CapitaLand Ascendas REIT

Good evening everybody. Thank you for your patience. Sorry for the delay. My name is Terence from Investor Relations. Thank you for attending Capital Land Ascendas REIT financial results briefing for the year ended 31st December 2022. Today's briefing will include a presentation followed by a Q&A session. Please note that today's session is being recorded and will be made available on our website after today. We will now proceed with the presentation for the FY2022 Financial Results by Ms Yau Kee Peng, Head of Capital Markets and Investor Relations. Kee Peng, please.

Happy New Year. On behalf of Capital Land Ascendas REIT, I wish you all good health and a successful year ahead. Let's now commence on the financial year FY2022 results. presentation. Key Highlights We achieved strong results across all our asset classes despite the uncertain macroeconomic conditions. The portfolio occupancy hit a 10-year high of 94.6% and we achieved high rental reversion of 8% for leases renewed in the financial year FY2022. So together with our proactive and disciplined approach to capital management, DPU rose by 3.5% to 15.798 cents Capital Land Ascendas REIT is 20 years old. So since our listing in 2002, we have grown our AUM from under $1 billion to $16.43 billion today. We have expanded beyond Singapore and have a sizeable presence in three other developed markets, namely US, Australia, and the UK Euro. The portfolio is well diversified and resilient. On the same store basis, property valuation is stable at $16.1 billion. So let's dive into some of the details. FY22 vs FY21 Gross Revenue increased by 10.3% driven mainly by full-year contributions from the 75% stake in Galaxys, Grab HQ in Singapore, the 11 data centers in Europe, UK, the 11 logistics properties in the US, and of course, better performance from our existing properties in Singapore. NPI rose 5.2% to $968.8 million despite cost pressures. Total amount for distribution rose in tandem to $663.9 million. DPU rose 3.5% to $15.798. This is second half versus first half financial year FY2022 performance. Gross revenue is 2.9% higher, driven mainly by contributions from the seven logistics properties in Chicago, US. Net property income grew in tandem with gross revenue. Distribution income is stable at $333.2 million despite an increase in borrowing costs. DPU is stable at $7.925. So this is second half versus second half of the previous year. Gross revenue increased by 7.1% and this is largely driven by the logistics portfolio in US. So this is Chicago as well as Kansas City and better performance in Singapore properties. Net property income increased 3.5% to $491.8 million despite higher utilities expenses. Second half DPU increased 4.3% to $7.925. Distribution, we adopt a semi-annual distribution frequency. So for the period of 1st July to 31st December 2022, a distribution of 7.925 cents will be made. You will be receiving the dividends on 7th of March. Moving on to investment. so the highlights for the year so on the acquisitions front we continue to adopt a cautious approach to ensure that we only acquire good quality properties with strong tenant base and have promising long-term potential so during the year we completed 223.4 million dollars of acquisitions and all three acquisitions sorry All three acquisitions are in the robust logistics sector in the US and Australia. The logistics portfolio is currently sizable at about $4.1 billion and represents a significant 25% of our AUM. Next, we completed a redevelopment. This is Euribix in Singapore. It is a premium industrial property costing $38.2 million. The new five-storey property enables us to secure a higher base rent when we compare to the original two light industrial properties prior to the redevelopment. and during the year we also completed two AEIs. Post the financial year, in the first queue this year, January-February, we completed two acquisitions. The first one is a high-tech industrial property at Topayo, and the second one is a cold storage facility at Wanburo Lane. MPI yield for the two acquisitions is estimated at about 6.8-6.9%. Capital Management Gearing is healthy at 36.3%. So our emphasis is to ensure healthy gearing levels during this uncertain business environment. We have a total borrowings of about $6.3 billion. So during the year, we proactively term out $1.3 billion of debt with a fresh panel of 5 to 10 years. So we have extended the debt maturity to 3.7 years and this you can see it is very well spread out such that less than 20% of our debt should come due for renewal in any one year to minimize refinancing risk. The healthy leverage of 36.3% as well as a high proportion of fixed rate debt of 79% enable us to moderate our interest expense despite the significant rise in interest rates. Cost of debt is 2.5% for FY2022. and the finance are at very healthy levels, far exceeding what is required by the bank covenants. For example, ICR is 5.2 times. This is above the one odd or two times threshold. A3 Moody's rating is maintained, providing us with financial flexibility and very strong access to capital. This is an interest rate sensitivity table. So about 79% of our debt is fixed. So the balance 21% is on floating rate and based on that 21% proportion of variable debt, a 100 basis points increase will result in a 2% decline in distribution. And then if we were to assume a 200 basis points increase, then this will result in about a 4% decline in distribution. Natural Hedge To minimize the effects of any adverse exchange rate fluctuation, we have a high level of natural hedge of 74% for our overseas investments. Revaluation As at 31st December 2022, Claire owned 227 properties worth $16.4 billion. On the same store basis, there is no significant change in the valuation of our property portfolio. It is stable at $16.1 billion. In local currency terms, higher valuations were achieved for our properties in Singapore, Australia and US. Although the valuations for data centres in the UK and Europe declined, these data centres accounted for about 4.4% of the total AUM of $16.4 billion. So this is a strong demonstration of our acquisition strategy over the past few years. Our portfolio is well diversified and resilient. Our tenants' businesses are spread across more than 20 industries. This will reduce exposure to any one industry and lower customer concentration risk. So when one industry is challenged, another industry may be doing well. Overall, the portfolio occupancy recorded a 10-year high of 94.6%, driven by improvements in Singapore and Australia in the fourth quarter. Singapore improved to 92.1%, higher than the island-wide occupancy rate. This is due to higher leases at some logistics and high specification industrial properties. Australia increased further to 99.4% due to new leases in our business space properties in Sydney. And these tenants have signed up for pretty long leases of 5 years, 10 years. US occupancy remained healthy at 94%. UK, Europe also very high at 99.4%. So based on new leases signed in the fourth quarter, the biomedical, engineering, IT and data center sectors were the largest sources of demand by gross rental revenue. For FY2022, the largest sources would be engineering, logistics, IT and data centres. We have here, for the international portfolio, in the fourth quarter, the logistics, IT and data centres and education and media sectors were the largest sources of demand by gross rental revenue. And for the full year, so tenants from logistics, biomedical, retail, consumer sectors accounted for the largest portion of the new demand. Okay, rental reversions. Overall, the portfolio achieved an average rental reversion of 8% for the full year. So this is in line with our guidance. You can see that the rental reversion for Singapore is 7%. Australia 14.2%, US 29.2% and 11.7% for UK Euro. So looking ahead, we expect the rental reversion to continue to be positive mid single digit range. Okay, well stable at 3.8 years. Okay, so we have the portfolio lease expiry on a portfolio basis here. So we have about 21% due for renewal in this financial year. So this is quite a normal level. And in Singapore is about 26% coming due for renewal. In the first Bar, you will see a darker shade of grey and you will see a 3.8% there. So this refers to the five single lease properties, you know, and many of them are likely to renew. Australia, 16.4% coming due. US, 9.2%. UK, Europe, 9.4%. There are five ongoing projects worth $617 million that are undergoing development or redevelopment, AEI and convert to SUD that will help us to improve on the returns of our existing portfolio. They are expected to complete between 2Q2023 and 2Q2025. To conclude, we continue to face challenges from the rising interest rates, inflation and global economic uncertainties. These issues may have some impact on our tenants' businesses as well as on Claire's operating costs. but we are confident to overcome all these challenges and we are well positioned to leverage on our strong financial position to take advantage of any growth opportunities should they arise to deliver a sustainable return to unit holders. So with that, thank you very much.

Thank you, Kee Peng. We have also representatives from the management on today's panel. May I invite William, CEO, Koo Lee Zee, CFO, and Mr James Goh, Head of Portfolio Management. And before we proceed to the Q&A, I would like to invite William to say a few words. William, please.