CapitaLand Ascendas REIT

Alright, good evening ladies and gentlemen. Welcome to the first half of 2024 Financial Results Briefing for Capital Land Ascendas REIT, or CLAIR for short. So we thank you very much for joining us in person today as well as online. This briefing will start with a presentation by management as well as a question and answer segment. So if you are attending this briefing online, you can submit your questions anytime during the briefing via the Q&A function on Zoom. If you are attending the briefing in person, after which you can raise your hand, I will call your name and the microphone will be passed to you. So before we begin the session proper, let me introduce the management on the panel. So first, we have Mr. William Tay, CEO of Capital Land Ascendas REIT. Second, we have Ms. Kulisi, CFO of Capital Land Ascendas REIT. Next, we have Ms Yau Kit Peng, Head of Capital Markets and Investor Relations. And finally, we have Mr James Goh, Head of Portfolio Management. And with that, I will hand the time over now to Kit Peng, who will begin with the presentation. Thank you.

Thanks, Andrea. Good evening, everyone. Thank you for taking the time to attend Capital Land Ascendas REIT's first half FY2024 results presentation. Let's commence. The key highlights for the first half of FY2024 are as follows. Distributable income increased 1.1% to $313.8 million. DPU declined by 2.5% to $7.524. Investment properties held steady at $16.87 billion. Our portfolio occupancy remained high at 93.2% and we achieved a high rental reversion of 13.4% for leases renewed in the first half. Gearing is healthy at 37.8% and cost of debt is stable at 3.7%. Let's take a look at the details. First half 24 versus first half FY23. Gross revenue increased by 7.2% to $770.1 million, mainly due to contributions from the Chess Building in the UK, the Stuttgart in Singapore, MQX4 in Australia, 6055 Last Boulevard in the US, just to name a few. MPI increased by 3.9% to $528.4 million, partially offset by higher operating expenses. Distributable income increased by 1% to $330.8 million on the back of higher revenue and MPI, and despite higher interest expense resulting from the high interest rates environment and higher borrowings as we acquired more properties. DPU declined 2.5% to 7.524 cents in first half FY24 because of a larger unit base. When we compare first half FY24 to second half of FY23, gross revenue increased by 1.1%, mainly attributable to the chess building in the UK, and the completion of the convert to suit from office to life sciences at 6055 Last Boulevard in the US. NPI increased by a higher 2.7% to $528.4 million, partially due to the lower operating expenses. DI increased 1.2% to $330.8 million, in line with the higher NPI and partially offset by higher interest expense. DPU increased in tandem with DI i.e. 1.1% to S$7.524. Distribution details, so we adopt a semi-annual distribution frequency. So for the period of 1st January to 30th of June, we will be distributing 7.524 cents and you'll be receiving the dividends on 2nd of September. We continue to optimise returns from our existing portfolio by upgrading our properties. In July, an AEI at Pacific Tech Centre was completed. This is a 10-storey industrial property located in the Jalan Bukit Merah vicinity in Singapore. To enhance tenant experience, the main lobby and the common corridor were upgraded. Occupancy has increased to 92.4% currently versus 83.7% in December last year. Moving on to capital management, gearing remains healthy at 37.8%. In the first half, we termed out some debt, about $600 million worth. This comprised of a seven-year bank loan and a 10-year bond. As a result, the will has increased to 3.7 years versus 3.4 years in December. So this is a summary of our financial ratios. I will just highlight a few. ICR is healthy at 3.7 times. Fixed rate debt remains high at 83%. And de-weighted borrowing cost is stable at 3.7%. So compare that with December 3.5 and then in the first quarter, March, this year it was 3.8%. A3 credit rating by Moody's is maintained and this provides us with a lot of financial flexibility and strong access to capital. To minimise any adverse exchange rate fluctuations, we have been maintaining a high level of natural hedge. Currently, it is at 76% stable. Asset Management As at 30th June, the occupancy rate for the portfolio remains healthy at 93.1%. You can see that the occupancy rates here for Singapore Australia, UK, Europe, they are overall stable at 92%, 96.8%, and 99.3% respectively. Occupancy in US is lower at 87.7%. So we have some color in the next couple of slides. So in Singapore, the occupancy rate is stable at 92%. and this is higher than JTC's island-wide occupancy rate of about 89%. In the US, it declined to 87.7% and this is mainly due to the expiration of leases at two single-tenant properties in Kansas City and Portland. So in Australia, we improved further to 96.8% from the 96.6% in March. And the improvement is driven mainly by higher occupancy rates in two business space properties in Melbourne and in Sydney. The new tenants have signed five to six year leases. In the UK and Europe, it maintains a high level of 99.3%. So where are the sources of new demand? So in Singapore, they were from the engineering, the government agencies, and the IT and data center sectors. As for the overseas markets, the financial and professional services, government agencies, and biomedical were the largest sources of demand in first half. Rental Reversion A positive rental reversion of 11.7%, the first column, was achieved for leases. Both Singapore and the US recorded positive, almost 12% rental reversion, while Australia, UK, Europe averaged of about 7.7% and 10%, respectively. For the first half, the average rental reversion is 13.4%. Looking ahead, we will be revising upwards our guidance from mid to positive high single-digit range. will be stable at 3.8 years. On a portfolio level, we have about 6.8% left to go for renewals in the second half. In Singapore, it is a 7.2% number. In the US, 9% Australia 7.5% of gross rental revenue due for renewal for the remaining FY24 and then UK, Europe less than 1% So in the second quarter, we kick-started two new AEIs to optimize the returns and to improve the value of the properties. The two AEIs are at Appirio and one at Changi City. So all together, we are working on six projects here totaling 573 million dollars and they are scheduled to complete in 3Q this year and right up to like first quarter in 2026 So some information on the AEI at Aperia here. So $23 million will be utilized to upgrade the drop-off point and entrance to enhance the tenants and the visitor arrival experience. Importantly, we are also redoing the layout of the retail mall and tenant mix to increase the footfall even further. So AEI is expected to complete in 4Q2025. OCC 1.5 million, some refurbishment here for the lobby and the waiting area. And it will complete in 3Q soon this year. So in terms of the last slide, We are still faced with uncertainties surrounding the inflation trend, the geopolitical tensions and possible changes in administration. However, we are confident to adapt to any of these potential changes and will continue to provide best possible returns to unit holders amidst these uncertainties. Thank you very much.

Thank you, Kew Peng. Now we will move to the question and answer segment of this briefing. And may I have the first question from the floor, please? Okay, we will have Mervyn from JPM.