CapitaLand Investment Limited

Hello everyone. A very good morning to you in a big picture and to those joining us online. I'm Alison from the CRCT Investor Relations team. A very welcome. CRCT released its full year 2022 results this morning and we have the management team here with us to share the highlights of CRCT's results. I'll introduce them later. For today's briefing, we'll start off with a presentation by our CEO, Mr. Tony Tan, followed by a question and answer session. Please note that this session is live, recorded, and will be uploaded later on our website. Now, I'd like to invite Tony to start his presentation. Thank you, Tony.

Good morning. Just commented that it's a big place for a small crowd. So we reached the result this morning. I hope you have a little bit of time to digest. I'll just quickly run through some of the key highlights and then of course our management teams are here to take some questions. Okay, move this. Is it moving? Yeah, okay. So just a few key highlights which can be elaborated in the following slides. A few things I think will work out quite well in 2022. We have seen some nice improvement in operating metrics. Committed occupancy, for example, has been going up over the year, over the quarter as well. And we have achieved rental reversion positive both for the retail and office, as well as a tenancy that has now already surpassed 2019. That includes downtown and suburban. So I think we're quite pleased with the overall general trends we've seen in 2022, which is quite in line with what we talked about when we met in different locations. On a sequential basis, we think running to Towards the end of the year, which you see nice uplift given there were a few momentum that has already triggered as a result of more relaxation from the COVID measures. Shopper traffic has been rising as well over the years. And of course, towards the end of the year, we've seen in a way leading to the festive period, we've seen quite nice uplift as well. Throughout the year, I've been very, very careful about how we look at costs, very active managing the costs. Everyone knows that inflation is hitting us in off-front. Interest rates have been going up. Utility bills have been going up as well. So we have been very proactively trying to manage all these different things, dynamics that has been hitting our expense line. I think we have achieved a reasonable output. I've given a little bit of guidance on how the utility rate vis-a-vis 2021 has moved up almost 90%. Rough estimate on how that would impact on the DPU front, but I think we came up better than that. We also secured quite a fair bit of financing for the market, in total $2.7 billion. they will secure in 2022. And we have hedged our energy rate throughout the course of the year. And 2023 is protected. LBIT is a higher rate. 2024 is protected as well. Given that we know that the volatility of the energy price is going to be still, notwithstanding all the geopolitical and war issues that we've seen around the world, I think energy price will continue to stay elevated for quite a while. Capital management is going to be active this year. Hopefully we are able to manage our balance sheet more effectively as well. We have done some proactive and very conservative management of balance sheet. You see the gearing came down a little bit, about 14.4% at the end of the year. I'm looking forward. We've been quite pleased to hear that China is opening up. At the end of the year, they talk about coming February, they're going to release more or less the floodgate to the rest of the world. That certainly will be helpful for the retail business, especially in the downtown business. So we hope to see that trajectory coming through in 2023. um also improving on the hospitality side you know we have a couple of hospitality related uh assets in our portfolio the hotel in raffle city uh live funan in uh basically funan we've seen very healthy kind of uh repa or occupancy yeah so that's training out pretty well So from the number perspective, full year we achieved almost 1.73% improvement on DPU. I know it's below market consensus, but I think we have done a little bit of things. Hopefully, going forward, we have seen some improvement from there. Bear in mind that we also have certain, hopefully, potential measures that will help improve the operating number as well going into 2023. On the revenue side, distribution income side is up by 4.1% to $702 million. I'll talk a little bit more later on. so overall um portfolio occupancy has creeped up to 98 95.8 percent uh from third quarter we reported 95.1 so it's going up as well um wheels has uh came like slightly from 3.8 years to 3.7 um from a retail perspective the uh earlier i mentioned i think the the number trending well quite quite well the quarter we closed uh the quarter as in the year today september retail sale was 21.3 percent today we are looking at full year 22.5 is improvement as well uh suburban mall um again um downtown mall lead the subway more in terms of recovery but surely because uh downtown wall has been um getting a wider a bigger hit during the throughout the covid period and as you've seen the rebound very robust and all the various measures like the relaxation of the mass mandate, I think it's a critical turning point. A lot of people are starting to flow back to office and we've seen very healthy returning rate to the office. So downtown more is seeing a little bit of uplift, a little bit of tourists trickling in as well. So we've seen a little bit of uplift from the tourist crowd as well. And Suburban, as usual, remain pretty resilient. People are still working for either three days, two days from home or for one, depends on which company you look at. But overall, I think Suburban has been pretty resilient. Portfolio, overall traffic has gone up, like I mentioned earlier, and it's led by downtown. Overall rental reversion, I did touch on earlier, I think it's all positive now, both the office and retail. And it's in fact, I think, whether you measure it from an average perspective or incoming, outgoing perspective, I think the retail reversion has gone positive as well. Valuation overall, if you look at overall for the whole 12 months, it's gone up by close to 9%. With a little bit of portfolio adjustment we did in the year, We divested One John Street towards the end of 2021. And then we had divestment of JQ. We acquired Capital Sky. We acquired and completed the three Australian assets. So there's a bit of movement. But overall, I think the valuation has gone up by about 9%. In terms of geographical split, slight movement only, I think Singapore portfolio shares gone up about just 1%, 93%, with 3% in Germany and 4% in Australia. This one I don't touch too much, I think it's self-explanatory. So second half full year, I think revenue has gone up quite nicely, 14.4% and MPI 13.1%. Margin-wise, I think we helped steady. We are trying to guide the market a little bit, try to move it. Given all the different inflation numbers that have been coming in, we are hoping that we will achieve more than 70% margin. I think we achieved a reasonable margin, close to 72 plus percent overall. That's for the full year. I think for the first time we crossed our MPI by 1 billion. That's a big milestone. Of course, 1 billion is just a digit, but certainly it's a major milestone for CICT. We continue to be probably one of the most diversified REITs in terms of different revenue streams as you can see our layout here. Singapore by far still the largest and of course we have some minor contribution from Australia and Germany as well. So we continue to build on that. Hopefully we get even a wider diversification. Singapore will still be very prominent, dominant. And I mentioned before, we hope that over time we are able to scale up in some of the two markets they are already in. Balance sheets are healthy. NAV closed about 2.12, including the dividend, 2.06 excluding the dividend. Funding-wise, I think we can rest assured that it's all covered, 1.166 billion, more than covered. We have all the funding in place. It's about timing, drawing down, closing the documentation, and of course, at the right moment, we'll do the interest rate hedge. We have also done a little bit of sensitivity on the interest rate movement and earlier I was just discussing with some of you out there. Overall, I think we are quite happy because I think we had a pretty high hedge rate and as a result, I think you see lesser volatility in terms of the impact from interest rate increase. On the balance sheet wise, we closed here with some improvement in the matrixes. Gearing has came down to 40.4, a bit more proactive, make sure we don't have either cash sitting around. Total borrowing came down a little bit, which is what I meant. Fixed rate has gone up slightly from September, 81%. And then interest curve came down slightly from 3.9, 3.7, a reflection of the higher interest cost that we are paying now. So average cost of debt creeped up by about 0.2, from 2.5 to 2.7. I think I want to run through in too much detail. All I can say is that the portfolio occupancy remains pretty stable and it's creeping up as well. The whales, slight movement, nothing to shout about. And this again, the main thesis is about diversification. I think the top 20 now contribute less than 20% of our overall contribution income-wise. Okay, I won't touch this. This one I mentioned before. And yeah, I think overall, we still seen a nice improvement in overall retail occupancy. Raffle City, I mean, because we completed the AEI, we took the entire space back into the market, and hence we are about 91%. uh not all the space in ai has been fully led you know it's about 70 percent i think later on i don't show whether you'll be participating in the uh the walk at rafa city uh post lunch and post lunch yeah so we have a kind of look at what we have done over there yeah Overall reversion, I mentioned earlier, I think we have achieved positive reversion, even for downtown mall, and that's a positive development. And in the fourth quarter, it's gone positive for both downtown and either incoming or average-average. I won't talk about this too much. I think this one I mentioned before, when downtown continued to lead the uplift in terms of the sales improvement. And we surpassed 2019 sales overall, both downtown and suburban. I won't say about this too much. Office-wise, occupancy has improved, 94.4. In Singapore context, 96.2. Average rent, about the same as what we reported in September. Reversion remained healthy, 76.6%, compared to third quarters, about 7.9%. Retention rate remained very healthy, 81%. And this is just a breakdown. We've seen some creep up in occupancy at the Australia side as well. We hope to be on that momentum as the return to office hopefully will pick up throughout the course of this year. So all these are a little bit more things for you to digest at your free time. I won't delve too much. In terms of outlook, naturally, I think there's a little bit of a dark crowd out there. Everyone knows about it. There's no surprise. There's been news about various job attrition, tech company particularly. Some impacted Singapore. We have not seen a very widespread impact in Singapore yet. But naturally, because the environment is in the mood of rationalization, we tend to quite in line with what some of the consultants are saying. I think going to 2023, we'll see probably a little bit of slowdown in terms of rental growth. But nevertheless, there are other positive factors underpinning Singapore's office market. Demand beyond the trade sector, I think, has been, I would say, quite decent. FMCG, we have Business support services are still expanding, the legal fraternity are also looking at expansion. Some interesting things like, which Singapore has anchored strongly in this part of the world, as being a champion on ESG and sustainability. And we see a lot of companies starting to move into Singapore as a base. So we have seen some nice traction. Hopefully that will transmit to some real demand for space. I think retail-wise, trajectory-wise, hopefully first quarter, riding into the festive period, we'll see nice improvement. And as the floodgate I mentioned, China, I don't know how many will flood into Singapore. Certainly, there will be more tourists coming in and hopefully downtown mall will continue to get that push, momentum. S'alba mall, as I said before, will remain pretty resilient. So overall, a little bit about crowd, some things to match on. What we have been actively doing in 2021, cost management is important, interest rate, cost management is very important. We'll continue to do that. This is what I mentioned. So we are looking also to hopefully complete our AEI Kratky this year. We are already planning ahead, you know, what next. There are a couple of projects we are studying and at a timely moment we will just let you guys know, right? Okay, I think I'll stop here and our colleagues can join me. Yeah. Very fast.

Sorry, I'd like to invite the rest of the management team up on the stage for the Q&A. Before we start, I would like to introduce the management team. To Tony's right, we have Ms Wong Mei Lien, our Chief Financial Officer. To Tony's left, we have Ms Jacqueline Lee, Head of Investment. And to her left, we have Mr Lee Yijuan, Head of Portfolio Management. Some housekeeping rules before we start. For the physical audience, if you have any questions, please raise your hand. When the mic comes to you, please stand up, say your name, where you're from before you ask your question. We'll be limiting two questions per person per round. If you have more questions, we'll come back to you.