Mapletree Industrial Trust

Good morning. Thanks for joining us this morning for MIT's second quarter and first half financial year 2024-2025 results briefing. MIT has released its second quarter and first half financial year 2024-2025 results yesterday evening. We have the management team to present the key highlights of the results. Ms. Le Lily, CEO, Ms. Khoo Geng Fong, CFO, Mr. Peter Tan, Head of Investment, Ms. Serene Tam, Head of Asset Management, and Ms. Chen Shokim, Head of Marketing.

So just to start off in terms of the key highlights, if you are flipping to these slides, you'll be looking at slide five. I think for this quarter, it has been, I would say, quite non-eventful business very much as usual. We do report a higher net property income. I think whether do you compare quarter on quarter or year on year, Osaka Data Center is a key contributor. I think for the final details, you will probably hear it from Ging Fong later. So I think in terms of DPU, we are quite happy to be able to deliver a 3.3 cents DPU. I think this, if you look at it on a year-on-year basis, is a 1.5% increase. Of course, on a quarter-on-quarter basis, I have highlighted last quarter. I think in terms of the MPI margin, etc., it's a little bit on the high side last quarter. So I think this quarter is a bit more but it also means that I think in terms of the DPU, we do see a slight decline. Operationally, oh yeah, and maybe it's also good for me to just highlight at this point that for this quarter, we have finalized the extension with AT&T. So I think the extension is for a 17-month period. I think in terms of rental, I reckon this would be a question that you all will ask, so I'll just address first. The rental rates, I would say, is lower close to what they have signed on initially. If you remember, this is the second extension. So the first extension was at the premium. I think in consideration of For all practical reasons, we think that just accepting the extension is a better move for us. I guess the other side of it, if we do not accept the extension or we hold for even higher rental rates, is the fact that you will have some downtime in trying to fill up the building. During this period, it is probably a zero-income type of situation. So I think the extension of AT&T is actually a good development for us. It gives us more breathing space for a good 17 months. But nonetheless, it's really kicking the can down the road and we will continue to work on marketing, exploring the various options that we can work with for San Diego. Going on to the operational performance, the average overall portfolio occupancy has actually increased I would say quite well from 91.9% to 92.2%, largely due to the Vanderbilt lease recommencing. But I think just like to remind that this Vanderbilt lease comes with a one-year rent-free. So at this point, we are still during the rent-free period, so there will be no DPU impact arising from this. Okay. The other point to highlight is the rental revision. We are happy to report that we have achieved a 10.7% across all property segments. This is something that we are quite happy to be able to achieve. But nonetheless, I think we also have to bear in mind that the rental revision, a large part of it comes about because we do have leases that were signed on during the COVID period. So those were at relatively lower rents. So I think going forward, we would expect that the rental revision rates to milk down a bit. So probably near the single mid-digit. The third point that we have here is really the acquisition of the property that we have recently announced in Tokyo. So we have just... completed it yesterday. In fact, it was like halfway through our board meeting that we actually completed. And the last point is really on the distribution reinvestment plan. We are quite thankful to these unit holders for taking up the option, for taking up the options to order elections to receive units. So we are able to retain about close to 17 million. So that actually helps to mitigate some of the effects towards our leverage. Okay, next I will pass on.

Okay, I'll go to the financial performance as well as the capital management update. Year-on-year comparing the second quarter, net property income increased by 4.6% to $134.5 million, largely due to contributions from the Osaka Data Centre which we acquired in September last year, as well as new and renewal leases across the various property clusters. These were partially offset by the non-renewal of leases from the North American portfolio and loss of income from the town hall divestments. We also incur higher property taxes, marketing costs, and higher property maintenance costs. On the borrowing costs, this increased by 3%, largely due to the higher borrowing costs in relation to the Osaka data center, partially offset by effects from the repayment of loans with the proceeds from town hall divestments. The distribution declared by the JV decreased due to higher borrowing costs from replacements of interest rate hedges. So overall, our DPU increased by 1.5% or 0.05 cents to 3.37 cents. Okay, quarter on quarter, our net property income increased due to higher revenue from the full quarter impact from the Vanderbilt lease. We also completed phase three of the Osaka Data Center in June and June 24, hence the higher revenue from Osaka Data Center for this quarter. This was partially offset by higher property taxes and property maintenance. Our borrowing costs increased due to higher interest costs from non-replacement of interest rate hedges upon expiry. Overall, our DP, Sorry, before that, let me clarify in terms of the NPI. Stripping out the rental amortization, our NPI is flat. Hence, if you look at the DPU, overall, it's a drop by 1.7% or 0.06 cents to 3.37 cents. Our NAV per unit decreased by 4 cents to 1.72 cents. mainly due to decline in the valuation of financial derivatives as well as weaker US dollar. Next. Our total debt decreased by 48 million to 3 billion, mainly due to lower net translated borrowings from a weaker US dollar. Our aggregate leverage ratio stands at 39.1% as of 30th September. Post completion of Tokyo acquisition, the aggregate leverage is about 40%. As Lily has mentioned, we retain 16.6 million of cash from the DRP which we have used to pay down loans. So as a gauge for every 10 million of cash retained, we will be able to reduce our gearing by 0.1%. So for this girl, we continue to apply DRP. In terms of debt maturity profile, it is well staggered with average debt duration of 3.4 years with no refinancing risk. So we have about 50 million of IRS due this quarter, which was not replaced, hence the lower hedge ratio to 80.4%. And our average hedge tenure reduced slightly to 3.4 years. Our average borrowing cost is at 3.2%. I think Lily will continue with the operational performance, right?

Okay. Sorry, there's some downtime because we need to switch the mic. We need to pass the mic on. Okay. Now, on the operational side, good news in terms of the occupancy. We see overall an increase of occupancy for the entire portfolio. I think if you look at the breakdown between the Singapore North American and Osaka, The key contributor to the increased portfolio occupancy is really from North America. That one, as I explained earlier, is largely due to the commencement of the lease by Vanderbilt. I think maybe at this point, I can also highlight or report that for our Kallang Way, we have managed to increase our committed occupancy. I think last quarter, we mentioned about 53.5% has been committed. So this quarter, we are able to increase it by one percentage point to 54.5%. I guess it's a slow progress, but at least there are some progression. So I think the team is working quite hard on this And we do hope that we can at least reach maybe a 60 to 65% by end of this year. Okay, moving on. List expiry, I think if you look at this quarter, we do have one list that is expiring. That's the one that was previously occupied by Systera or Centre Square now. I think that one is in East Technology in Phoenix. I think the re-leasing is currently in progress, but we think that it should be quite okay to do a backfill, considering that this is actually in Phoenix, which is one of the key data center markets in North America. But of course, I think it's not a case of immediately if somebody who left, somebody will come in and take over as in. So there's bound to be a certain level of downtime. so i think we need to be a little bit patient on that one okay uh if we look at the rest some of the expiry that's coming um for the rest of the financial year we do have vanguard who is located in philadelphia so i think that one takes up about 124 000 square feet and it will be expiring towards the end of this calendar year so december 2024 we have started the marketing for it so and in fact we have engaged a broker to do the marketing so we do hope that you know there will be some progress on it as well another smallish facilities that is due for expiry that is in february 2025 in east cornel i think this is the one that is held under the jv so i think in terms of the square feet is about 33 000 But I think this one, we know that they are not renewing, but I think there is no much issue in filling it up because we are currently talking to the existing tenant to see if they want to take up the additional space. I think other than that, the rest are quite small, very much business as usual. Rental rates, I think that is something that we are quite happy to report. Average revision rate, as I said, 10.7. But if you look in terms of the range, you are talking about as high as 26.1%. I think this 26.1% actually occurs in the light industrial building, which you see no bars in the chart because it's only one lease, so to protect the confidentiality. But what I can say is this is actually one of the least that is in our 2A Changi North. And generally it's 26% because we actually start off with a low base. Moving on, maybe just the next thing to highlight is actually our acquisition in Tokyo, which we have just completed. Maybe I'll let Peter take through this.

Hello. Hi. All right. So, I mean, as what Lily mentioned earlier, so we just completed this acquisition yesterday in the midst of our board meeting. So, our Japanese colleagues were actually helping us to close this off. So, we're pleased to announce it's completed yesterday. I think the other update that we have is we have also continued discussions with TAPCO, which is the Onshore Power Service Provider, So we remain confident that we are able to secure the power in the future when we wanted to redevelop this asset. So total IT load is probably north of 30 megawatt. So that's what we will be aiming for. All right. I'll hand it over back to Lily.

This is like passing baton, quite fun. Okay, the next part I will just quickly touch on is the outlook. I think for this quarter, the outlook in terms of generally for the global economy as well as Singapore, US are actually quite positive. In fact, I think if you look at the newspaper yesterday, very positive news in respect of the industrial segment as well as the technology segment. So I think this is... something that bodes well for us. Nonetheless, we do know that we have certain challenges that we need to deal with, say, you know, in terms of filling up some of the spaces at Kowloon Way, as well as some of the renewals that's in the North America portfolio. Then I think you can move on to the next slide. Then from what you can see here, of course, the portfolio remains large and diversified. So I think notwithstanding that we do have certain challenges that we need to face, the portfolio should still be able to deliver something that is quite resilient and stable. And that is something that the team here is working towards. I think financial flexibility, we have been able to make sure that our balance sheet remains strong. So with the DRP, this will certainly give us more flexibility that we need. I think we continue to look at the growth through the acquisitions and development. And since you're on that point, maybe in terms of the divestment, that is something that we are still pursuing. We are in talks with some of the potential divestment transaction. But I would say at this point, there's nothing much I can report. But please be assured that we are working on that to help to rebalance our portfolio. And that will also give us some financial flexibility towards our acquisition plan.

Thank you. We will now move on to the Q&A session. Can we have Mervin to ask the first question?

Thanks, Melissa, and congrats to you and team on the very good results of the AT&T extension. Can we just follow up the AT&T lease renewal or extension? The audio wasn't very good. You said the rents will be lower. Is it rents will be will be back to the pre-20% increase or what will you restrain to?

What I meant is you will be back to the initial lease. So if you remember, this is the second extension. So for the first extension, there's about a 20 plus percent premium. So I think if you are going to compare it on a year-on-year... Only three people. Oh, that's Melvin's background. Okay, thanks, Melvin. So as I was saying, we do expect to see about a 20% drop in terms of the rental rates for AT&T. I think that is actually a decision that we have to take on a practical basis. I mean, rather than leaving the property empty, at least we're getting some rental out from it. But nonetheless, we also have to remember that the first extension was actually at the premium. I hope that explains.

The 17-month extension, there's no rent-free period, right? Or is this straight cash flow?

No rent-free period. The extension is only for 17 months.

If I have a rent-free period, I get nothing. And then on the other two leases, Centre Square and Phoenix, when does it expire? And what percentage of GRI does it contribute? Similarly for Vanguard and Philadelphia, the percentage of GRI and your expectations in terms of rental reversions for these two leases? Thanks.

Okay, thanks. For Vanguard, I think it takes about 1.2% of our total portfolio revenue. and it expires in December 2024, so end of the calendar year. I think the other one we're talking about was the one at East Corneal. That one will expire in February 2025, but it's a smaller space, so about $33,000. So in terms of contribution to our portfolio, it's about 0.03%.

Okay, thanks very much. Look forward to more divestments and perhaps more acquisition in Japan.

Jarek, can we have your question, please? Jarek from DBS.

Hi, Monique, Melissa. Can you hear me? Yes, yes, we can hear you. Hi, Lily and Tim. Just two questions from me. Just a follow-up on MIRF questions on your US data centers, apart from what was highlighted, right? Are you still sensing that your tenants are willing to renew? And are we still going to see largely your typical three to five year kind of renewal rather than a short term kind of extension? Just want to get a sense around the strength of the portfolio in the US. Then my second question is on interest costs. I think previously you talked about 3.5%. You're doing much better than that. Could you give us an update on what to expect for

this year and maybe next financial year yeah that's all for me i think for at&t at this point they have already informed us that they are going to move out for sure okay um the reason why they had the extension is because they are having problem really shifting all the operation cutting off and shifting all the operations to the orange county um of course that that also indicates how sticky tenants can be or how difficult it is for the tenants to just, you know, pluck off and move away. So it's not really kind of a plug and play type of business that you're talking about. So for AT&T, this is their second extension. Of course, I would also hope that they can do further extension, right? But the truth is they have done the extension this time for a longer period, about 17 months. I think the last extension was about 12 months. So I don't know. We have no indication whether they will continue to extend.

Also, Derek, to add on to your question, since we are on these top 10 tenant slides, so actually if you look at the top 10 tenant slides, we We are actually quite confident that most of them will continue to renew on a, you know, at least on a five-year or longer basis. Of course, for the other, some of the smaller, other smaller tenants, there may be the renewals at a shorter lease term or short-term renewals. But for the top 10 tenants that you see here, we are quite confident they will continue to lease with us if they have, for the facility they have with us in US. Yeah, except for AT&T.

Got it, got it, got it. Okay, so I just want, for the AT&T asset, right, do you have the asset power that currently is contracted? Is there upside to that or it's too sensitive?

Okay, the current onsite power is low. Okay. Yeah, it's low. But for this asset, we actually see other alternative use besides data center. So that's what we will continue to pursue as well.

because San Diego market we actually see there are other other good users just like similarly like the other one that we have in Brentwood okay got it got it sorry interest cost yeah I think that's like the key question okay our interest rate is 3.2% we are 80.4% hedge so with the

Sorry.

Can you hear me? Can, can, can. Okay. So we are 80.4% hedged. With the interest rate cut coming, we will then benefit from the unhedged portion, 19.6%, or about $600 million of our loans.

I think you went on mute again.

Okay, maybe I need to restart. About 80.4% of our loans are hedged. So the remaining unhedged portion will be able to benefit from the interest rate cuts. For every 100 bits cut, we will have that savings of 6 million per annum. But having said that, we do have IRS coming due this year. Every year we will have IRS coming due. And all this will actually lock in during low interest rate period. So for like this year, as I mentioned last quarter, we have about 350, 400 million that's coming due. So some of it we may or may not replace, which then bear higher interest rate of maybe 300 to 350 bps. That will have an impact of 11 to 12 million per annum. But the thing is that two-thirds of this will be at the JV level. So you may not be able, you won't see it at the borrowing cost line, but you'll see this impact at the distribution declared by the jv but all in all i think uh by end of this year we expect interest rate at the group level to be around uh slightly below 3.3 percent slightly lower than last quarter indicative of lower than 3.4 percent okay okay sounds good okay so i mean all this interest rate is also relative right because we we our jpy debt that we drew for the tokyo acquisitions is cheaper I mean much cheaper than 3.2%. Yeah. So on average, this will then help to bring down the average interest rate.

Okay. Okay. Got it. Got it. Okay. Thank you. Thank you. That's all for me.

Yep.

Okay. Can we have Brandon from Citi to ask the next question?

Hi. Morning. Can you hear me?

Yes, we can.

That's good.

Yeah, it's good.

The volume is good. Okay, thanks. Just going back to the AT&T, right? Any reason why, I think, given the kind of vacancies we are seeing in the market, they are still, like, pushing down that rent by 20%? Would you actually have negotiated for a better rate? That's my first question. And do we have any updates on the Williams Street occupancy compared to a couple of quarters ago. That's my second one. And third one, can you let us know what's the hedges and both US hedges and the debt that's due in FY26 as well and FY25 hedges and debt for US? Thanks.

Let me address the AT&T rental first. I mean, of course, I can insist and charge them an arm and a leg, right? But I think it's really us also trying to balance what we can get out of it vis-a-vis them just biting the bullet and shift everything out, right? So I think at a certain point of time, we need to be very practical about this. So do we want to force the hand so much that they decided that there's no point for me to continue this, I just back up and go. After all, this is really the second extension. So when it comes to the second extension, their job or their move to the Orange County would have more or less have started, and probably it's just in the midst of completion. I don't think we want to push the envelope too far also. I think it's really taking a very practical approach towards this, weighing between us, being able to charge a higher premium or a higher rental, these AVs face with the possibility of leaving an empty building. That gives me nothing. So I hope that addresses the AT&T question.

And for the other two questions.

The other question is 250 William occupancy. I don't think there's a lot of move. I think there's actually quite similar. I think for 250 William, I think as we all know, it's in Atlanta. Atlanta at this point in terms of the downtown, it is not easy to get any more data centers to be established because of the power constraint that they have there. But we are currently working with the Georgia powers, and hopefully we are able to bring in more power, in which case then the 250 Williams will be able to see some level of uptick. I will leave Keng Fong to handle the schedule.

For USD-IRS coming due in FY25 as well as FY26-27, a SING dollar equivalent, we have about $500 to $550 million of USD IRS coming due next FY and the year after maybe $600 to $650 million.

And also one two-thirds is JV.

For next year, maybe half-half. The year after is largely the Singapore side. I mean, it's MIT group level.

Okay. And is it correct to just assume that the hedge, I can't just assume that the debt tranche is exactly the same as the hedge tranche. So I should divide it by 80% to get the exact debt tranche due because of your 80% fix. Is it correct?

I think when you look at the debt maturity profile, it's very different compared to our interest rate hedge profile because we manage our refinancing risk as well as the interest rate risk separately. In terms of the debt profile, we don't see... much higher margin that the banks are charging. I think our risk is more on the base rates part. So you can compare with the slide on that maturity profile.

Okay. I think we can take this offline. It's a bit too detailed. Okay.

Thanks. Thank you. Thank you.

But maybe suffice to just remind that in terms of the hedge tenure, it's about 3.4 years. So we do have certain level of protection.

Okay, got it. Thanks.

We have Jonathan from UOB to ask the next question.

Good morning and congrats on a very good set of results. My first question relates to slide 24 on the rental reversion. And for flatted factory, the rental reversion is quite strong, 13%, and it's quite kind of broad-based within the flatted factory space, 102 leases sign. Could you discuss some of the positive catalysts within the flatted factory space, and would this 13% reversion be sustainable? On the other hand, for high-tech, we have new leases sign, signed at 248, which is quite low. So could you discuss dynamics within these two segments? Thank you.

I think for the reflected factories, we have to recognize that this is actually one of the lower cost space that we have in Singapore, right? And I think you also recognize that deflector factories are the ones that were quite hard hit during the COVID period as well. So a lot of the leases that were contracted during that period were at lower rental rates. that this was signed like then about three years ago. So now that we have three years has passed, generally you do see the uptake there. So that actually explains for the, I think close to 13% rental revisions. Whether this is sustainable, I would say that we are probably not going to see a similar trending going forward. There will still be a positive rental revision, but I don't think you'll be in a double digits.

And for the new leases for high-tech building?

Maybe I'll just take this question. Jonathan, for high-tech buildings, as you know, it's a mixed bag of properties of different ages specifications. So this particular block of high-tech building is actually the one at Propio where we did an asset enhancement initiative. So if you recall, within the cluster, there are two blocks of federal factories. And a number of the leases that were signed for this quarter included those at the factories where it's about $2. So you see it brings down the average. Sometimes for high-tech buildings, this number is skewed. So it's also affected by the fact that there are only 13 leases signed during the quarter.

Okay, thank you, Melissa. And if I can follow up on the DRP, what's the current discount that you're offering now? And would you consider having a higher discount to reward unit holders and then also to improve the sort of acceptance rate? Thank you.

Hey, hi, hi. For this round, the discount that we're looking at will be at 2% discount to adjusted reward, which is the same as last quarter. The thing with the take-up rate, right, it really depends on the share price at that point of subscription. So, for example, last quarter, the take-up rate was very good, was mainly because during the subscription period, our share price rallied. So that gives us that discount of about 6%. I mean, 6 to 7%. Yeah. So even by giving that 3%, I mean, additional discount, it may or may not help. It all really depends on the market.

Okay. Okay. Thank you. Thank you, Lily. And thank you, management team. Thank you very much.

Hi. Can we have Joy from HSBC to ask the next question?

Sure. Thank you. Morning, Lily and team. Just a few questions from me. First of all, just on the Vanguard leases, can we get a sense as to, you know, in terms of the impact to P&L, should we expect something similar to the AT&T leases we have dealt through in the past? And also, what's the plan on the asset itself? Second question, I think early on, you mentioned that you were doing a power study on the portfolio. Is there any updates on where we are, you know, opportunities. And then last one, just going back to interest rate swaps, the base rate that you're locked in for the next few years, is it very different? So basically the revert to current market, is it of the same quantum or is actually on a diminishing sort of quantum?

Thank you. Okay, one at a time. So for the Vanguard, I think just now I said that the contribution is about 1.2% to the overall portfolio. So that will be the financial impact that you see on the portfolio. Whether is it going to be the same as the AT&T, I can outrightly say no, because AT&T, as it is, is a much bigger space that we were talking about. So I guess if you look at the top 10, AT&T is actually one of the top 10 tenants. I think that San Diego is about a 3% contribution. So comparatively, the impact naturally will be much lower. But nonetheless, this is something that the team, again, is working very hard on. Hopefully, we are able to deliver some good news. All right.

Sorry, Lily, what I meant is in terms of the impact in the void period, we should be quite similar as to how you backfill the other AT&T leases, right? Is it the tennis one?

Yeah, you probably can expect that. I mean, at the end of the day, we are trying to fill up a whole building. So I'm not cutting out into smaller spaces. So you're talking about one whole building. Okay, thank you. Then on the power study, it is still ongoing. I think the point about power study is not as speedy as I thought it would be. In fact, I was chasing the team, you know, why does it take so long? But the truth of the fact is to do that power study, we need to work with a consultant, we need to work with the power supplier. As you would understand at this point, the utilities supplier is actually very busy and perhaps quite swamped with requests. But this is something that we have gone under way. I believe that a typical time that is needed is at least a six to nine months type of period. We do have some that is coming to a conclusion soon. Once we have any news on that, we will be quite happy to share with you guys.

Joy, on your questions on comparing the base rates for the interest rate swaps that we look in the next two years, FY25 and FY26. Correct. Okay, so earlier I mentioned for those coming with you in this FY, the 300 to 350 bps higher, you have to bear in mind that the full year impact will be next year. So there's always this lag effect. So for FY25, the existing hedge versus the new rate, potentially we are looking at maybe 100 to 150 bps higher for FY25 and FY26. Because those were locked in not as low as compared to those we locked in for those IRS due this FY. But you will still see the impact of the higher interest. Got it.

And this is versus today's rate. So meaning if let's say rate gets cut, we will see probably 25, 50 basis points better. Is that fair?

Yes and no. Because when you see the interest rate cut, that is more for the short-term rates, i.e. more the overnight rates. But if you look at the long-term, let's say three years or five-year rates, potentially it remains stable at current rate, or it may go even higher when interest rates normalize. Usually it's a steeper curve. I see. Got it. Thank you.

We have Rachel from Macquarie to ask the next question.

Good morning, Billy and Tim. Just a few questions from me. I think firstly, can I just confirm the East Konya asset, is it the one that you're referring to with the Phoenix asset? Is that right?

No. The one at Phoenix is the one that's really vacated by Centre Square, which they have vacated in the early part of September.

Okay, got it. And can I Noor, what's the percentage of GRI for the Phoenix asset and what do you intend to do with the Phoenix asset?

Phoenix asset is about 0.3% of GRI.

So we are looking to, we are in the process of doing the marketing. I think, of course, as I've mentioned just now, Phoenix is actually one of the key data center market in North America. So it is something that will probably need time for us to find the tenants.

And also, what kind of reversions do you expect for the backfilling of both the Phoenix and the Vanguard assets?

I think for the Phoenix one, we think that we should probably be able to maintain about the same rates that we can get. For the Vanguard one, because it was originally a kind of a specific use for Vanguard themselves. So as you can see from the valuation drop over the years, we actually think that the rental rates will actually be quite low because we may not be able to find a replacement tenant who uses the facility like Vanguard.

Okay, got it. So, negative for Vanguard, that's right?

Yeah, that's correct.

Okay. And I do see that there are also some expiries on the data center portfolio in FY25 and FY26. Any cost of concern that we should be or any risk over there?

I think if you look at it, the larger ones perhaps will be the ones that is in the hyperscaler facilities. And I do not think there is much risk in that one because for these hyperscalers, they are looking to stay for long.

Maybe to add on, I think what you see is also we have not really captured the short-term renewal by AT&T in San Diego because this is at 30th of September. So if you remove that, then quite a big chunk of the lease renewal will move away.

I see. Okay, I got it then. Okay, thanks. And then my next question is on the future acquisition power. I think, Jason, did you mention that you already got the power or you're still in the process of getting the power?

We have not got the power because that will take quite a bit more time, but we are actually quite confident with our engagement with TEPCO now. that will secure the power.

Okay, got it. Okay, that's all for me. Thank you so much. Thank you.

Hi, can we have Tan Chiam from Goldman to ask the next question?

Hi, good morning. Can I just clarify on Cenex? When is the lease ending?

That lease ended early September this year.

Okay, got it. Second question is on cash contribution from occupancy. Brentwood, are we still under Brent Free or is it 100%? And also Kallang, what was the cash occupancy that's contributing this quarter?

For Brentwood, there is a one-year rent-free from June, so you will see cash contribution from 1st June FY25. For Kallang, I think for Kallang,

For KALANG, you'll probably be looking at above the 50% level, so probably around the 52-53% level.

Okay, got it. Just one last question on your Singapore data centre. Any lease expiry that has come through and what was actually the version on your Singapore data?

I think for Singapore data centre, we have not hit any expiry yet. but that's a long time ago. Any coming? Yes, we do have one that is coming up. That will be from the STT side. I think if you look at the STT list, the renewal for the data center confirmed will be, I'm quite sure that they will renew. The only thing is if you recall back For those with a history long enough, if you recall back, the rental from STT, there's actually two components to it. One is the base building, and the other one is actually on the data center feed-out works that we have done for them. So I think come next year, when the lease is due for renewal, that data center works rental will actually fall off. So I think if you look at in terms of the impact, it's about 50% of the rental from STT.

You're saying it will be 50% lower?

I think, yeah, that's about the proportion of the data center works, except that there will be some offsetting effect by the escalation from the base build works as well. So that we are still discussing with the tenant, and there will be some uplift, but it will be offset by the drop in the data center work.

And what's the expectation on reversion? I guess some other peers have recorded really strong reversion.

Yeah. But for this deal, there is some, you know, because it's only base building, so, you know, and we actually have agreed to some form of rental cap for the renewal. Yeah. So I think we will just have to push up to the maximum of the rental cap. But I would say it's

decent enough but it won't be you know very high double digit also okay got it thank you can we have deal from dbs to ask the next question yep thank you thank you hi hi lady and team uh just just two quick questions for me i think firstly i know just wanted to ask about the business parts in singapore i saw q and q your your occupancy a slight uptake um but reversions were negative So just wanted to understand, you know, what should we be expecting for business park segment? And, you know, in terms of the new demand, which sectors are they coming from?

I think for the business part, we have been pushing up the occupancy a little bit by a bit. But I think in terms of revision, we do see a slight decline. But I think that is something that is still quite palatable. I mean, at the end of the day, your decline is not as huge. In terms of the demand that we're seeing, maybe Kim, you can take that through.

Hello, can you hear me? This is Kim.

Yep, yep.

Okay. For the business park, as you know, we have actually, the buildings are located in the first-gen business park, so two in International Business Park and one in Changi Business Park. Now, international business parts has certain demands that is actually more from the manufacturing companies that are located in Tuas. So we are able to get some firms that have some HQ functions and they are located to our strategy. Whereas synergy, again, is more location demand. That is from the logistics sites from the Changi North area and then the aviation kind of industry. But there are smaller demands. So we don't see the last time those technology companies that is in Changi Business Park. I hope that answers your question.

Okay, got it, got it. But just a quick follow-up on this. Then in terms of looking ahead for both segments, International Business Park and Changi, should we be expecting to see occupancy continue creeping up with demand for some of these smaller spaces still coming in?

Yes, and I would say maybe because the smaller demands, they do have a lot of choices now in the market, so it may take certain targeted groups to be there. We are trying to fill actually the larger space that will have a bigger impact on the occupancy.

Okay, got it. Sounds good.

Let me just elaborate a little bit on the revision for the business park. I think for this quarter, there's actually a rent-free that was given to two of the new leases at the business park level. So that actually accounted for the dip in terms of the revision.

Okay, got it. Thanks, Liddy. Okay, and moving on to my next question, going back to talking about these power studies for your portfolio, I know it's still early days, but just wondering with these power studies, if let's say you do ascertain that certain parts of your portfolio has an upside to power load, would it actually affect your portfolio valuations? Would it actually add to your valuation?

I think the short answer is yes. If we can secure more power, it should improve the portfolio valuation.

I guess that will then filter through in terms of the rental rates that we are able to fetch for the building. Of course, with the power study, it also means that our option, if we are able to have some visibility in terms of the uptake or in terms of how much power we can actually get hold of, our options with respect to the building will be much wider in the sense that we can consider you know, either it will help in our releasing of the building or we can even consider a redevelopment if the numbers make sense. And, you know, as a very last resort, even in terms of the sales of the property, that power study result will help. Yeah, and we probably will be able to, it will basically open up the tenants base for us.

Okay. Actually, I'm referring more to, you know, I mean, if the power study shows that there is a potential, you know, even before you actually manage to lease out or get the additional power, would this potential uplift actually help with valuation?

No, I doubt if it's just potential, it will increase the valuation because something must be confirmed.

Okay. Okay. Got it. Got it. Okay. And, and, and just quick follow on this, right? So, so like you say, if let's say there is potential, you know, you can, you can do a, you know, extension or redevelopment. How, how do you see, uh, yourselves doing some of this? Would, would it be together with a partner? Are you able to undertake it yourself? How, how should we be expecting any potential, uh, major AEIs or redevelopments?

I think the options are on the table. You know, we can, we are able to do it ourselves or we can find a partner. You know, it could be a colo operator or an end user. So all these options are on the table because essentially we do have the skill sets and the resource to do it.

If I may remind, we have also done built-to-suites for data center before. Of course, then you're looking at Singapore, but there is no, I reckon that it is not difficult for us to transfer the knowledge over there as well, right?

Okay, got it. That's clear. That's all from me. Thank you.

You are conscious of the time, so can we take the last question from Yu Qiang from CLSA?

Hi, thank you. Thank you for making me the last one. Just maybe two questions and one suggestion. One is, can you briefly talk about the demand in US data centres? I know some of your data centres might be pretty old, so it might not be AI capable, but What are the type of industries that you are seeing on the demand side? That's the first question. Second is on Kalang Wei. Why is the occupancy taking so long to fill up? And then as a suggestion, I think your U.S. data centers have a lot of leases. Maybe next time a slide with a summary of each of the lease expiries and what's going on there would be helpful. That's it for me.

All right. I will take the first question. Slightly easier question.

As the question was asked, I was pointing fingers.

For the first question, the so-called enterprise data centers will probably have to find alternative users. You can actually see that from the the releasing of the Brentwood property to Vanderbilt Medical Centre. So that's one. For the co-location leases that expire, we actually remain confident that we should be able to find another co-location operator to take over the space. I mean, for people who have been following us for quite some time, we do have two... I would say chapter 11 filing earlier from our co-location operators. But essentially, most of our leases do not get rejected and another operator actually continues to operate the facilities. So we remain positive in that sense. And then for the cloud and the hyperscale providers, we are confident that they will continue to renew.

I guess I was also asking, other than healthcare, what other kind of sectors can take up those spaces?

I mean, it can be anything. You know, it can be anything, you know, even for tech providers, you know, doing for their backroom offices or training and so on. You know, it can always, you know, there are a lot of options. So ultimately, we actually think that North American market is pretty, very deep and wide. So that actually gives us the comfort that we are able to manage the portfolio and the properties.

Okay. And Kalam?

Kalang, I will leave it to another smart person.

Hello, this is Kim. For Kalang, the occupancy is creeping up slower than we like. The reason is because there is a lot of supply of high-tech spaces that is in the market right now. The largest competition is TSX. has about 1 million over square feet. And Alexandria Technopark, as you know, Google has also close to more than 300 over thousand square feet. So that added to the supply situation and it compete for the similar type of customers. So for us, the team has actually did smaller deals the last quarter, basically in also the the electronics IT sector trades. We are in the discussion with, like I mentioned before, we are hoping that we could find another big user soon, at least a floor that will move up the space. But the competition is deep. So just bear with us a while.

Okay, thanks.

All right, thank you so much. Thanks for joining us today. You know where to reach us if you have further questions. Thank you.