residential start to move in. For Red Bull City, I think generally it should be still resilient. I mean, of course there's a little bit of a huge jump in the past year's performance. It will stabilize. I think we will have to see how things pan out think that there's room for improvement. Of course, the second quarter, we do see a little bit like news on about room rates, you know, a bit, you know, not easing off a little bit, sort of occupancy easing off a little bit. But I think it's more of a function of the quarter and hopefully in the second half of the year when, you know, we have F1, we have other major events coming through, that will actually help to improve the hotel performance as well as the retail performance to that. Did I miss out on any property? I think there's one more. J8. J8. Okay, sorry. What's about J8? J8. Any AI portion? It's resilient. I would say the J8 generally, the traffic performance.

I mean, your other REIT things, they're going to do some AEIs there. So the competitors that may submit more.

They may do some AEIs there. We'll see what we do there.

I think J is a very unique location. It's urban. It's not too far from town. Very wealthy attachment overall. Digital location. Well connected. Transportation node. So all things look in the checkbox. One of the weaknesses is it's a little bit subscale. So I think we are trying to think along that line whether we could really scale it up. it will take some time but otherwise the footfall is strong we want naturally to translate that footfall into conversion that's more important yeah but overall it's a bit subscale yeah for one that's so well located with two MRT line below yeah i think it's a bit of skill but we'll see Beyond J8, there are other assets that we also think about in the future. Downtown office where we can do AEI and also even in other sub-urban retail mall. But we need to plan it out carefully. Like earlier I mentioned, planting milestone, hopefully that would give some stability income. Because each time we do AEI, sometimes it will be affected. Just like IMM, we affected the sales, affected the rental. But overall, we know that it's a stronger footing post the conversion and give us a stronger competitive edge.

Just a very small point. It's really about planning out how we are going to do our AEIs for the different things. So one is what are the other ongoing AEIs we have. I think the other part that we have to consider also, sometimes it's not just us, right? It's also the authorities, what their plans have, they have in the precinct and how we should time these things a little bit better. So at the right moments, we will share our plans.

Thank you. We need to go to the online questions first, then Gula will come back to you. So, okay, the question is from Donald. The first question, how much is Capital Spring contributing and when will contribution stabilise?

Do you want to take that?

Okay, in terms of the DI contribution, For first half, this is in the range of 3,000,000. I think largely contributions have stabilized.

Okay. And the next question is from Mingliang and Hongwei. It's about will the anticipated higher gearing limit of 50% by MAS, whether we expect acquisitions And then would there be any update to CICT's capital management policy given that?

I think we want to ensure CICT is on a strong footing for long term. So maintaining the right metrics, financial metrics is critically important, notwithstanding MAS relaxing the, in fact, for the borrower to be able to borrow all the way up to 50% on a reduced ICR, but we remain very disciplined. Not forgetting our stakeholder involved, not just equity investors, we also have debt investors. And naturally, they are on the opposite side. So, on a sustainable level, and given what earlier I mentioned, what are the plans we have from upgrading our building. I mean, we need capital. So we need to maintain certain level of flexibility so that when we embark on any kind of AI work, which is value-accretive and deeply-accretive over time, that we have the capacity to do it. So it's important that we want to maintain the discipline.

Okay, the cooling access service. The question from Hong Wei is that we have actually shared that we are undertaking cooling as a service. How much cost savings do we expect for these utilities and expense? And also for the other initiatives that we have, the electric vehicle charging stations, does it help to increase kapak income and how much margin is there from such charging stations?

Okay, I'll just leave the question first. Then I'll leave to each one to talk about the... the rest. I think overall when we start to look at cooling as a service, I think we came with a view that the few things we need to ensure CRCT remain the premier investment vehicle. That's when we look at how we treat our assets, looking at sustainability angle. So those are all very important elements. And what that means when you translate that from an operational level, your building has to be very efficient. So what drives efficiency? Energy consumption. Energy consumption is a factor of many things, including the equipment, maintenance of equipment. So while we look at cooling as a service, the primary driver is really to think about, can we consistently maintain the efficiency in a prolonged period of time? So we know that we can do a good job, but perhaps there are even better operators out there who do this as a rise forward, who can be even more efficient. So to some extent, when we start to look at what the vendors can provide services, then we realize that actually there are a lot of people out there who could provide the certainty of energy efficiency to maintain a high level of green building status for our portfolio. So that's the starting point. Will that translate into real savings? I think over time it should, because it all depends on the capex cycle. Let's say if it's a much older building with very aging equipment that may come closer to the end of cycle your immediate conversion into that could mean a lesser saving because we could have done it ourselves the immediate savings from a replaced ME equipment accrued to ourselves immediately but if it's a equipment that's somewhere in between that's a little bit difficult to say the capex required to upkeep that is a moving target the capital that need to deploy and the cost of that capital is also a moving target. So it's something a little bit more challenging to sort of manage. So if we can able to get a service provider to basically de-risk that, then technically in the long run, we have more stability in maintaining the efficiency. But overall, based on what we are contracted, we do see a net saving given what we have to pay the service provider and our so-called interest expense that's been avoided. Because when you do your equipment upgrade and you bear your CapEx yourself, essentially you've got to carry the cost of the CapEx. Now you actually move out to the third party. So that's how the concept works.

I would say that probably the EV charging is not so much. I think the starting point is not so much about income per se. It's really about making sure that our assets remain relevant in terms of these things. We do see the EV car population actually coming up quite a lot. In fact, I think one of the top sales has been BYD over the past months. So that's the need for us to then actually progressively expand our EV parking lots and facilities to make sure that, you know, our shoppers, our office tenants are able to actually use some of these amenities when they're in our property. So I would say that that one is actually the primary driving at this point.

Thanks, Yijuan. Okay, the last question is from Amanda. It's asking about CQ at Clark Key's performance after the AEI. I think it's asking about performance in terms of tenant sales, will... Sorry, let me see.

CQ.

Maybe I'll start off first, then you can... Also, to clarify, we don't share specific tenant sales for individual assets.

So CQ, I would say you're going through a stabilisation stage. If you're at Mr CQ, we call CQ a club key, by the way, CQ a club key. It's actually the holistic precinct, including the current redevelopment work at Canning Hill. Because the whole micro-market, to a large extent, needs to be anchored by that product coming on the stream. And it's not ready yet in 2026. So while CQ has completed all our AI work, there will be this sporadic need to ensure we sustain a regular footfall. So curation of tendons naturally is very important. I'm making very honest, not all tendons will perform well. So during this in-between period, definitely we'll think of whether is it a transitory kind of issue that we need to deal with, or is it really a mismatch in terms of trait mix in the club key. So we have to do that adjustment potentially. But once that canning heel thing come on stream, you would naturally have a little bit of base load food for residents, hotel, service residents, will create some kind of stability. Then the vibes and dynamics will be quite different. Although we say that we wanted to derive a little bit Clarkie in the past, not wholly relying on the night trade, but Clarkie is still very well known around the world as the place to go for your night activity, right? Entertainment, clubs, you know, disco. So with that in mind, the position of Clarke Quay and also with the more living resident component that's next to it in Canning Hill, that curation of what goes there is really a little bit of art and science and also factoring sometimes what authority requires to put in place. You can't definitely have very loud music close to where residents are living. So we have moved further away, closer to the carpark location, where the current Zouk location is located, closer to that early part of the entrance coming from the South Bridge Road, North Bridge Road I think, yeah, that location. You can have a little bit louder music, you know, vibes, but moving towards near residential, there's some kind of a constraint. So the overall curating that makes to get it the right switch port, I would imagine we need one or two cycles. post-completion of AI, which is what we are doing now, at the same time, post-completion of canning here, where your base load will start coming in. In a product like CloudT, it's really people begets people. It's the thing where you start drawing people, you got the kind of people, the kind of cloud coming in has to be the kind of cloud that we effectively can do conversion, right? Currently, actually the footfall has improved quite a fair bit. It's not back to the pre-COVID days for sure, because the night life part is still a little quieter generally over there, but it's coming back and hence we want to sustain that. But the crowd coming back are also quite different. We have a lot of tour bus coming in, but very transitory, you know, transient kind of crowd. Doesn't immediately lead to kind of conversion. What we need to imprint in most of our, in a longer term basis, visitor's mind, whether it's foreign, local, is that is this place actually day and night you can do something, right? So you come here on your own, whether you're a tourist, you know, you just venture in this place, it's a massive visit place, riverside, good lifestyle, give you that kind of feel that they have been to Singapore. In Clarkie, he has been to Singapore, but at the same time, also experience that rather than just a very kind of transient cloud who come in and take photograph and Instagram and that's it. So that's the art and science part that we try to get it right over time.

I think Tony has given quite a good perspective of CQ performance or what's happening. So I think we have one more question online which is related to Capital Spring. We also at this point want to also draw in just another question on the JD line part. Just to add is that actually the higher operating cost Because due to the end of the defect liability period, which ended last year, this was something we already shared, which is why operating expense is higher for the first half and also higher interest expense. And the question online is asking whether we have refinanced the floating debt at Capital Spring JB and what is the interest savings when the debt is refinanced?

The loan documentation is in the final, almost final stage. So anytime, you know, in a few days, it will be signed. the interest savings from the refinancing will be from slightly lower loan margin, about 20 basis points. And then on the conversion of floating rate to fixed, considering all that, I think in terms of interest savings, it could be in the range of 40 basis points.

Thanks, Maylian. So, given time, we have a last question from Gula.

Yes, yes, sorry, thanks for taking my question. I'm just wondering, you know, everyone's been asking about acquisitions and divestments, but what about redevelopment? Because have you looked through your portfolio to see where you can do really extensive AEIs or redevelop, you know, something like, was it lot one, you know?

anything there or you know good panchang plaza is also very low rise i mean is there any chance of any new development when you close assets i'll pass that to each one i think i touched i alluded a little bit on that maybe you might give some clarity so definitely we without naming any properties you know specifics i would say that generally we would actually explore various uh scale of um aeis as well as redevelopment plans potentially uh it's just that some of those uh plans may take quite a while to materialize. So it's not something that, especially if you talk about redevelopment, right? You look at the whole process of FS, engaging authorities, everything to the eventual carryout. We are talking about easily two, three years down the road at the earliest. So that will take time. But definitely across both retail and offices, we do explore some of these opportunities that we see how to actually better position our assets and optimize the assets. Yeah, so in the near term, then of course, then along the way, we have different skills of AI or major upgrades that we are also studying for some of our malls to make sure that we keep them relevant. I think some of the malls we do find that there are pockets of opportunities for us to try and explore. Again, at the right time, then we will probably share because the last thing we want is to say something that at the end doesn't materialize. So we'll share more in due course.

so then there's a there's a capital spring acquisition is it whether you plan to acquire the is it 45% of capital spring rate I think you're referring to the call option 55% commercial component you plan to acquire because I think we we do have the call option so we have to in a way because it's a call option we have to flexibly to decide whether we want to do it

That 45% actually is not a bad contribution. We'll see. We'll see how things stand out for there. It's all about prioritizing any kind of capital, what you want to redeploy, assuming the market comes back in a nice way.

And then one last question. This is about your ratings because there's all these questions about the higher leverage, aggregate leverage ceiling and all that. So how important, I mean, You talked about your debt market, debt investors. So how important is the ratings to you? And what do you have to keep your aggregate leverage and your ICR to maintain your rating? And there's also the debt to average leverage of that.

I think it's important to maintain the premium status of CICG. There are advantages of having that title because you get some flexibility when it comes to looking at potential debt issuance and you keep us in check in terms of making sure we are able to get an overall basis, a more competitive cost of capital. So cost of capital, not just equity, also debt. So I think it's important. So we will try, we will strive as much as possible to try to be able to manage that. Rating agency obviously will look at different financial matrices. It's important to them. They also look at whether you are able to ability to generate uh growth right at the same time so that you are able to sustain the kind of financial matrices so sometimes in in between there could be a blitz and that's something we have to engage the agency to explain uh it could be a timing difference we are embarking on a prolonged kind of a ai world there could be a bit downtime and then if we talk about

let's say so that's that we may be interested in monetize but the timing may not be right so we just have to engage them anything okay thank you tony so um thank you very much uh that's the last question we can take just given um time i think we have managed about close to an hour of q and a from both online and offline and on-site. So if you still have more questions, please feel free to reach out to the investor relations team and also management will be around after this session if you have more questions. And so we are pleased that CRCT, we have delivered a steady first half this year, 2024 performance and we're definitely trying for growth. So thank you very much for joining us today.

Thank you.