City Developments Limited (C09) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, friends from the media, analysts, bankers, investors and fellow CDL colleagues. My name is Belinda, and I'm the Head of Investor Relations and Corporate Communications at CDL. Now on behalf of the CDL management, we warmly welcome you to CDL's briefing on its unaudited financial results for second half and full year, ended 31st December 2021. Thank you for joining us this morning. This is a hybrid briefing format. We have guests that are physically here at the M Hotel and a very small and intimate Group as well as those joining us virtually via the Zoom and live webcast. In line with CDL's commitment to environmental sustainability, we will not be providing any printed materials at this briefing. Instead, we encourage you to please download those documents that are found on our website. These documents were uploaded to SGX early this morning before trading. They include a copy of the detailed financial statement, a press release summarizing the key highlights of our performance, and also a presentation deck that we will be walking through very shortly. For our guests joining us virtually, you would similarly be able to download these documents, which are available on our CDL website. I would like to introduce you to our CDL management panel. In the center, we have Mr. Kwek Leng Beng, our Executive Chairman. We also have Mr. Sherman Kwek, our Group CEO; Mr. Chia Ngiang Hong, our Group General Manager; Mr. Kwek Eik Sheng, our Group Chief Operating Officer; Ms. Yiong Yim Ming, our Group Chief Financial Officer; and we also have Mr. Frank Khoo, who is joining us virtually. Frank, would you like to say something?

Good morning, everyone.

Thanks. Good morning. The format of today's briefing will be in 2 parts. We will kick off with a presentation of some of the key highlights of our Group performance, followed later by a Q&A opportunity with the panelists. So without further ado, I'd like to invite Mr. Sherman Kwek, CDL Group CEO, to kick start the presentation. Mr. Kwek, please.

Good morning, everyone. Linda, that was very formal to call me Mr. Kwek, but thank you anyway. Good to see all of you. Hope you are staying well and staying safe. Today, we have quite a hefty presentation to take you through. So there are over 50 slides, that both Yim Ming and I will do. Traditionally, as you know, the whole Exco panel will present, but for time efficiency, it's just going to be Yim Ming and myself today. So I will move very quickly through the slides, so as to leave more room for Q&A, and you can raise up any burning questions you may have later. Okay. So I will be taking you through the overview and strategic initiatives and then handing it over to Yim Ming for about -- she has about 7 slides on financial highlights, and we will not be going over the operations review. Our key financial highlights; you can see that we have posted a prettier set of numbers for 2021. And this is primarily driven by the Property Development segment, where we continue to sell very well on almost all of our projects. And you can see there, Whistler Grand, Amber Park, Tapestry, Irwell Hill, all these contributed strongly last year. Of course, we also had other projects that did very well, such as our 696 unit CanningHill Piers, but obviously, because that only launched in November, so that won't contribute to our 2021 financials. And also, we have JV projects like Sengkang Grand, that also sold tremendously well, 680 unit project. We are 96% sold over there, at an ASP of 1,007. So I think all these are really good indicators of how strong we have been running down inventory. And therefore, we have also had to aggressively go out to replenish our land bank, and we have also been very, very pleased and encouraged to see that our hospitality sector has been further building on the green shoots of recovery that we saw a year ago, and things are actually improving and we've also had impairment reversals for the segment, which further helped to strengthen the profitability of that division. Our key financial highlights in terms of RNAV per share, as per previous -- as for 2020, when we started doing it, we start disclosing it, what it's like, not only when we fair value our investment properties, but also when we revalue our hotels. So you can see that, actually RNAV is very high, at $18.61, and we understand where our share price is, so we will work very hard to close the gap as we start to execute strongly on our strategy. I think big news this morning, many of you would have seen is that, we are proposing a very, very special dividend in the form of a Distribution In Specie, DIS of part of the CDL Hospitality Trust, CDLHT shares that we own. I have a section on this, and I'll go into that in more detail. Obviously, we -- for illustrative valuation, we used $1.20 for CDLHT shares. This obviously depends on when we actually do the distribution on what the share price is. The reason we use $1.20, is we look at February for this whole month, it has been typically about $1.18 and $1.22, and obviously, yesterday was a fairly unusual day, where we were disrupted by some geopolitical events. This just shows you how RNAV actually went up, and this was actually also driven by valuation increases for our properties, mainly on our investment properties, which went up by about $1 billion in valuation and about $100 million for our Hospitality segment. And while the outlook is improving for offices, for hotels, all that, but the truth is, it didn't improve that much. The reason the valuations went up, is actually because, as you know, as per SGX, we have to start doing more external valuations. So now you can see that 88% of our investment property portfolio is externally valued and 63% for the hotel side, and it shows you that actually, we've been very prudent in the past, when we typically tend to do internal valuations for most of our portfolio in the past. So actually, this shows you how, I think, conservative we've been, now that external valuations have lifted the portfolio valuation substantially. Okay. Key operational highlights for 2021. And obviously, last year, I think one, really brought us to the forefront of our Singapore resi property development, were the 2 projects we launched; one was Irwell Hill Residences, 540 units. We have now achieved ASP of over 2,600 per square foot. And of course, the 696 unit CanningHill Piers, which, as I mentioned earlier, is -- has sold very well. We launched in November. It's around 88% sold right now at an ASP of 2,990. So we're very pleased with the performance there, and we continue to sell on the projects that we had launched in previous years. So therefore, you can see last year, that we actually had record annual sales value of $4.3 billion. We sold 2,185 units at $4.3 billion. This is an absolute record in CDL's entire 59-year history. The last high we had was in 2007, so around 15 years ago, where we achieved $3.4 billion, and we sold 1,655 units, then. So you can see, we've actually had a superb bonanza year last year, and all this, of course, doesn't all go straight into revenue. We will recognize it progressively, but it's a strong base for our future results. And of course, we also replenished our land bank. I have a slide on that, and I'll go into that in more detail later. China, we continue to exhaust what's left of our inventory. But obviously, this emphasizes the urgent need to continue with our development activities in China, since we don't have much inventory left. Australia, we launched a small project in Melbourne, Fitzroy Fitzroy, and we only launched at the end of last year, so it's still early days for the sales, but doing well. In terms of our investment properties, you can see there, our office committed occupancy is at 93.3%, retail, 93.8%. We're above the island-wide occupancy for the whole Singapore market, and in fact, the whole Singapore market has, I think, remained resilient. Last year, I think we barely saw much of a blip in terms of occupancy changes for office and retail. It's just that, retail rents did drop last year, I think almost 7%. But going forward, the outlook is brighter as well. I mean for office, as you know, you've all seen many research houses have forecast strong rental jumps, rental gains for the coming years, and for retail, as we transition over to being endemic, retail should also see a substantial improvement. So I think that's been very encouraging for us. And for our office assets in London and China, very stable occupancies and good rental reversions as well. Of course, the highlight has been our hospitality segment. And this, again, is a tribute to, I think, our Chairman as well. Our Chairman predicted early on, 1 year ago, at last year's full year results briefing. He said hospitality will recover and recover fast within the next year, right? And I remember a lot of people are shaking their heads. People doubted that hospitality will recover so soon. But it is happening now, as we have more vaccinated travel lanes, as many countries around the world show a resolve to reopen their economies, things will gradually start improving strongly for the hospitality side, and you can see occupancy is up more than 12 percentage points. ARR is up, RevPAR is up. And of course, I'll cover some of the new things that we have done in the hospitality side later. And the big one is the divestment of Millennium Hilton Seoul, and again, I'll talk about that subsequently. The fund management side continues to be a very important part of our business and a key part of our transformation, where we are trying to build up our AUM. So we're making progress. Obviously, IREIT, I have a slide on that later. We can talk more about it. We supported by subscribing for the rights. We supported the acquisition of 27 assets from Decathlon on a 10-year lease and sale -- sale and leaseback arrangement. And we are still progressing along, with our intention to list our U.K. REIT properties, alongside our partner's property in Singapore. That's taking some time, because the offering size is very large, and we've also had to make tweaks to the deal, such as the yield and everything else. But it's still coming along. We hope that we will be able to share good news with you in due course. This is just a quick breakdown of EBITDA by segment and total assets by segment. So you can see that everything is in the black for 2021. This is something that we shared previously, but only the top line. But this time, we thought we'll add in a bottom line. So we revalued -- fair valued our IP and revalued our hotels, how would that change our geography and our business segment? And actually, it's -- I think all of you can imagine, this is -- the reason for this is because, our heaviest chunk of investment properties are all in Singapore, our office buildings, all that. So therefore, if you revaluate it, actually, Singapore, a proportion by geography goes up and IP by business segment actually shoots up as well. Okay. Next on to our strategic initiatives. I think all of you are familiar with our GET strategy by now, growth, enhancement, transformation. I don't need to go into too much detail, except to say that I think for growth, we constantly try to manage it. The way I look at it is on a dual axis. It's local versus international and development versus recurring income, right? So we always try to strike a balance, how much we grow of each segment at the expense of the other flipside. And so far, I think, I would say that we've been really pleased with the results that we've edged out. This is just a snapshot of what we have done, for each part of the strategy, the GET over the past year, and I will go into that in more detail. This, by the way, is our -- one of our latest acquisitions. It's in Birmingham, Coincidentally, this is called the Octagon. It's coincidentally right next to the Birmingham Hotel that we had to sell into this government master plan. So we coincidentally bought the site next to it, and we're building the world's tallest octagonal-shaped residential tower, and this is our PRS plot, so it's apartments for rent. So this will perform very strongly when it's completed. In terms of acquisitions investments for last year, as I mentioned earlier, Birmingham. So typically for PRS, as you will notice, the land price tends to be lower. So [ 6 over million ] for the one in Birmingham, about 13 million, 14 million for the one in Leeds, but the development cost will be the huge chunk of it, and that's because it's for rental. So therefore, the land cost needs to be low. In Singapore, we replenished 2 sites last year through GLS. One is our Northumberland, which we will be launching in April, so very shortly. And that's 407 units. The other is in Tengah, it's EC. I think all of you know, EC supply is at an all-time low in the market. So EC projects should do very well. Both projects are joint venture with MCL Land, which has become a very, very enjoyable partner for us to work with. Over in China, we have the Shenzhen Longgang Tech Park, and this is something that we acquired from Sincere. So we first acquired a 55% stake, and then we use some of the debt that they owed us to offset it, to take control of another 10%. So overall, it's a 65% stake that we own. And lastly, in Australia, acquired a small site in Brisbane for -- again, for sales. In terms of acquisitions, they are pending. And of course, some of these are pending also deliberately, because we don't want the clock to start ticking so early, so we [ slate ] for slightly longer completion period. But -- and I'm sure many of you understand why I'm saying that. So there's the Upper Bukit Timah site, that we acquired from Tan Chong International, an off-market opportunity, a great attractive pricing. We will share more details when we're ready to. Then there's Jalan Tembusu, which we won at the beginning of this year in the first government land sales. Jalan Tembusu, just to share with all of you. We actually -- prior to going to a tender, I mean, we did have chats with, again, our long-time partner, MCL Land, and they expressed that they would be interested to join us, to partner with us for this land site. So after acquiring it, they were very, very pleased with the price at which we acquired it, and they actually asked if they could participate. So because we really enjoyed working with them, we have let them come in as a 49% partner for this project. And for Central Square, of course, I have a bit more on that later, but we acquired that from Far East Hospitality Trust, and that will give us the impetus to do a big redevelopment of that precinct. Over in Japan, we acquired 2 more properties. It's our sixth and seventh property, PRS property in Japan, and I'll talk more about that later as well. In terms of our launch pipeline for this year and next year, we have the following sites. Tengah, I mentioned earlier, Upper Bukit Timah. We will be launching in the second half of this year, the residential component of our redevelopment for Fuji Xerox Towers. We haven't come up with a name for the project yet, so we will get to that ASAP. And then, of course, we have the Northumberland site, that we are calling Piccadilly Grand. And lastly, we have the Jalan Tembusu, I mentioned earlier. So a very healthy pipeline for the next 2 years. So a key part of our growth. I think right now, the hottest sectors, as all of you know, are things like data centers, logistics, but those are very crowded areas. Valuations are very, very sharp, and they have big funds all around the world with capital to deploy. So we decided to find an area, a new economy area, that actually fits CDL's expertise and experience, and what better area than the living sector, right? I mean, so the living sector comprises of these categories like private rented sector. So these are also apartments for rent, workers dormitory, student accommodation, affordable housing and senior housing, and all these very much actually, fit in with our 2 core areas of expertise, right, which is property development and hospitality. So we know how to develop and we know how to provide the necessary services. So we are intending to focus on these areas. So far, of course, PRS is the area we've gone into, the strongest. But we have also gone into other areas, where we currently have a senior housing project that we launched in Australia, has done well. First phase that we launched, it's in South Sydney. First phase we launched, we have sold off of all the 77 townhouses for the senior housing development, and we will continue to manage it, of course. And we are also doing workers dormitory in China. We actually have done quite a number of projects. But because all these are still small in scale, we have chosen not to elaborate on it. But as we start to grow scale, we will share more details with you because, as I've always said, right, you need scale in order to build cost efficiencies and to really build it into something of value. And yes. This just gives you a snapshot of our PRS portfolio. On the left side are properties that we already own. On the top is Sunnyvale, which was actually a redevelopment of a very aged hotel we own in Sunnyvale, California, which is in the heart of Silicon Valley. So the redevelopment will have a hotel component and a PRS component. So the PRS component is ready, and it's now operating and it's already 82% occupancy despite only just opening in late last year. In Japan, we have acquired these 5 assets over time. You will notice that in Japan, the asset sizes are quite small, but that's the thing with Japan, I think especially, we look for newly built assets. So with the exception of Horie Lux #1, the rest are all new assets that are built within the last 12 months. And typically, you don't find very big assets in Japan. They tend to build smaller sizes. So we do have to acquire more to build up necessary scale. On the right side, as mentioned earlier, we are completing the acquisition of 2 more in Yokohama, and we have those 2 under development in the U.K. The junction will start -- the junction is 5 blocks, 665 units and will start progressively opening up from late this year, till next year. So all 5 blocks will be operational, and it's next to the Wellington Financial District in Leeds, and it's going to be very, very sought after. And Octagon of course, will take a few more years to complete because it's -- we still haven't broken ground yet. But that also will be very strong, and Birmingham is the second-most populous city in U.K. and Leeds fourth most populous city. Again, this is what I mentioned earlier, this is -- I have a pointer, a laser pointer. So again, there will be 5 blocks built on top of what is a historic viaduct, and the retail will be located within the [ arches ] itself. So this will be a very, very impressive scheme when we launch it, and will be highly sought after. And over there is Octagon, which some colleagues internally have joked, that it looks a bit like Republic Plaza, of course, without the tapering in like a rocket, but it's a very, very nice property as well. This is our portfolio in Japan. So we own 4 in Osaka and 1 in Yokohama. And of course, we are adding 2 more, so that will give us 7 properties in Japan for PRS. Enhancement; so enhancement basically just talked about how we're going to extract value from our existing portfolio, as well as how we're going to drive for better operational efficiency. Can we develop our sites faster? Can we use better construction techniques? So all this is captured under enhancement. And obviously, the 2 big things that have been making headlines for us, our big redevelopment initiatives, one is Fuji Xerox Towers. So we're already under way. We are in the midst of demolition right now for the building -- sorry. Yes. So you can see, this is what the mix will be like for the redevelopment. And as mentioned earlier, the 256 units we launched later this year. And we will also, of course, have a brand-new office component. So that's where all the cascading so-called water features are. So this -- I received a lot of compliments for this project. It was -- we did a design competition, it eventually selected Nikken Sekkei. And a lot of people have commented this is very biophilic, so it's very, very complementary to Singapore's plans to be a Garden City. So we're really glad. And I think nowadays, with COVID, wellness is very important. So you can see that this building will have a lot of space for wellness, for the office occupants. Now next is, of course, Central Mall and Central Square. In the past, I couldn't talk too much about it, because we were in plans to talk to Far East Hospitality Trust, our neighbor to acquire their site. Now that we've bought it, this site is going to be a phenomenal site. We are targeting to get a GFA uplift of 67% under the Strategic Development Center scheme. This, I think, is a record in Singapore -- in the history of Singapore. I don't think any redevelopment has ever gotten this kind of uplift before. And that's because the government really wants us to redevelop their whole precinct as well. When you think about it, across the river on the precinct you have CanningHill Piers, the whole [indiscernible], so vibrant. But yet on this side of the river, things are unfortunately quite quiet. So therefore, when we -- with the scale now, after acquiring Central Square, we can really redevelop it into a very beautiful precinct. So you can see we owned Central Mall Office Tower, Central Mall Conservation ShopHouse, and this is Central Square we acquired from Far East. So the intention, if we get regulatory approval, is to build a resi tower, a standalone resi tower in Central Square, as well as freehold standalone office tower on Central Mall. So acquiring Central Square also helps us with, what we call marriage value because in the past, I had a lot of mixed-use components in one building. Now I'm able to do standalone resi tower, office tower, and for the conservation shophouses, we're still looking at what we want to do there, but you can do something like a hotel, a small-scale, sub-100 [ key ] hotel or maybe co-living. So various things we're exploring. So very, very exciting project. You can see it's really a big footprint with great frontage to the river, which is the reverse here. I won't spend much time on our AEI, but basically, we have successfully -- we are almost completing the AEI for Ba Xian, which is the Chinese restaurant Tower Club. We've already done the [ chi spa ] at the top. We almost completing. We slabbed over. There was a huge void in the middle, that joined with the lobby. We slabbed over it. So now we can actually hold small-scale events and weddings. So this will help to boost the operating performance. King Center is our office building located next to Grand Copthorne Waterfront Hotel. So we're also sprucing that up because it has been getting very tired over time. And of course, Palais Renaissance, we are completing it in the first half of this year, and already, we received a lot of great feedback on how beautiful it looks. A lot of Instagram-worthy areas within the mall, and furthermore, we've actually seen a lot of great F&B, new F&B operators sign up. So it's going to have a lot of great offerings there. So there'll be a lot of F&B on the lower levels and upper levels are very specialist in nature, like hair salons and stuff. So it's going to be a fantastic product when it's relaunched again after the AEI. Jungceylon, strong performing mall for us. We've had this mall since 2006. It's performed extremely strongly over the last 15 years or so, and it's just that, it's getting, again, very tied. So we decided this is time for a refresh. So we are gradually going to be -- I think we are phasing out the AEI. So when it's completed at the end of next year, this mall will be quite superb. And of course, Phuket also wants to reopen. They have created a sandbox and they're trying to really get international tourists back in. So this will be a great boon, and we will also be -- in tandem with the mall, we'll also be looking at how to so-called spruce up the hotel there, the Millennium Resort at Patong, Phuket, which has 2 wings, this lakeside and the beach wing. So we will be looking at how we can, I think, synergize the whole thing together. So very, very exciting when this opens. And in the past, Jungceylon has been a very strong performer to our recurring income. M Social properties, much thanks to our Chairman, M Social was actually his brain child in wanting to create a new brand that's a lifestyle brand, that I think is -- that actually resonates with the younger population and with those that seek a lifestyle and a novel experience, and he's created already -- after the first one in Singapore, M Social in Singapore, I think we've continued to refine on the DNA, and now we're starting to roll out more M Socials internationally. So besides Auckland, we now have M Social in Times Square in New York, used to be a former Novotel. And since its opening in mid last year, it's already performing extremely strongly. And likewise, M Social in Paris opened in September last year, after the AEI and has also been doing very well. This is just a snapshot of M Social, the brand, how it's evolved over time. The green are the existing properties and in operation, and the red ones are the ones that are coming through. Of course, the next one that's going to open up is M Social in Suzhou. Probably end of this year or beginning next year, we'll reopen a brand-new hotel and will be very, very hip and very, very attractive. Nothing wouldn't be complete without just touching on our ESG achievements, which are part of our initiatives to enhance our portfolio and enhance our company's business resiliency. Very proud of all the awards that we have received last year, and in fact, every year, so let us know if you have any questions, but I think really glad, and we again continue to remain as the top developer worldwide. We were -- for the ratings that just came out beginning of this year by Corporate Knights, this Canadian firm, leading Canadian firm. I mean we are ranked fifth in the world of in terms of sustainable companies and #1 for property developer in the world. These are, again, more of our ESG initiatives, our commitment to achieve Net Zero carbon for operations and of course, an exhibition that we held last year at the CDL Green Gallery, it runs till next month, till March. If you haven't seen it, encourage you to go and take a look. It's actually very, very fruitful learning experience. And again, how do we link I think our ESG and sustainably track record with our business is -- so aside from the fact that, I think I reported all of you before. By retrofitting our buildings, we've actually saved a lot of energy costs, more than $20 million over the last few years. But at the same time, we've also used our track record for green, in order to secure green financing, which obviously comes with good rates as well. So the -- this is the track record that we have, and so far, we have over $3 billion of green loans and bonds. And this sustainability innovation is a loan, where if you have innovation that clears, I think a panel, you can get a discount and interest rate, and we've successfully done that. We've already got one interest rate discount by using a facility management, smart platform that we developed internally with our wholly owned subsidiary, CBM. Now lastly, on the transformation. Transformation, there are 3 components to it. I mean there's a fund management side, which I'll talk on more, the strategic investments, which, at this stage, the biggest one in there is obviously our November 2019 privatization of M&C. And lastly, there's innovation in venture capital for purpose of time, I'm not going to go into that today, but it's really the innovation of venture capital is, how do we drive our business to stay current and to future proof. And so we have been, actively for the last 4 years scouting out technology to use in our business, to enhance our product offerings, our service offerings, as well as to enhance our own operational efficiency, moving to the document management system that's fully cloud-based, everything else. So we've been able to actually do a lot, and I'm not sure if all of you have heard, but last year, with Irwell, as well as CanningHill Piers, for the first time we used CDL home sales portal that we developed internally ourselves, to facilitate the entire balloting, sales booking system, and it's received rave reviews from buyers, from agents, even from government agencies who have come over to ask us how do you -- did you come up with this system, and we want to know more. It's made the process even more efficient. So in fact, we can actually sell more units in the same amount of time. And there are no -- there are other competing software in the market, but our software so far I am told, works the best. So that's been a great boon for us. Okay. fund management, we still want to achieve our AUM target of USD5 billion by 2023, which is next year, still small, of course, compared to some of the other huge Titanic fund managers out there. But I think baby steps we want to grow this part. We've been new to fund management, so we want to demonstrate our ability. And essentially, there are 2 ways for us to grow our fund management. One is organic growth. So like what we are intending to do, with the listing of our U.K. properties. So that's organic growth. We buy the properties, warehouse them on our balance sheet and then we list it in REIT. Other is M&A. So one example is IREIT. So IREIT is where, in fact, next slide is on IREIT, right, is where we buy into the platform. So we own 21% of the units in IREIT as well as 50% of the manager. So we jointly manage IREIT with our partner from Europe and we're really pleased since we took joint control of the REIT, we have helped to grow the REIT's AUM by 76%. They've gone from 5 properties to now 37. So really, really happy with what we have been able to do then and again, helps to establish our fund management track record. Next is strategic investments. This is -- obviously the biggest one in here is M&C, amongst others, Millennium Copthorne Hotels. Since our prioritization of it in November 2019, I think a lot of people have been asking us, what are you doing with the portfolio? How is your strategic review going? I hope some of you are now starting to see that the whole holistic strategic review is bearing fruits, as we start to look at how we can piece out the whole portfolio. Some of the properties we will hold for long term, because they are in locations that will always do well. And of course, we have our M Social brand now. So we can -- the M Social brand now, so we can capitalize on that, to drive stronger performance with such a relevant and young brand. And then, of course, we have properties that we are repositioning, and we also have properties that we slate for divestments. So you've seen evidence of that in recent days -- recent weeks, sorry, and of course, we continue to drive operational efficiency. So 2 big divestments that we were able to do and able to reap the full benefits because we privatized M&C in 2019 are the following 2, Millennium Seoul Hilton, which was sold for SGD1.25 billion. We just completed the deal yesterday. So we're really glad that, that's in the bank, received the money. And we look to recognize an estimated gain of about $529 million. The other, of course, which was a nice surprise, was Tanglin Hill shopping center, the collective -- Tanglin Shopping Center, the collective sale. I think many of you have texted me about this as well. And yes, I think we're really pleased with how the collective sale turned out and we should recognize a very nice, so-called gain on this property as well. We can't share on the MOA, the Matter of Apportionment yet, because it's still confidential. But obviously, as you all know, our book value is very, very low for this property. So it will be a very nice boon for our results. So again, this was all possible, because we privatized M&C back in 2019, at what I still think is a bargain price of GBP6.85 per share. Okay. So lastly, last part of my section is just the DIS. I do have to talk about it because, obviously, this is something we just announced and is going to attract a lot of interest. And I hope shareholders will be pleased with this. Shareholders have been asking us for a long time, to give them a special dividend and furthermore, with the sale of the previous 2 properties I just showed, right, Millennium Seoul Hilton and Tanglin Shopping Center, we're going to recognize a huge windfall. So we want to be able to pass back some of these gains, to reward our shareholders. So just a quick overview for us, CDL Hospitality Trust. I'm not going to spend much time, but you all know this company, $1.4 billion market cap as of yesterday. They were listed in '06, first hotel REIT in Asia, excluding Japan, and of course, part of the FTSE EPRA NAREIT as well, and they have since -- listing grown their portfolio size quite substantially as well. They now have 19 operational properties, 4,600 rooms and a retail mall. And of course, last year, they announced, they are acquiring a PRS project. It's a development project in Manchester. We're actually helping them with the development and it's going to be 352 apartments. So quite a sizable portfolio. So the transaction is of the DIS, I mean, at that point in time, when we were looking at -- I mean, we were also looking at wanting to deconsolidate CDL Hospitality Trust. So that's the honest truth as well. And at that point in time, we thought about, which route we could take. We could obviously sell the units in the market. So it's still a cost to us by doing a distribution in specie, right? I mean I don't get the cash proceeds, had I gone out there and done a merit deal or a block trade and sold the stake that we want to [indiscernible] by to deconsolidate. And furthermore, it reduces the assets on my balance sheet by doing this dividend. But we felt that, this was the time to do it and is to reward our shareholders. And so therefore, the essential part of it is that, for every one CDL share that you own, you will get 0.159 CDL Hospitality Trust units. And we have to announce it first, which is today. We have announced it, and then we got to then get the circular dispatched in March, and then this is slated for voting at the AGM in April, and requires a simple majority. I hope all shareholders should be very, very happy with this free dividend. It's at no cost to our shareholders, and it's going to be great for them. So basically, right now, we own 38.72% of CDL Hospitality Trust. We will be doing a DIS for 11.72% to our shareholders. So a 27% CDL will continue to be the single largest shareholder for the trust, and we will be able to deconsolidate CDLHT from our financials. So this is the transaction rationale. I think, firstly, we want to reward our shareholders. Shareholders have stuck with us through thick and thin. It's been a long journey and the last 2 years, especially as we all know, have been very, very tough years. We've gone through the COVID pandemic. We've gone through the whole Sincere saga. So I think this is to reward them for sticking with CDL and displaying their confidence in us. And the second one is to capitalize on the improving hospitality outlook. I think doing the dividend at this kind of share price level, when hospitality is just at the cusp of recovery, actually gives great upside for shareholders. So I would recommend all of our shareholders not to sell their shares. They should hold on to the shares as hospitality recovers, and they will really, I think, get to participate and enjoy the upside. Thirdly, of course, it strengthens our Group's financials. The slide after this that shows you how, but we obviously will recognize a gain of estimated around $467.5 million, and this gain does not include the fact that we have the potential to recognize negative goodwill as well. So on the day that we distribute, if it's -- the share price is below the NAV, we will actually recognize the so-called negative goodwill too. So the gain, I estimate -- don't hold it against me, but I estimate it will likely at least hit $500 million or more. So I think that will be a big boon for us, and we improve our gearing by 6 percentage points. So it's a phenomenal thing. And furthermore, I think there have also been a lot of criticism in the past, why isn't CDL and M&C being a more active sponsor for CDLHT? Why aren't you selling them more hotels? And I think one of the -- of course, it's not the only reason, but one of the reasons also is that, look, if you have to consolidate, and I can't recognize the gain, then a lot of times, from a selfish standpoint, you may choose to sell the third party. I recognize the gain. But now after we deconsolidate, anything I sell to them, as long as it's above my cost, my book value, I mean, I will recognize the gain. So this will encourage, I think our Group to be a more active sponsor for the REIT. And lastly, CDL Hospitality Trust recently announced a change in the mandate where they're broadening it to PRS properties as well, which is perfect for us, right, because we have been embarking in the PRS for the last 3 years. And so, when our PRS portfolio stabilizes, we have even more options, we can choose to sell some or more of them to the REIT to further be a strong active sponsor to the REIT. So I think the transaction rationale works great on all fronts for us, as well as for the REIT, as well as for the shareholders. And again, this comes at no cost to our shareholders and no adverse tax impact. So it's absolutely free to them. So they should be very pleased with it. Yes. So -- and as I mentioned earlier, right, we are valuing the shares, if we use $1.20, I mean, this dividend is worth $0.19 a share. Of course, this will fluctuate all the way until the actual day we do the dividend. This again just shows you a snapshot of how our financials would have improved, had we done this. This is a pro forma as of 31st December 2021. So as of end of last year, if we had done it, our gearing, our borrowings would have gone down by $1 billion. Our gearing would have dropped by 6 percentage points. Total assets would have obviously gone down, now that you are deconsolidating them, but NAV per share, RNAV per share and EPS all up tremendously. So a fantastic thing and look forward to a favorable outcome at the upcoming AGM. Okay. That concludes my presentation. I've gone through 40 of our slides already, so I'll try to do it as efficiently as I could. Yim Ming 7 more slides, so just bear with us, as she takes you through financial highlights and will be done for Q&A. Thank you. Yim Ming? Thank you, everyone.

Thank you, Sherman. Good morning, ladies and gentlemen. 2022 certainly sounds like a very exciting year for CDL, but please allow me to share some 2021 highlights. This slide shows the pretax contribution for each of the segment. The 2020 PBT had excluded Sincere for better comparison to the 2021 results. The Group continued to operate under challenging conditions of COVID-19. So it has actually definitely progressed very much better from the second half of 2021. All segments of the Group have been affected to varying extents. For property development, the construction progress has definitely been slower. Obviously, hospitality sector is impaired really by the travel restrictions. And of course, this also impacted our mall, which is in Jungceylon, in Phuket. So property development is a key contributor for the growth performance consistently. For FY '21, revenue is up 30%, but PBT is up 11%. This is due to thinner margins for the projects that are still under construction. Six projects contributed to 90% of the property development revenue. This includes -- I think Sherman has mentioned earlier, Tapestry, Whistler Grand, Amber and Irwell, which is Singapore projects, as well as Shenzhen and New Zealand land sales. There's also lower foreseeable losses in 2021 versus 2020. 2021 foreseeable losses relates to an overseas project and all the Singapore projects are actually doing very, very well. For the hotel segment, the revenue of $873 million has improved 36% over FY 2020. However, it is only at 52% of 2019 levels, taking 2019 as a pre-COVID year. There's so much potential in this segment that's really poised for recovery, with accelerated investment distribution and further relaxation of the travel restrictions. This is also evident as you could see, the RevPAR improvement for FY 2021 is 48.6%, while the RevPAR improvement for the second half of 2021 is actually 123.8%. The PBT loss is about $71 million for FY 2021 for this segment, is also a remarkable improvement over 2020. Notably, this segment is GOP positive, it's EBITDA positive and is really a good testament of the recovery, as well as the cost containment measures the Group has put in. For FY 2021, there's also impairment loss reversals of $96 million versus impairment losses of $87 million in the prior year. This impairment loss reversals are largely for U.S. hotels, 5 of them, which again shows that U.S. has a fast rate of recovery. Lastly, we want to reinforce, that really the impairment reversals came as a very happy surprise for us, and is really a leading indicator for hospitality segments. For the Investment Properties segment, revenue has declined by 6%. But notably, the profits from this segment in FY 2020 included substantial gains from the sale of Novotel Clarke Quay and Novotel Brisbane. Whereas for 2021, the only divestment is Mille Malle, a very small retail mall in Bangkok. Furthermore, this segment is also impacted by the closure of Jungceylon as mentioned earlier, which is expected to reopen in the second half of 2022. The redevelopment plans for Fuji Xerox has also impacted this segment's profits, as the tenants have vacated the building in the first half of 2021. For the Other segment, the decline in PBT is due to absence of divestment gains from the disposal of one subsidiary, SHR, mark-to-market gains on financial assets, as well as lower contribution from our facilities management arm, which is very labor-intensive. Next, we move on to the chart for a quick look. FY 2021 revenue, I would just like to remind the audience again, that Singapore local properties are recognized based on the percentage of completion method. Irwell residences is at its very infancy stages of construction, and projects such as Amber and Haus are expected to contribute a lot more in 2022, as the percentage of construction progresses. Sherman mentioned this before as well, but I'll just reiterate, this also does not factor in JV projects, which are equity accounted for and has contributed strongly. This includes, of course, our famous Boulevard 88, South Beach Residences and the Jovell, for example. As you can see from the tall orange bar on the left, the hotel operations have good potential to close out the gap and reach back to 2019 levels, in the very near future. On EBITDA by segment, again, we have excluded Sincere for better comparison. It's heartening to know that all segments are EBITDA positive and 2021 EBITDA has the most double [ that ] of 2020. Having said that, the Group endeavors to continue to target EBITDA above $1 billion mark. In terms of PBT, I reinforce that property development has always held the fort for CDR profits. If you look at the tall gray bar on the left, the IP segment for 2019 was boosted by PPS 2 gains and the FY 2020 grey bar was boosted by Novotel Clarke Quay. Overall, divestments play a key part in the recycling of CDL. So as the Group continues to account for its investment properties that caused less impairment losses, so when we divest such properties, we do expect very attractive disposal gains. Sherman had shared earlier, one example will be the Tanglin Shopping Center unblock, which we expect to recognize when closed in 2022. Next, I would like to focus on the balance sheet and liquidity position of CDL. The Group has strong and robust fundamentals, with cash of $2.2 billion and together with committed credit facilities, $3.9 billion. Again, I'd like to take this chance to thank all the banks, who have supported CDL. With increasing interest rate risk, the Group has also included a 34% fixed-rate debt profile as a measure. On gearing, the Group's net gearing, including fair value of investment properties, stand at 61%. With the completion of the sale of Millennium Seoul Hilton yesterday, of about KRW1.1 trillion, as well as the proposed distribution in specie of CDLHT units, which allows us to deconsolidate its debt. The impact on the pro forma net gearing is a decrease of 12%. However, do note that this pro forma gearing has not factored in new acquisitions. Lastly, we want to assure investors that the Group continues to exercise prudent capital management and have a balanced debt expiry profile. The average debt maturity is about 1.9 years as at 31st December 2021. As you can see from the bar from the left, there is quite a lot of loans expiring in 2022. This really is a timing issue, because what happens is, if you look back at -- for CDL in 2018, we acquired the U.K. properties. In 2019, we had privatized M&C, as well as we had a lot of development projects that were started off in 2018, going to TOP in 2022 and 2023. So on this note, we want to assure that we're actually very confident on the refinancing, again, thanks to the support from the banks, as well as the good cash flows from the various projects to be able to repay these loans. So lastly, we just want to reiterate, the Group does not take any speculative foreign exchange positions and it's really a balanced -- natural hedging strategy that the Group adopts. So with that, I hand over back to Belinda. Thank you.

Thank you, Sherman and Yim Ming, for the presentation. We are going to move very quickly into the second part of this briefing, which is the Q&A. I'm going to give the Q&A opportunity to those in the room, as well as those on our Zoom and live webcast. Please feel free to ask your questions. My colleagues are standing around in this room with a microphone. I just want to remind those in the room, that this is a fully mask-on event. So please keep your masks on when you're asking your questions. If you have any questions, just raise your hand. As for those who are joining us via the Zoom, please click on the Raise Hand feature within the Zoom meeting room, and when prompted, we will switch on your mic and you may ask your questions. And for those who are joining us on the live webcast, you may also post your questions by clicking on the question tab. So without further ado, I'll just open up the floor. Okay. I see a couple of hands. Maybe I'll take Mervin first. Mervin, introduce yourself and your organization.

Thank you, Belinda. Mervin from JPMorgan. A few questions. Maybe first one, in regards to your asset disposals congrats on the sales and good gains. But is any absolute number target for this year? I think other corporates have -- some have $3 billion annual sales target. Any guidance on that? In terms of the hotel performance, any guidance or color in terms of forward bookings at this point in time? And how quickly RevPAR could recover this year? Would it be 70%, 80%, 90% of pre-COVID levels?

Okay. In terms of asset disposals, as you know, we've had this question in many of our prior briefings number. We don't usually disclose this number, and we don't like to have a hard target as well, because then you start making silly decisions if, let's say, I want to dispose off $3 billion, then I really got to go and find assets and dispose it, regardless of whatever the conditions, just to achieve that number. So we don't usually disclose this, but suffice to say that we do have -- we have strategically reviewed our portfolio, and we will gradually dispose off assets, not just hospitality, but other assets, non-core assets within CDR's portfolio. Again, in order to redeploy the capital into higher-growth areas, more sustainable areas, so that's the case. In terms of hotel performance, perhaps I could invite our chief expert within the company to opine on that. So Chairman, I think Mervin with JPMorgan was just wondering, what are our thoughts in terms of hotel performance, how fast can we expect RevPARs and other metrics to recover, going forward?

I think going forward, hotel has very good prospects. I already predicted last year, that this year, it will perform well. And in general, is performing very well. And one thing you must bear in mind, our cost of hotel is actually very cheap, based on history, I'm expert in hotel. I follow the history. So all our hotels were bought very cheap, but we haven't disposed them off -- all of them, maybe 1 or 2, and then we get replacement. And so, for example, we bought cheap, we sold at hefty price unexpected, and in this respect, we should be very happy, that we got our money already. I think, since yesterday, am I correct in saying?

We announced it -- we completed yesterday, Chairman.

So I'm very happy for the hospitality business. It bodes well for the company, and it will continue to do well for the company.

Maybe I could just add a little bit more on the RevPAR. I think the last 2 quarters have been quite positive. We can see especially for the markets with big domestic base, Europe, U.S., they really recovered very, very fast, to the point where I think third and fourth quarter, especially the regional hotels, they were actually trading close to or even above the 2019 equivalent. I think we continue to see that as well for those markets which have opened up. I think the challenges will be in those regions, which have been very reliant on the international market. So places like Singapore and New Zealand, those will continue to be a little challenged, until the borders are all lifted.

Okay. Maybe I'll take the next question. I'll take from Rachel first. Rachel? Let us know, Rachel, your firm -- introduce yourself.

Hi, I'm Rachel from DBS. Congratulations on the strong rebound that we have been seeing. My first question is on your dividend. Thanks for the strong proposed dividend. I'm just wondering, moving forward, what are your thoughts about dividends? Should we look at potentially converting some of your divestment gains into cash -- actual cash dividend, after this restructuring exercise? So for dividend, I'm just wondering how should we think about your dividend moving forward? I mean you have been doing a lot of asset recycling strategy and you have been divesting a lot of assets, and that has given a lot of gains. Is that likely going to be translated into higher dividend, cash dividend payout, after we have done all this CDLHT restructuring?

I think that depends upon the performance of the company. My reading of the Singapore scenario is that things are not easy for Singapore. We are facing a lot of headwinds. The government is helping a lot, but in helping that much at the end of the day, I think we have to repay. So I would like to be cautious, without having to pay a lot of big dividends when we can't afford, and then wait for the better days. I would rather be sensitive to our Singapore condition. If I recall, I think it has been said in Singapore, that we may retrieve on what we have already moved forward. In this respect, it is good. But on the other hand, it is not as good for the people who are working, who are operating in the scenario. But life is I guess -- as you can't have good every time. You pay for what you are getting now, one time or another in the future. So I am a very pessimistic person on Singapore scenario. I do not know who eventually will achieve when we have retired.

Thank you, Chairman. So just to add to your question, Rachel. I think Chairman's point, his first point was absolutely on point, which is it will just depend on our company results. And also, as you know, we have a lot of things to execute on in our GET strategy. So it depends on our capital requirements. Obviously, with some of these big divestments, as well as with this distribution in specie, it will bring our gearing down substantially. So that's a really happy event for us, and we are very optimistic about our company's performance. So I'm not going to opine on macroeconomic conditions, but we're very optimistic of our company's performance for 2022. So hopefully, we can still follow up this time next year, with a nice dividend to our shareholders. But really, as our Chairman has mentioned, it will depend on the macro environment, as well as how our company's performance is. So having said that, in the past, I think we have consistently tried to stick with a dividend payout ratio of about 33% thereabouts, and we will continue to try to stick to that policy.

My next question is actually on the CDLHT. It sounds like you have exciting plans for CDLHT. Just wondering whether you have any pipeline assets there looking to recycle into CDLHT? And looking at your hospitality portfolio, how -- what sort of percentage you feel that is [ merger ] assets, and that need to be recycled up? And what proportion would be still under developing stage?

Good question, Rachel. Obviously, as I mentioned earlier, with a broadened mandate now, actually a lot more assets, we can see or we can sponsor and sell the CDL Hospitality Trust, whether it's hotels or PRS. Suffice to say, obviously, we continue to evaluate the portfolio, and obviously, before we can sell to the REIT, some of the properties need to be stabilized first. So we have a lot of properties that have -- like our PRS, they are all -- most of them are almost brand new, and they're just opened. So we need some time to stabilize it. And then that way, I think we can sell it to the REIT at a good price for a win-win outcome for both parties. Likewise, with our hotel portfolio, we are still looking. We have done our holistic strategic review, and I think now we just need to decide on the timing. So [indiscernible] you'll see more as we proceed.

Okay. I'm going to take one call from our Zoom line. Actually, it's [ Boon Leong from Taoabao First ]. Hey, [ Boon Leong ], if you would like to pose your question?

Hi, [ Boon Leong from Taobao ]. [indiscernible] for good results. And I have 2 questions. One question is on residential market. I would just like to [indiscernible] Chairman like the reasons for the measures and also the tax, and even like some wealth tax that are [indiscernible] considering. So how would that impact CDL performance? And then the other question is more on macro situations, about Ukraine and Russia is [indiscernible] how would that affect CDL's situation?

So I think Belinda, because it wasn't very clear. Yes, maybe you can repeat for Chairman's benefit, and then Chairman, you can answer. I think both of these questions are right of your alley.

Maybe, I will just rephrase it for [ Boon Leong ]. Basically, he's asking about 2 key things that have happened. One, of course, is the cooling measures and some of the measures that are introduced during the Singapore budget recently. How would that impact the CDL Group moving forward? And the second one, of course, is the recent situation with the geographical tensions in Russia, and what your thoughts are pertaining to the outlook?

Yes. So I think the cooling measure introduced, I will expect all sectors sooner or later. And the other question is this situation in Russia, in my opinion, Russia, Ukraine and all these are, it's not going to affect us. You may be frightened about that, I am not frightened, okay.

Thanks, Chairman. So just to supplement, yes, the cooling measures during Christmas time were certainly something that took us by a bit of a surprise, but not something we didn't expect. I think it was after all last year, prices for residential sales went up by 10.6%. So -- and that's on private homes, right? For HDBs, it went up even more. So we figured that, probably there would be some cooling measures. But having said that, while I don't want to necessarily downplay the impact of cooling measures and each successive round of cooling measures does indeed have an impact on market and the impact on buying sentiment. But I think if you take reference from the 2018 cooling measures, initially for the months ensuing the cooling measures, following the cooling measures, I mean, yes, there was a bit of a dampen, buying sentiment as buyers took a wait-and-see approach. But subsequently, I think buyers still resume with their buying activity, primarily because, I mean, obviously, you have different ends of the spectrum, you have the mass market, mass and mid-market, where many of them are genuine homebuyers, they're HDB upgraders, and they don't want to put off their purchase for too long, and therefore, eventually, when things stabilize and the dust settles, they still move forward with their purchase. Then you have the other guys on the luxury segment, the other folks on the luxury segment. And likewise, it's the same thing, too, right? I mean, for many of them, you pay an extra 10% of ABSD, that doesn't really deter them. So I think over time, yes, we've seen activity a little bit more muted as some buyers hold back, and that's really for making an immediate decision. But I think if 2018 is an indication, over the next few months, I think you'll see that activity levels remain healthy. So that's one for the cooling measures. And secondly, I do support what Chairman has just said on this Russia-Ukraine conflict, which is very unfortunate. I think right now, again, it's going to create a bit of a global stir. Yesterday, certainly, many global equity markets, have seen a jarring impact. But hopefully, this will not be a prolonged conflict and will not result in many casualties obviously as well. And I don't see this as derailing the recovery, the global recovery post-pandemic for everyone. So I think things will get back and get back to healthier levels, especially for hospitality as well.

Can I just supplement the first question? The fortunate thing is the supply in the market is kind of limited. So the buying interest, I think should come back quite soon. Unlike [indiscernible] inventory level is very high. Thank you.

Okay. I'm going to move on to another question in the room, maybe I'll take the question from Louis first.

Hi. This is Louis from Credit Suisse. Just got 2 questions. I think the first, if I understand correctly, I think CDL actually didn't bid for Tanglin Shopping Center. And so just wanted to understand the strategic thinking, the thought process behind. Is it because of balance sheet or pricing, or whether or not you view dislocations or prospects favorably, or is it that you have quite a few other redevelopment projects, I'm thinking behind the decision on Tanglin Shopping Center? And the second, with the upward revision in your RNAV, I think while that's favorable, I think it also means that the gap between RNAV and your NAV and correspondingly share price just widens. So in terms of over the next 1, 2, 3 years, what is management's views on how to actually close this widening gap?

So Louis, so I'll answer your 2 questions. The first one on Tanglin Shopping Center. Good question. I also received this question over the last few months. hey, are you guys going to go for it. But I think at the end of the day, we -- as I mentioned earlier, I mean, we are looking to redeploy our capital and enhance the capital efficiency, right? And I think Tanglin Shopping Center is a big redevelopment. We already have quite a lot of exposure in that area. We obviously own the property next door, St. Regis, and we have Orchard Hotel nearby. And we -- and furthermore, I don't like to comment on other people's tendering prices, but I think you've all seen your price for yourself, right? I mean it was the highest, so-called land price ever paid for commercial, okay, in the history of Singapore. And based on our, back of the envelope calculations, breakeven numbers are quite high as well. So if they were to do a full commercial, right? I think it would be like $5,000 per square foot or thereabouts. They could do -- because it's a commercial land title, they could do 60% commercial and 40% resi. But even then, it also would not be great, right? I mean the breakeven numbers are all above $4,000 or $5,000 per square foot. So for us, I think we didn't want to undertake such a sizable redevelopment, and we already have redevelopments on our hands, right? We have Fuji-Xerox towers, which is a big redevelopment, as well as the Central Mall, Central Square. So that is essentially [indiscernible]. Mr. Chia, do you have anything you want to add on Tanglin Shopping Center?

Yes. I think -- the site is location-wise, is I consider good. But I think it's quite a big project and of course, layout can be a bit challenging. I think the owner probably is looking at doing commercial -- full commercial. So we did evaluate -- so in the end, we fear that maybe we give them this [indiscernible].

The second question was on how we're going to narrow down the RNAV and the NAV gap?

Well, very simply, Louis, I think by executing well on all the things that I presented on screen earlier. I think we have been refining our GET strategy. Obviously, we now have a focus over the last few years on things like the living sector, I mentioned earlier. But again, it's just -- every component of the strategy is important, the G, the E and the T, and we have to continue to, I think, unlock value and maximize value for our shareholders. And we do endeavor to close up the gap, because really, it's a huge gap between our share price and RNAV. So we will certainly work hard on this.

Okay. I'll just take one more first. Maybe I'll just move to Donald first. Donald?

This is Donald from Bank of America. Two questions. One is, could you give us a sense of what's the -- for residential, Singapore residential, what's your margins at the moment and for the new plots that you acquired, what sort of margins are you underwriting, given the rising construction costs? That is the first question. Second question is, any updates on potential redevelopment for the City Square -- sorry, the other property, I can't remember the name.

City House?

City House yes, City House redevelopment that you showed on the slides. Any update on that timeline? And what's the mix of use?

Yes, for the first one, which is on our margins. Again, you know by past practice, right, we always get asked what are our margins on our specific development projects. We don't share. But suffice to say that, I think now, especially we have a healthier land bank, we don't have to be that aggressive with our bidding, and we still continue to remain disciplined. We always try to achieve a gross margin on the cost of at least in the double-digit range, so at least 10% and above. But it's also no secret, that many developers are faced with high land cost, as well as a very, very severe so-called increases in construction costs, primarily labor, have also seen margins in the single digits. So we are working hard to ensure, that our projects do not have lower margins, things that we do include, locking in the construction contract early, sometimes even before we go and bid for the land. So we have various methods that we adopt, to try to ensure that we keep our costs at the right levels. But yes, it is an unfortunate thing that affects the whole industry, right? I mean there's a shortage of migrant workers, and that's not something we can resolve. The government is working very hard to resolve this problem, but it's not something you can resolve overnight. And then secondly was City House redevelopment, yes, we included it on the slide, because City House is part of the -- is in the zoning for the CBD incentive scheme. As you know, the CBD incentive scheme is very, very specific. It's so specific to the point where, right diagonally opposite City House is a [indiscernible] building. And even that doesn't even fall into the CBD incentive scheme. But City House does -- but City House and it meets the qualifying criteria as well, in terms of minimum land size of that deal. The only thing is that, we are still evaluating it to see whether the feasibility makes sense. I mean City House, yes, that building could certainly do with a refresh and it's in a great prominent corner in the CBD, but there are other factors we are considering and leases and also the efficiency, if we were to build a new building. But yes, I mean we are still eyeing that 25% GFA uplift, if we're able to redevelop it. So it's something we continue to discuss internally.

Thank you, Sherman. Could you move to Derrick of Macquarie. Derrick, if you...

This is Derrick from Macquarie. Again, on the earlier question around the share price gap versus the RNAV. I think a lot of your peers, Keppel, Hongkong Land and all have all started share buyback program. Clearly, it's accretive if you do it. Just wondering what is CDL's talks around this? Would you be open to restarting your share buyback program to potentially close this gap? That's the first question. Second is on the GRS bids. I think the latest Tembusu site, CDL seems to have bid a bit more conservatively. What is -- what are your thoughts around it? Are you thinking about potential ASP weakness, or is it just to factor in the fact that, there is a higher penalty with the latest cooling measures that have been implemented, the rest of it, is that what you're trying to factor in, when you bid for the land? These are the 2 questions.

Derrick, so if you don't mind, I'll take this question as well. So firstly, on the share buyback, it's something that we have been discussing a lot. In fact, yesterday, with the Board meeting is something we discussed again. I think certainly, with our share price trading at a lower -- relatively lower level, it's a great time to do a share buyback, right, investing in our own company is as good as investing in an external -- making an external investment. And certainly, some of the other developers locally and foreign, who have done share buybacks recently, have certainly seen their share price go up in response. So something we continue to evaluate. You are right. Derrick, in the past, we did a share buyback scheme, we were in the midst of doing and then we stopped it. So we actually didn't even fully do the mandate that was approved internally, but we will be starting it again. But we just need to discuss internally to get all the final points. Again, there's no point doing a share buyback, if you're going to do a very small amount. Share buybacks are mainly effective if you're going to do a larger quantum. So we are still discussing internally, but thank you for that reminder, Derrick, and we understand it's a very important capital initiative, especially where our share price is right now. Second thing on Jalan Tembusu. No, we bid more conservatively, not so much because we had jitters after the cooling measures in December or we are afraid of the market or because of the cost, but simply because as per my response to Donald earlier, I think we're trying to protect our margins. We are confident about that area. We have done many projects in the area, including Amber Park, which has now sold extremely well, and we've hit a high price around $2,004, $2,005 per square foot for Amber. So it's -- Tembusu is situated in a great site there, in Katong next to all the key amenities. So we're actually very confident about this site, but it's just that I think we wanted to be more conservative and we already have a good land bank in place, as I mentioned. So we wanted to protect our margin. So that's why we bid more conservatively. And even then, I think we got it at a great price. I saw in one of the analyst reports, they even said that we got it, at what they felt was something like a 9% to 12% below market price. And it's evident also by the fact that our JV partner, MCL Land is coming in. So obviously, they are very pleased with our acquisition too.

I want to make a comment here. I think the answer is not share buyback. The answer is, what are you -- going forward, what are you going to do, in order to grow the company? We must find a solution. Just share buyback is not the answer. We must find a solution how to grow the company. Sitting now and saying, buying share back and all these -- this is to me, is of no consequence. It has little effect. But what is your creative plan? Our creative plan is to have something to do, like, for example, our City House. Say what you like. I have noticed over the years, whenever it's empty, you fill up very quickly. Somehow that property is -- has a lot -- tenants go out and they fill up quickly. My greatest dream is to do something going forward, so that we can sustain it. We don't allow something not really pushing the share. Something that we identify and grow the company -- what is that something, we must find the answer to it.

Okay. Let me just take -- I know there's a lot of questions on the floor, but let me just take one that is joining us virtually as well, and then I'll come back to the floor. So Joel, would you like to introduce yourself and post your questions, please.

This is Joel from DBS. Congratulations on the results. I just have 3 questions. And the first one is regarding to the divestment proceeds from Millennium Hilton Seoul and Tanglin Shopping Center? And as to the company and like what do you guys tend to use do with the proceeds. The second question is regarding the -- any loans that could be deconsolidated from the sale?

Okay. I'll answer the divestment proceeds, the loans that could be deconsolidated, not sure I fully understand Joel, I'll pass it to Yim Ming anyway. See, as for the divestment proceeds, as I mentioned earlier, quite a substantial amount will go towards reducing our gearing. But at the same time, obviously, it frees up fresh capital for us to deploy to newer, high-growth sustainable areas, such as the big opportunities that Chairman is referring to. And also, obviously, we use it to reward our shareholders as well. That's why we're doing this big distribution in specie, this DIS, right, which is costly to CDL as well. So over to Yim Ming.

I'm not sure if I understood your question correct, as Tanglin Shopping Center has been with us for a very, very long time. There's actually no big loans --such a loan at Hilton level, at the current hotel property level, which is actually very, very immaterial. But regardless, we have looked at gearing all along on a net gearing basis.

Okay. And my next question is regarding the property development sales, and I see that most of it has been doing -- selling quite well. In particular, I'd like to ask about Haus On Handy, I think it was about at 27%. So I was wondering the reasons why and what is CDL doing to market it?

Mr. Chair?

Yes, we are aware. But it's in a very good location, and construction is coming up fast. Actually recently, we sold a few units. So I think when the people see that the site is being developed and the structure coming out they will be more interested. Previously, when there wasn't [indiscernible], you can see just see the slope, it's always a challenge. So we are quite confident that with the promotion we had in hand and then going to have a late campaign, I think we should be able to push the sale as the construction progresses, which is quite usual in the case normally, when it's nearer to OP, the people who have more - -folks coming in to take up the units. And the location you can see is still very, very good. I think that's next to a triple-line MRT station in front. Yes, thank you.

I'm going to move down quickly to the floor. Okay, maybe I'll take right at the back, maybe Brandon. Brandon, then I'll take Xuan, yes.

Hi. Brandon from Citi. Just a few questions. Can I ask what's the alternative plans for the 2 U.K. offices, if the REIT doesn't pan out? So that's my first question. The second question would be, what are the -- what are your thoughts about introducing some capital partners for the 2 ongoing redevelopments in Fuji-Xerox, as well as Central Mall? And my third question would be, what's the end goal for your PRS strategy? I mean is there an AUM size? What's the timeframe you're looking at? I mean is it something that you're looking to sell ultimately to the REIT, or sell to third parties, like what we did with the recent Melbourne one?

Okay. Your 3 questions. Okay. The first one, tongue-in-cheek, I will say, failure is not an option, okay? No. But really, we do want to get the REIT listed, and we do not want to -- have to consider alternatives at this stage. Obviously, there are many options that open up, if we don't go down the listing for U.K. assets. We could even sell them individually or we could create a private fund or we could do other stuff with it. But our first preference is to still get the REIT listed. So we're still progressing along that. Things are looking optimistic. So I still remain confident about the listing prospects. And secondly, in terms of capital partners or redevelopment, I think at one of the previous briefings, I had mentioned that we will be open for consideration. CDR, obviously, at this stage, you see our financial position. We do have the necessary firepower and capital to do the 2 redevelopments, which is Fuji-Xerox Towers and this Central Mall-Central Square amalgamation. We have the ability to do it ourselves. But we also will not close the door, if we are approached by a capital partner that has a significant interest and can offer us the right economics to partner with them. And lastly, PRS strategy, I mean, we do have an internal target in mind. As always, I can't share some of these numbers, because they are our own internal target size. But we -- as I've always mentioned, we need to achieve scale, in order for this platform to be meaningful. And we are still small right now. I mean, in terms of operational plus pipeline, I mean, we have about 1,700 units, so just over 1,700. So we still need to continue growing this. But certainly, we are very focused on achieving scale here. And again, once you achieve scale, a lot of possibilities open up with institutional funds, with even listings. So a lot of possibilities open up. Frank, is there anything you want to add on to this?

Just quickly, Sherman, yes, I think we are still pushing ahead with trying to launch the REIT. But what is more important, Brandon, is that we are actually seeing a lot of recovery in the U.K. market. So over the last 3 months, we have seen our [ base ] occupancy move from low 90s to almost 100% occupied. So we are just left with a cafe right now, that we need to sell. And even for [ 125 ], again, look, we have seen occupancy move from, again, low 90s now to the high-90s. So hopefully, like what Sherman said, as the physical market recovers, that will generate more positive sentiment and that would help us, as we launch the REIT. And on the PRS, again, like what Sherman said, it's all about building scale. But more important, and we are also trying to build on the ground expertise. And I'm not just trying to build AUM, but really trying to build on the ground expertise. So eventually, we can manage our own assets and also third party.

I'm going to move very quickly. Maybe Xuan, I'm going to move down the floor. So maybe, Xuan, if you can ask your question first?

This is Tan Xuan from Goldman. Just one question on CapEx. Can you guide us on CapEx and cash flow needs for the existing redevelopment, and excluding resi? And how would that move gearing.

What would be -- can you give them some guidelines over what your CapEx is going to look like before the redevelopments, excluding resi?

So I think really for next year, our huge CapEx needs will be for the hotel, which is not expected to be very significant relative to the Group. And of course, the big ones would be the redevelopment of Fuji Xerox. So having said that, because -- our land cost for FXT is very, very low. So really looking at just the construction cost element of that. At this juncture, I'm sorry, Xuan, we're not certainly able to share on the TDC of the hotel. But instead of saying that -- in terms of firing power, so we have to look at, of course, the cash flow needs of the Group as of 31st December 2021. We do have a firing power of $3.9 billion, plus the proceeds that is coming from the divestments. So we are confident, that really more than addresses the CapEx requirements, not even including the expected cash flows that we have from the continuous sales. So in 2022, 2023, we do project quite a few projects of ours to TOP, including like, for example, 88, Whistler Grand in 2022, Amber 2023. All these, as you know, upon TOP, will inject a huge cash flow for us as well. That was really where our cash flows are coming from. So I can't give you further clarity, but I think you know, rest assured that in terms of cash flow requirements, we are able to handle the CapEx.

Okay. Moving down the floor, is there any other questions? Okay, maybe Vijay?

Yes, hi. Can you hear me? Vijay from RHB. I have 2 questions. Maybe we have a first question with regards to your investment property portfolio. Of course, you have a big $10 billion portfolio and a lot of this is in Singapore markets and good quality assets. Is there a plan to spin off some of these assets into a REIT kind of platform, especially ones in Singapore, to unlock capital as well as increase your ROE? And is that a medium-term ROE target which you are working towards?

Okay. Thank you, Vijay. Yes, we've also received this question quite a number of times before. You guys have a sizable chunk of office properties in Singapore. Are you doing an office REIT? I think, again, much of this, we usually defer to our Chairman and our Board to discuss when will be the appropriate time. As I mentioned earlier, thanks to our Chairman's initiative and vision, we were the first Singapore company to -- we listed the first Singapore Hospitality REIT. Of course, now there are many, many office REITs out there. So if you were to list office REIT, it has got to make sense as well, and it's got to have a unique differentiating point as well as very stable recurring income. So we continue to look at that possibility. And on your second question of ROE, as mentioned earlier, I think our medium-term target -- short- to medium-term target, is to try to get ROE up to 8%. It is not easy, okay, for us and we certainly can't get there overnight, and we certainly are not targeting double-digit ROE at this stage. But that's why I think you've seen in our recent -- in the recent months and years, that we have placed a strong emphasis on capital recycling. It's only by recycling our capital and deploying it more efficiently, that's how we raise our ROE. Our shareholder equity base is very large. It's about $10 billion, Yim Ming? Yes, about $10 billion shareholder equity. So we have a big base, right, to start with. Therefore, for us, I think it's really key for us to just do capital recycling, and that's how we're going to bring our ROE up. So again, it's something the team and I are going to work hard on, to increase this in the near to medium term.

Sorry, just one more question. In terms of your capital allocation, I think last year, you have allocated quite a bit of capital to Singapore market. Maybe in FY '22, where do you see capital being allocated, maybe in terms of markets as well as asset class. Can you give some color on that?

Yes. Okay. So last year, quite a lot of the capital was placed into Singapore. So moving forward this year, where would you deem your capital allocation to be in terms of geography and also assets?

Yes. Same, I think, Vijay, in the past, we've always tried to find a healthy balance between Singapore and our overseas markets. And currently, it's still the same. I think Singapore will always form a strong base for us. And it just so happens, that last year during the pandemic, yes, a lot of capital went into Singapore investments. But at the same time, you've seen, we've continued to push strongly overseas -- our key overseas markets are China, which -- and we have been doing some investments in China recently, but smaller in scale. So China, U.K., Japan, Australia and Vietnam. Vietnam, we're still small in Vietnam, but we already have quite a decent exposure there to the mass market projects, over 6,000 units actually in Vietnam, but we're small in terms of our investment proportion. So again, we don't talk much about all this, but it's very important. I think these days for the company to be well diversified, we can't have all of our eggs in one basket. So yes, rest assured, we're not just investing in Singapore property. I mean we have been steadily expanding in these overseas markets that I've just mentioned.

Okay. Are there any more questions on the floor? Yes. Okay. Yew Kiang, maybe we will take that as one of the last questions.

Hi, Yew Kiang from CLSA. I have 2 questions. The first one is on the accounting-wise. I see that you've used 88% of your properties value externally. What's stopping you from adopting accounting, where you revalue all your properties? That's I mean, similar to what our peers are doing. Second question is on RevPAR. I want to check with maybe Chairman, what's your RevPAR growth assumption for this year?

Thanks, Yew Kiang. So really, I think for CDL, you are right. We're one of the only developers that continue to record our investment properties at cost. So really, I think we have better brand for the past few years, we haven't depreciated our properties and the depreciation for IP is almost $120 million a year. So being very conservative in the past, we really look at divestment as part of our recycling profits, while it's really [ used ] for long term as well. So really, from an accounting perspective, like you said, if I were to change my accounting policy today, it actually also means that, yes, I'm mark-to-market. I show the entire fair value that we have. but the divestment gains would really be based on fair market value to get today. So from the Group perspective, I will use Tanglin Shopping Center is a good example. It's an asset that the Group has held, so to speak, it may not be the core, but it's something that the Group intends to -- non-core assets that can yield the Group's substantial profits. So this is really one of the strategy that the Group has held over years as well. So in terms of timing for change of acquiring policy, is something that the Group constantly evaluates. But to ensure that investors are aware of the entire like-for-like comparison, which is why the Group has always disclosed the fair value, as well as the same parameters based on fair value model.

But yes, it's a good question that you have raised, Yew Kiang, and it doesn't preclude the fact that I think we will -- we constantly analyze whether we should change our accounting method to fair value instead of a cost model. So we are still looking at it. And then secondly, the question about RevPAR and again, our hotel outlook, maybe Eik Sheng and then Chairman can answer.

Yes. I think earlier, I mentioned about the -- I mean, I guess, every region is going to be different. And I think rather than look at the RevPAR growth, maybe we can compare it to 2019, which is the pre-pandemic kind of numbers. I think for this year, I think we are expecting, of course, different regions will be slightly different. But maybe overall, 70% to 80% of where we were in 2019.

I think very important to note is that, we are proxy to the Singapore property development. CDL is a proxy, okay? The key question is, we must find the right strategy for growth moving forward. Once you have that strategy, then your share price cannot fluctuate between $7 and $6.80. I want to find a key strategy to move forward. How do we find a key strategy? The answer is, we will have to find the right one, so there is growth. At this moment, I can't tell you which is the right one. But we must rectify. We cannot all the time, assume that okay, we saw Tanglin Shopping Center. We make a hefty gain. We sold [ Seoul ], we made another hefty game. We want to sell Shirokane, there's a possibility there. Maybe it's not so soon, maybe within a year. If all this come about, you have plenty of cash, you go and work backward, forward. You have so much cash, you don't know what to do with it. So we will reinvest. I think very important is for us to find the strategy moving forward. We don't want to be -- a share price $7, $6.80 -- $7, $6.80. That shows that we don't have a right strategy to move forward. Now, it's very easy to say, okay, I want to have this strategy, that strategy and so on. If we cannot do something soon, we should abandon and find the right strategy to fit us. I mean Tanglin Shopping Center is actually unexpected. We make such a hefty sum, we own office building, we own carpark, we own shops. The amount of money we make is unbelievable in terms of our investment. This is a situation I like very much, and I will not hesitate to find something, so that your share price cannot hover around $7, $6.80. You have to find something more interesting and we come back to you next year.

On that note, I'm just going to ask whether the panelists have any more other final words? If not, then I think I really have to bring this meeting to a close. So I just want to say a huge thank you to all of you in the room and also those joining us on the webcast. Thank you so much for your time and your support. Have a great weekend ahead. Thank you.