City Developments Limited (C09) Earnings Call Transcript & Summary

Okay. 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, a very warm welcome to CDL's briefing on its unaudited Full-Year Ended 31st December 2022 Financial Results. Now thank you very much for joining us this morning. I know many of you rushed from another briefing and very grateful to have you here at the M Hotel. This is a hybrid briefing format. We have guests that are physically here at the M Hotel as well as those that are joining us via the webcast this morning. Now for all of us at M Hotel, it is our pleasure to finally be able to see many of the familiar faces again and meet all of you in person, more importantly, without your mask as well and in such and large group. So, we're very delighted to have you here. Now for today's briefing in line with CDL's commitment to our environmental sustainability, we will not be providing any printed materials. Now instead, we encourage you to scan the QR code that you see on the screen to download and view all the following documents that are on the CDL website. Now these documents were uploaded early this morning on SGX before trading. They include a copy of the detailed financial statement, a press release summarizing some of the key highlights of our announcements and then also a presentation that the senior management team will also be sharing in a very short while. Now for all our guests that are joining us on live webcast, you may similarly be also able to download these documents via our website. I would like to introduce you to the CDL management panel on my left. In the center, we have Mr. Kwek Leng Beng, our Executive Chairman; on his right, we have Mr. Sherman Kwek, our Group CEO. On his left, we have Mr. Kwek Eik Sheng, our Group Chief Operating Officer; and then we have Mr. Chia Ngiang Hong, our Group General Manager; and nearest to me, Ms. Yiong Yim Ming, our Group CFO. Now the format of today's briefing is in 2 parts. We will kick off with a presentation of some of the key highlights of the performance, followed later by a Q&A opportunity. So, now without further ado, I just want to invite Sherman to kick off the presentation, please. Sherman?

Thank you very much, Belinda. Good morning, everyone. Good to see you here again today. And as Belinda has mentioned, without the mask on. Take you very briefly through our results for FY 2022. And after that, we will open it up for Q&A. So, I'll take you through the overview and strategic initiatives, and I'll pass it to Yim Ming for the financial highlights. I think you've all seen our results that we announced this morning. I think we had a really good year in 2022. This was primarily driven by our divestment gain. So, I think I've emphasized several times over the last years that we want to get more active at capital recycling, so we can have more efficient deployment. And of course, our long-term goal is to ensure that we raise our return on equity. So, I think we're starting to put these plans in motion. And our Hospitality segment displayed a very resilient and strong performance as they recovered off 3 very difficult years during COVID. So that has actually propelled our results to a strong, strong high, especially on the PATMI front where $1.3 billion is the record since our inception in 1963. Now just -- you may have noticed the footnote there, but just to add that I think every time people see that results are restated, they get alarmed, right? It was restated only because we -- as you all may remember, we were planning to do an IPO in Singapore for our U.K. commercial assets, so primarily 2 of them, 125 Old Broad Street and Aldgate House, but because last year, the capital markets were not too favorable and conducive for new IPO listing, so therefore, we had to shift these assets. We put a pause on IPO and we had to shift these assets from assets available for sale, AFS back into our assets and liabilities in our balance sheet. So therefore, accounting rules requires to restate for the prior year as well for 2021. So, the only impact -- it doesn't impact the revenue or EBITDA, but it impacts PBT and PATMI. And as we've written there, the impact is $12.9 million. So, that's why there's a restated now. NAV per share has gone up, thanks to our strong earnings. And you can see on the RNAV per share side, the gap is even wider. So, we will be working hard to close this gap between be it 16.98 or even this 19.14, if you revalue the hotel portfolio as well. So certainly, a lot of latent value that we have to unlock. On the proposed dividend side, last year, I mean, in terms of actual dividend declared was $0.12. This year for 2022, we have declared $0.28. And of course, we did pay out earlier in the year this in May, the CDLHT units that we did a distribution in specie to our shareholders. So that was actually worth $0.202. So, I think all of that should factor in to us rewarding our shareholders for bonanza year. Key operational highlights. In Singapore, we sold 1,487 units with total sales value of $2.9 billion, and this was primarily driven by 2 launches, Piccadilly Grand and Galleria and Farrer Park as well as Copen Grand EC, in Tengah and really pleased that these projects have done well. Copen is 100% sold. Piccadilly Grand approaching there. And of course, we replenished our land bank. China, much of our existing inventory is sold already. Although right now, we're focusing on one of the assets they acquired in 2021, which is the Shenzhen Technology Park. So, we're starting to really drive that into high gear. In Australia, we acquired more sites for PRS, which is, I guess, the U.K. term for multifamily apartments for rent. In Singapore, we also had a very strong and resilient performance. Our office occupancy is 95.2%, which is higher than the island-wide average occupancy. And of course, I think we all know that office really had a storming year last year. Rents for the overall entire Singapore office market were up close to 12%, so it was certainly a great recovery after several years of uncertainty from COVID. Retail, our occupancy still remains high, but the overall retail market environment in Singapore is still a little bit tenuous. I mean last year, rents did drop by several percent. But having said that, I think it will come back with strength as we start to put COVID behind and we're all getting back to life as normal. Overseas, stable occupancies for our London office buildings. And of course, we made several more investments as well as divestments. On the hotel operations side, as I mentioned earlier, you can see there, really stunning set of numbers. So, really great that hotels are having their time of the day in the limelight. And global RevPAR was up 91% for our portfolio. So, really pleased with that. And on the fund management, as mentioned earlier, we had put a pause on our IPO plans, but at the same time, we're looking at how we can enhance our U.K. portfolio by growing the size of it. We did release a holding statement to clarify all these media reports. So, we are looking at the potential acquisition of St Katharine Docks, but we will provide more news when that acquisition is finalized and completed, and we will continue to grow AUM through some of our existing listed platforms, CDL Hospitality Trust and IREIT, of which we are the managers. And of course, we have also invested in various other funds and we are co-investing with some of these funds to acquire assets. For instance, last year, we made our first foray into the Australia office sector with the 330 Collin Street, fantastic building in the heart of Melbourne CBD. You will be familiar with these charts because we show it every time. So, this just shows you a breakdown of our assets, both by book value, also if we fair value the IP in hotels, and you will see that Singapore still accounts for slightly more than half of our asset value. Okay. I think you all know our growth enhancement and transformation strategy. Rather than go through the summary slide, I'll just go through each part of the strategy in detail. So under growth, you'll see pictorially all the stuff that we completed last year in terms of acquisitions, investments. We made our first foray into the student accommodation sector and we started it with the U.K. So, we bought 1 asset, Infinity in Coventry in June last year, and we followed up with 5 assets in December. So that brings us up to 6 assets and over 2,000 beds in the U.K. So, we're really happy and the portfolio is doing very well. In Japan, you may remember a few years ago, we started expanding into the multifamily sector. So last year, we were able to add 3 more assets, 1 in Osaka, 2 in Yokohama, which brings our total portfolio to 5 in Osaka and 3 in Yokohama. The only thing is I wish I could buy bigger assets in Japan. They still come quite small. But the great thing is that we've been focusing more on buying brand new assets so that there's -- the assets are in the most competitive position and there's less wear and tear and repair and maintenance costs to deal with. So usually, we do it on a forward-funded structure where we purchase the assets 6 to 9 months prior to completion. So, all these assets are very, very new in Japan and, hence, extremely competitive. And as a general comment as well, I think why we like the living sector, which composes of things like multifamily, all that, it's because I just see that as apartment prices continue to stay high and continue to rise around the whole world, I mean I think more and more people are turning to renting. I mean, by renting, you can stay in a convenient location that's possibly within walking distance of where you work or within a nice, strong leisure environment, whereas, let's say, in Japan, right? I mean, many people are priced out of Tokyo. So, there are many of my business associates or even colleagues that have to live like 2 hours away. And every day, they commute to and fro is like 4 hours. Now they can afford to rent somewhere, stay in the city of Tokyo itself, and they can do dispense with or making a hefty down payment for apartment as well as taking on a mortgage that they will spend the next 30 to 50 years paying off. So, I really think the rental sector is strengthening. Same with student accommodation. I see that students are coming back and especially from Mainland China. I mean -- and this will drive, I think, the student accommodation sector in the U.K. especially. And in Singapore, we replenished with 4 sites. So, Upper Bukit Timah Road, there was a private purchase, and then you have Jalan Tembusu, which was the first GLS of last year in 2022. So, that will be launching pretty soon. And then we have this Central Square that we acquired from Far East Hospitality Trust, and we are amalgamating it with a Central Mall. And of course, we have the EC site and Bukit Batok West Avenue 5, which we acquired later part of last year. In Australia, as I mentioned, the office building and the 2 multifamily PRS sites. We completed quite a number of key divestments. We didn't show all here. There were some like our [ Ta Gold 23 ] Industrial Complex and some other smaller ones, but the key main ones were these. Obviously, on the right-hand side, you have our Millennium Seoul Hilton that was a big, big divestment for us and certainly gave us a very, very strong return after holding it for several decades. And in Singapore, we are thankful that these collective sales were successful. So, we were also able to reap strong gains from Tanglin Shopping Centre as well as Golden Mile Complex. This just shows you a snapshot of our so-called launch pipeline in Singapore resi for the -- for this year and next year. So, I think we're very privileged to still have a strong land bank and pipeline in the works and very excited, I think, for all these projects to hit the market, and we hope they will be received favorably. We've definitely put in a lot of effort to designing them well as we always have done and ensuring that they meet the needs of our buyers, home buyers, especially now post-COVID, so you have a lot of areas where you can do or work from home and stuff. So, we've really designed these projects well. As I mentioned earlier, the living sector portfolio is one that we have been expanding into aside from our traditional residential development and office and retail asset management. So, I think we've added all these assets there and you can see our U.K. student [ accom ] portfolio is doing well. Current occupancy 98%. And we expect this to only strengthen for every academic year. Same with our sites over in so-called the U.K. for PRS. So, we have The Junction at Leeds, which is approaching completion. We have actually achieved sectional completion of 3 out of 5 blocks. So, just under 50% of the units, there's 665 units and the rest of the 2 blocks will be completed later this year. So, whole project will be operational. We have tenants moving in already, although it's still early days, but very, very strong. I was just in London 2 weeks ago, made it up to Leeds to inspect project and it's located next to the Wellington financial district. So, it's going to have very, very strong demand. The Octagon, in Birmingham, probably the best location, I would say, right in the heart of Birmingham, coincidentally located next to the former Copthorne Birmingham Hotel that we own, but that was compulsory acquired by the city for a whole rejuvenation of the Paradise Precinct. That will take a few more years for us to complete it. It's the tallest octagonal-shaped residential tower in the world. But when done, it will do extremely strongly. The Castings in Manchester was acquired by CDL Hospitality Trust. So, we're helping them with the development and that should be very nice when it's also completed. Our Japan portfolio, as I mentioned earlier, we now have 5 in Osaka and 3 in Yokohama. And so-called when we show -- by the way, when we show AUM, be it for this or for our Japan PRS, I mean, these AUMs, we don't add it into our fund management AUM because they reside entirely on our balance sheet. We're just giving you an idea of what the portfolio is worth. So, this is worth like [ a B -- 1 B sing dollars ] based on the gross development value and same with this as well. So really happy. I think this continued to perform very strongly. In fact, we just -- for City Lux Tobe and Yokohama, we just signed a big lease with a Japan automobile manufacturer. So, very excited as well. The property immediately jumped to 100% occupancy. In Australia, we added 2 sites, 1 in Toowong, in Brisbane. That's a riverside suburb and also had strong demand for rental apartments. The other is in Southbank in Melbourne. So, gives you a snapshot of living sector portfolio for the PRS and the PBSA side, what's operational, what's in the pipeline, but coming along nicely, and we have ambitions to grow this portfolio further. Enhancement, how do we drive so-called operational efficiency as well as how do we get the most of our assets in terms of unlocking value, whether via repositioning -- via so-called renovation or AEI, as we call it, or via redevelopment of the entire asset. So, as I mentioned earlier, I mean, you will see that on the right-hand side, it's the Central Mall, Central Square. We are making good progress in the planning. So -- but because it's such a big project. So therefore, it's likely to only the resi components like the [ ODT ] launch in the second half of next year. So far, so good. We look like we might probably get the biggest GFA uplift that we've ever seen by amalgamating these sites together and redeveloping them. So, we were very, very excited and this site has great frontage also to the river. On the left-hand side, this is the whole entire complex. It's called Newport Plaza. It will be a mixture of service apartments, hotel -- sorry, service apartments, residential and office. And so for the resi component, we will be launching it also in the next few months and we are anticipating that, that will do strongly. And for the first time, I mean, we decided to do a super penthouse at the top of this Newport Residences, and it will be roughly about 13,000 square feet, freehold, a single floor, and I spent time with the team personally designing this super penthouse and it will look really great. And best of all, this is because of feedback I received from a lot of ultra-high net worth potential buyers. We have designed a dedicated lift core and lift, 1 lift just for that unit. So, it doesn't serve any other unit except this unit on the top floor. So, I think that will be very well received because I think a lot of well-heeled buyers have said that they want their privacy and they don't want to share the lift with others. So we said, okay, it was not easy to make that happen, but we managed to design it in. So, I think we are excited when that launches in the next few months to see how that will do. Our very substantial and large mall in Phuket, Jungceylon. We are done with the Phase 1 of the AEI, the asset enhancement initiative in Q4 of last year. And by the rest of this year, we will complete the rest of the phases. And this mall will be thriving again, it was always a very strong contributor to our recurring income. And no doubt that also as Phuket comes back, Phuket has suffered massively from the COVID lockdowns, everything, but as Pocket starts to come back with the tourism recovery, especially with the Chinese Mainland PRC tourists, I'm anticipating that this mall will do extremely well. M&C, I mean, I think we also have continued to upkeep and renovate and rejuvenate our portfolio. And also we are starting to put emphasis on the M Social brand. As I mentioned in previous briefings, remember, this is our Chairman's brainchild to come up with a new hip funky brand that really connects with the lifestyle of consumers these days. And therefore, as we start rolling them out, I anticipate that this will gain strong traction. And we have one that will be opening very soon. That's actually not a brand conversion. That's a new build and that's in our Suzhou HLCC, mixed-use development. So, the hotel component should open by around April-May, and very excited to see that in operation. The hotel is looking very, very nice. So, we will share more visuals once the hotel is opened. And it wouldn't be complete without mentioning obviously something that we've been dedicated to for the last close to 30 years. I mean since 1995, I think we have under the guidance of our late Deputy Chairman Mr. Kwek Leng Joo we have really ensured that we kept sustainability in mind. As you know, he coined the term conserving as we construct, and it's something that we have to do as part of our social responsibility to society and to the future generations, right, to make this world a better place. So, these are all the accolades that we have, and we will always try to improve on them. And this is also our very ambitious Net Zero carbon commitment. Some of the goals are lofty, but we will certainly put our full might behind our effort towards achieving them. Transformation last part. I guess we kicked off with just showing a slide on the distribution in specie, as I mentioned earlier last year when I first talked about this, I mean, we could have chosen to gone and sold the stake in the market. But at the end of the day, we decided that we would distribute it in specie to our shareholders. So by doing that, I actually didn't receive any cash for it, but we felt that, that would be the right thing to do to reward our shareholders in advance of what we anticipated was going to be a bonanza year in 2022. Of course, this year turned out to be even bigger and stronger than I anticipated last year. But it's something we want to reward our shareholders. And we hope our shareholders are happy, right? Because since we distributed the shares out, I mean, CDLHT's price has continued to strengthen and is as per what I said last year, we are allowing our shareholders to participate in the hospitality recovery. Of course, as a result of this deconsolidation, I mean, we were also able to recognize a pretax gain, inclusive of negative goodwill close to $500 million. And what's great is that now we have deconsolidated CDLHT from our balance sheet. In future when I do sell assets to them, I can recognize a gain on it. So, this will encourage us to be more active sponsors and supporters of the REIT too. So, I think this really achieves many objectives on various levels. And of course, I understand some other friendly companies in the neighborhood are also embarking down this parcel grid. I think it's a great way to reward shareholders. Key parts of our transformation. We have fund management. So as I mentioned earlier, these are so-called the targets that you have seen from earlier. I mean, so in 2018, we said we had a 5-year target of USD5 billion under AUM, still small by any measure, but so-called one step at a time. We were going to get there with our REIT IPO. But since we put that on a pause, we are now looking at other ways that we can grow our AUM. We only include in our AUM, what is not consolidated into our balance sheet or wholly-owned by us. So, we're quite strict on the definition. Of course, CDLHT now becomes part of the AUM after we deconsolidated it. And we have IREIT Global. We have HThree City, of which were part of the GP as well. So, I think we'll continue to grow this and you will see that we've been expanding our living sector portfolio. So such time that, that achieves the scale, I think we can start to look at potential fund management opportunities and platforms for those assets as well, be it PRS or PBSA or workers' dormitories or other stuff that we have been investing in. And so I'll go on fast. I mean -- so in terms of our investment strategy, we continue to accumulate scale in assets. So as I mentioned earlier, since the IPO was not successful, we're looking at more acquisitions, including the U.K. office sector. So, that will help to enhance our portfolio, strengthen hopefully, the yield and the WALE and allow us more opportunities once we achieve certain scale. We continue to diversify our recurring income streams. So, this makes us more resilient across asset classes, across geographies as well as we want to grow our fund management to generate revenue and significant value. And this also obviously will help with the ROE as well. The second part of transformation is obviously M&C, Millennium and Copthorne Hotels. We privatized it in November 2019. Of course, very unfortunately, right before COVID hit us. But still, we privatized at a very good price. And now that we've made it through COVID, you can see that the hotels are showing a strong recovery. So, we certainly have a lot of aspirations for our hospitality portfolio and a lot of plans in place how we're going to really unlock value and drive things to the next level. And these are part of some of the things we've done, capital recycling. I mean, Millennium Seoul Hilton was under M&C, so was Tanglin Shopping Centre. So, we've already done some capital recycling there. We are restructuring in terms of the brands and all that and we will be able to unlock further value. And of course, we want to drive operational efficiency. Our Chairman himself is personally overseeing our hospitality portfolio on a daily basis and seeing how we can optimize costs and also embed new technologies and new innovation to ensure that the customer experience is enhanced and efficiencies are derived. So, very excited at the future for hospitality. And of course, last part, innovation and venture capital. Internally, in 2018, I set up this innovation, Enterprise Innovation Committee, EIC internally. So, we have really embedded a more innovative culture. Innovation is not just the responsibility of a committee or management. It's the whole company, right? Everyone has to embrace that mindset and we have done that and it's getting stronger. And also we have been obviously constantly evaluating various prop-tech companies that we can invest in or we can harness that technology to enhance our product and service offerings from CDL and M&C. And we have, of course, come up with some in-house platforms as well like digiHUB and CityNexus. I won't go into detail today on those. And we've invested in some external funds also prop-tech funds. So, we have visibility on what tech is coming up like Taronga Ventures and Fifth Wall. Fifth Wall, probably the largest prop-tech VC fund in the world. So, Okay. That ends my segment. I will hand over to Yim Ming for a brief walk through the financials and then we can open up for Q&A. Thank you.

Thank you, Chairman. Good morning, ladies and gentlemen. Very proud today to go through this set of record financial statements. So, this is to set the landscape. This is indeed still a challenging time this year. So, in terms of Property Development segment, it accounts for 42% of revenue and 9% of PBT for 2022. 3 strong performing projects, which is Amber Park, Haus on Handy as well as Irwell Hill Residences. These 3 strong performing projects account for 74% of our 2022 revenue. So, while our JV projects are not consolidated into revenue, they are strong performing JV projects such as B88, Boulevard 88, which is going to TOP in 2023, Sengkang Grand Residences, Penrose and Jovell also contribute to our results. The group also provided for foreseeable losses of $62 million this year in this segment. This is largely for our U.K. development portfolio based on external valuations. Excluding the foreseeable losses, this segment actually outperformed for 2021 -- against 2021, I mean. So notably, for Piermont Grand, it's EC. It's going to TOP in 2023. In line of accounting standards, ECs are only recognized in entirety upon TOP. So, we have not taken any revenue or profit contributions from EC. The other EC, our Copen Grand fully sold as well will only be recognized upon completion estimated in 2026. Next, I'll move on to hotel. So, Sherman has elaborated quite a bit on how -- it was really an astronomical performance. It's really boosted by the record sale of Millennium Hilton Seoul as well as the gain on deconsolidation of CDLHT. Operating performance of the hotel also improved significantly. It's our shining star. Revenue improved 58%. I'll have a few slides on hotel operations later. So, in line with the positive outlook of this segment, the group also wrote back impairment losses of $32 million for hotel properties. Next, I'll move on to investment properties. CDL continues our conservative accounting policy of accounting for our investment properties at cost. Being a real estate player, we're able to extract value at the most opportune time with the completion of the collective sale of Tanglin Shopping Center as well as Golden Mile in November. These 2 projects yield us profits of $332 million as these projects has a very low book cost. So of course, the divestment gains have boosted the performance of this segment and which is -- which has its challenges. Challenges include higher financing costs. Our properties in China, particularly, for example, has got some impairment losses because of collectability issues. And there's also some impairments that we have provided for U.K. property as well as China property in this segment. I'll just move on to other segment. You see a loss of $71 million in FY 2022. This is largely due to a full impairment for our remaining exposure in Sincere Property. So with that, we have no further downside risk in relation Sincere Property, which is undergoing bankruptcy reorganization. Any distribution from the bankruptcy reorg will be accounted for account accordingly. Just on hotel. This is just a slide to show a strong rebound in hotel operations. RevPAR increased 91%. And if you look at against 2019 levels, which is pre-COVID levels, it is actually very close to 2019 levels. So, this really reflects a high flow-through in terms of GOP margin. It has improved 11.3%. This is a high flow-through to the bottom line due to the higher room rates as well as the productivity gains that we have achieved during pandemic and of course, the cost containment measures. All wouldn't have been made possible if we hadn't privatized M&C by in 2019. I'll do a little bit on the RevPAR by region. So, there's RevPAR growth across all regions, if I were to compare 2021 and 2022. In fact, U.K. and Europe have RevPAR exceeding 2019 levels. Singapore and New York are very close to 2019 levels. So in terms of Asia, with China and Taiwan opening up, we do expect Asia to pick up very quickly in 2023. And for New Zealand, I'm sure they will also keep pace. Revenue by segment, increased 25% year-on-year, largely due to hotel operations segment, which has improved 58%. So notably, with the deconsolidation of CDLHT after the distribution in specie with effect from May 2022, we do not consolidate CDLHT anymore. So, the revenues from the hotels of CDLHT will not be included in the top line. In terms of EBITDA by segment, increased 232% year-on-year. Really strong cash generation for FY 2022 put us in a very good position. PBT, [ red hot ] year for us as well. Similarly, it's the highest PBT since inception, increased 764%, boosted by divestment gains largely. Next, I'll just move on to balance sheet. So, the group has strong and robust fundamentals. We have cash above $2.4 billion, and including available committed credit facilities about $4.1 billion. Interest cost is kept low at 2.4% for 2022. The rate hikes are more exponential towards the end of 2022, continuing into 2023. So, these rate hikes obviously continue to be on the close radar of the group. So with that, the group has also increased its fixed rate debt to 42% for 2022. And notably, we also have -- we do adopt a natural hedging strategy. We do have loans in renminbi as well as yen that's about 10%. So -- and we think that these 2 currencies have lower risk of rate hikes. So with that, I think we are fairly comfortable right now in terms of a fixed rate debt portfolio. We do have a balanced debt expiry profile. So, we have 5 projects going to TOP in 2023. So if the cash flows, the loans will be repaid. So, 2023, our cash flows are actually very well managed. In terms of currency, we don't take foreign currency risk. In fact, for our acquisitions since 2018, we largely try to hedge it with loans and borrowings to avoid foreign currency exposures. So with that, thank you for the support of everyone, and thank you for all the lenders as well. Thank you. I'll hand it back to Belinda.

Okay. Thank you very much, Yim Ming and Sherman, for the presentation. We would now like to move to the second part of the briefing, which is the Q&A. I saw the hands go up very fast. Please feel free to ask the questions. My colleagues are standing around the room with a microphone. And if you have any questions, please feel free to raise your hand and they'll come to you. [Operator Instructions] Before asking your questions, we may request that you please introduce yourself and also the organization that you represent. So, I see all the hands up. So fastest first, okay, let me just take those on the front row first. Mervin, would you like to...

Mervin from JPMorgan. Congrats on the Diamond Jubilee first off, fantastic achievement over the many years. Maybe we can start with a strategic question on the living sector, in particular, medium term, what do you see in terms of percentage of assets from this sector earnings contribution? How quickly can you move off the assets you have on balance sheet into a private fund or either into CDL Hospitality Trust? Second question I have is called hospitality side of things, obviously, very strong. Do you see any signs of weakness in Europe or U.S. in particular due to high cost of living pressures as well as mortgage rates?

Thanks, Mervin. Yes. So on the living sector, we currently have been building up our portfolio there. And we looked to unveil a few more exciting opportunities. Currently, we are in this PRS, multifamily as well as student accommodation. And we do have actually other investments we've made in things like workers' dormitories or that, but still small for now. So, we will share more details when we build up scale on this front. And of course, retirement housing as well, which is a key component of the living sector. So, we do have 1 project in Australia that we're working on, too. So with this right now, we do have targets that we set internally. I'm just trying to decide whether I can disclose them because we have laid out to our Board what we are going to achieve for 2023, '24, '25 and what our targets, basically a 3-year targets, how much we want to grow the portfolio by. Certainly, let's put it this way. I mean, I think we intend to grow it by probably 4x what we currently have in terms of AUM or / or GDV, as you may call it. So yes, I mean that's probably what I should share on that. I don't think I want to throw out the specific target numbers that we have. But certainly, we have a lot of ambition on this front and we think that all these themes are going to be very, very critical as we go forward as the world embraces rental. And we also need to show up our recurring income. So because this always gives us a strong base every year where development is really the alpha on top of it. And you asked also, oh, how fast can we convert them into fund management strategies. Actually, I'm still trying to build up scale for them, but I'm already getting offers. I mean, I'll give you an example. Obviously, I can't name the party that approached me, but I already have a fund that approached me and they want to buy all 6 of my PBSA assets in the U.K. that I only bought last year. In fact, 5 of the 6 were bought in December, so the ink is barely dry on the SPA and I already have a fund coming in, offering to buy them at a profit of me and even offering for me to participate as part of the GP and the fund manager. But I think these are early days. I mean, I want to see how much I can push the portfolio before we inject it into a fund. But you can already see, I think -- sorry, mic, not so good. Okay. Sorry.

Maybe, you don't speak so close to the mic.

Okay. Maybe I should...

Yes, they'll pick the sound.

Too close. Yes. So, I think we'll have a lot of opportunities to open up. The great thing is that right now, there's still a wall of money around the world, as you know, despite the fact that the economic outlook is not so optimistic and we will have some challenges over the next 18 to 24 months, not least of which with interest rate hikes, but there's still a wall of money out there, lots of funds, PE funds and pension funds and other kinds of corporate funds chasing after assets. I think what the great thing is that we have the assets. So, I think we're in quite a strong position if we want to monetize them into a fund. And obviously, we don't just want to divest the assets for gain that would negate all the efforts that we put in towards building it up. More importantly, I think we want to -- if we were to divest these assets, it will be into a fund structure, be it a REIT IPO or a private equity fund that we will be part of the GP as well. So, I think that makes more sense for us because then that really helps to build up our fund management ambitions. On the hospitality side...

Yes. Thanks, Sherman. So, I think on your question about whether there are any signs of weaknesses. I mean so far for the first 6 weeks, I think we're seeing actually quite strong strength in the markets, especially in the U.K. and Singapore. In the U.S., New York is still pretty strong, but I think we are starting to see some weakness in the regional U.S. markets. But I think on the upside, on the trends going forward, we're still seeing the return of corporate travel that is slowly coming back, and we're expecting that to strengthen in the second half as well. In addition, there's, of course, the China market is starting to come back. I think the market wants to travel. It's just that there isn't enough flights coming out of China. So, I think those are upsides that we will continue to see going forward as well.

The question on financials. I think you asked what's the percentage of our assets. So living sector currently, the biggest is in U.K. U.K., we have about AUM, about [ $1.04 billion ]. So, all in, it's possibly about slightly less than 5% of total assets right now.

Okay. Let me just go to the next question. We will take Rachel.

I'm Rachel from DBS. On behalf of all the shareholders, thank you very much for the dividends that you have paid out this year or declared. Right. A few questions from me. I think my first 2 questions will likely be from asset recycling strategy. I think you mentioned that you have a more well-calibrated divestment strategy moving forward. So, if you could share, is there any like targets? Or how are you thinking about every year, you're going to do any potential divestments? And following from that, in terms of acquisitions, you now have quite a bit of powder to go out and [indiscernible] really started. But I mean, looking at the development -- developed markets, funding cost has also gone up. So, we just want to hear your thoughts in terms of the asset prices versus the higher funding cost, how are you thinking in terms of accretion when you acquire? Yes. And my -- probably my last question is on the living sector as well. I think would you be able -- you've shared some targets, but would you be able to give us some sense what's a good size in terms of the number of units of PBSA that you can achieve operational efficiency? I think now you have less than about 3,000 units. So, yes, what kind of size would be good for an operational efficiency?

So first on the divestments. I apologize, Rachel. I mean, I know we've received this question many times what our divestment plans or that. But I think it's something we choose not to review for now, only because also, I mean, I think things are very fluid. Again, collective sales come and go. But yes, we do have a plan to make further divestments. And of course, you just -- you can't keep selling. I mean, it's going to be a capital recycling thing as well. So, we divest as we find opportunities to invest in as well. So, it goes in tandem together. But yes, we will review more details when we can. On funding costs, yes, our funding cost is going up, so we're cognizant of that. But at the same time, I think that's also what's going to drive an increased amount of opportunities for us to invest in. I think we are certainly taking a very disciplined and scrutinized approach to really bet through all the investments on the horizon. And I think over the next 18 to 24 months, we will see some very attractive so-called investments that we can make. In fact, if we do succeed in closing this St Katharine Docks deal, I mean, I think you'll all be suitably impressed with some of the investment metrics on that deal itself. So, I think while funding costs are going up, we are cognizant and therefore, we have to balance it for every investment between the mixture of debt and equity. But at the same time, I think it will give rise to many very attractive and accretive opportunities for us. And lastly, for the living sector, again, without wanting to review too much targets currently, we have over 2,000 beds in the U.K. We actually already achieved pretty good economies of scale with 2,300 beds that we have. But I would say in the long run, I mean, we probably want to increase this by another 2x to 3x the current size, which certainly, as you have mentioned, will allow us to derive more economies of scale. But portfolio already doing very well, right now, 98% occupancy, and I anticipate that it will just strengthen and much of the rents are being driven by foreign students, especially Mainland China, PRC students. And I think that much of the rental growth, sorry, is being driven by foreign students, especially PRC students. So, I think that trend will only strengthen over time. Thank you.

Okay. Thanks, Sherman. Maybe just -- since we're talking a little bit about the currency and also the debt, I'm just going to pick up a question that came on online via the webcast. Now we have a few financial-related questions. From [indiscernible] of Nikko AM. She says that I wanted to follow up on the debt hedge to fixed rate. You mentioned that given the natural hedge, you're not too concerned about Japan and Reminbi rate hikes. However, noted that you are only 10% of your debt mix. So, any intention to increase the percentage of fixed rate debt going forward? And how much do you expect average interest rates to rise this year?

I'm not the best economist. But yes, I think for interest rate wise, I think FY 2022, will end at 22.4%. I think for 2023, we are projecting that on an average portfolio basis, it could go up to as high as 4% or slightly a notch over 4%. In terms of fixed rate hike, I think fixed rate loans, we are currently at 42%. So, plus the 10% of effectively, the yen and the renminbi, which we think are less at risk is a level we are fairly comfortable with right now. So, I think what we really look at is not going to be a high percentage of how much we think fixed rate loans should be, but really looking from cash flow management wise, with the cash flows that we have for our projects that's going to TOP this year, with all the cash flows we generated back and of course, I think for new projects that we are undertaking and whether is it potential acquisitions in the U.K. or new land tenders, we have also revised our feasibility to take in higher financing costs. So, for new projects, we do target optimally a mix of maybe about 50% hedged. I think that's a level that we are possibly quite comfortable with.

Okay. I'm going to open the floor. Maybe I'll take the question from Vijay.

Vijay from RHB. I have a couple of questions. My first question is on the write-offs. Maybe can you elaborate a bit on the $62 million write-offs in U.K. market versus from the Residential segment, considering that the residential was a better segment in U.K., why was there a write-off? And maybe can you also elaborate a bit on the $81 million Sincere write-off? I thought you have written off all in FY '21. Considering now the market has recovered in China, especially in business park segment, do you expect any recovery when the bankruptcy proceeds go on from Sincere? Maybe that's my first question.

I think for U.K., the impairment is largely for one of the projects, I think for 2 things. I think, one, the progress of the project is a little bit delayed. So with that, the financing cost is capitalized in the projects have kind of increased the cost of the project. So, it's really a time return that was kind of compromised. And of course, we do have a big project, which is the Mortlake project. That project is still in the stages of getting planning approval, and that is fairly challenging environment today. So, I think there's, of course, a constant struggle for us to discuss with the relevant authorities on the affordable housing. So, I think that is something that we feel was timely to do in terms of impairment for this project.

And on your second question on Sincere. I think it's just out of prudency that I mean, we decided to write-off the remaining part of it. So, in back in 2021, when we did the write-off, I mean, that was bulk of it, but wasn't 100%. So, this is the remaining $81 million. Again, this bankruptcy reorganization is fairly a murky process, and it's a lengthy process as well. I mean we're now what 2 years in and still have no visibility as to how the bankruptcy reorganization will be handled? Or what kind of proceeds will be distributed. We are certainly in line as a creditor. So, we thought out of prudency will just write it off. And if we get distributions back from the bankruptcy reorganization, then that will be great. So, we continue to wait and see, but it's just out of prudency. And obviously, as you all can imagine, 2022 would be a great year to put the write-off through because of our record results.

Okay. Vijay, you want to continue.

Just 2 quick questions. On Singapore market, residential market, what are your thoughts on the market, especially considering a lot of measures implemented at this point of time, you have 2,100 units of land bank, do you plan to acquire more land bank in the market at this point of time? And my last question is on M&C. In terms of rejuvenation of M&C and rationalization, have you think it's complete in terms of divestment of noncore assets? Or you still think there is some more assets which you could divest and rationalizing your portfolio? Also, can you give a guidance on the CapEx needed for the M&C portfolio?

So, I'll deal with the Sing resi, and I'll pass it to Kwek Eik Sheng talk about the M&C. Yes, I mean, I think we are still pretty optimistic on the Sing resi market. No doubt things are a lot more difficult than a couple of years ago. I mean, we're still dealing with the aftermath of COVID. As you know, COVID has disrupted global supply chains worldwide. So, it's no secret that costs have risen majorly in the development sector, especially in Singapore. I mean, where we are faced with, obviously, this labor -- skilled labor shortage of foreign workers. And this has pushed up labor cost as well as the rise in raw materials as well, thanks to supply chain disruptions. So therefore, it's still not the easiest environment, but I think the market has remained fairly resilient. Yes, there have been measures progressively released over the years. I wouldn't call the recent one, the slight increase in basic stamp duty [indiscernible] I think. But I think the market will push past some of these measures, especially for projects that are targeting at the genuine demand such as HDB upgraders or people that want to upgrade to a better location or a bigger apartment, I think there will always be demand from this segment. And therefore, we try to create projects that are well designed and truly in alignment with, I think, today's needs for today's consumers' needs and lifestyles. And we will continue to roll out our projects. And as for whether we will participate -- we replenish our land bank, certainly. I think we have done very well in Singapore resi, and we will continue to selectively participate in GLS tenders as well as in any collective sales that may be attractive in order to replenish our land bank. Obviously, we were quite lucky to be able to do it also via our inherent asset base. So things like I mentioned earlier, this Central Mall and Central Square, things like Fuji Xerox Towers, we were able to get a resi land bank from these traditional office assets we used to own. But we will continue to replenish our land bank and hope to remain as one of the market leaders in Singapore resi.

Yes. I'll just talk a bit on the M&C side. So, I think the privatization, we always mentioned there's a multipronged strategy. Of course, we are looking at divestments and that could be either to a third-party or to the REIT. I think in the past, we've said that we want to be a more active sponsor to the REIT. So, there are some opportunities that we are trying to look at. I think we'll try to push on those as well going forward. So aside from divestments, I think the other leg, of course, is to look at our assets, whether we want to optimize them as hotels. And I think Sherman shared earlier, we do have a plan to roll out more of the M Social brand. There are quite a lot of the AEIs that have already started, and or planning to start this year. Example, in London and New York. I think we've announced those. Grand Copthorne Waterfront as well is also undergoing some CapEx for the main facilities. So I think in general, we don't usually review a total CapEx amount, but I can share that generally, we do phase it out. We try to minimize the operations. I mean we don't shut down the whole hotel and then relaunch it in order to make sure that the cash flow still keep generated and we also have discipline in terms of the cash flow from each region. So, if we start a project in London, for example, we will make sure that the cash flows from the region are enough to fund that CapEx as well. So, as to ensure that we don't have a major disruption to our cash flow as well.

Just to add on to Sherman's point. Fortunately, the supply in the market is quite limited, the new supply is coming on board. So, we believe that the market will continue to be resilient for this year at least. And then, of course, with the borders opening from China especially, we expect more investors to come in, understand that they are quite a long queue waiting to come in to invest in Singapore. So with this, we are very confident that the market will continue to do okay. Thank you.

Okay. Shall open the floor again. Joy, maybe take the question for Joy.

Joy from HSBC. Just a quick question on Property Development segments. The margin for this segment seems to be on a declining trend. Partly I would assume is from rising costs. Where do you see the stabilized margin going forward? And as you start to recognize the Central Mall redevelopment and Fuji Xerox, do you expect that margin trend to change?

Okay. Good question. Yes, margins over the last few years have been declining for all developers. As you know, it's been a tough climate. I think it's hard to say. I mean when -- what's the stabilized margin, I think it depends on too many factors. It depends how you acquired the land. Obviously, land bank that we took out from our existing assets, like what I mentioned earlier, be it Fuji Xerox Tower or something, I mean, that would be a very different situation. Land that you acquired privately like my Upper Bukit Timah site. I acquired from Tanjong International. That will be a very different case. GLS will be more tricky. Obviously, that usually is a very hotly contested. So -- and at the end of the day, I think it will also depend on how home prices react. Obviously, in the last 2 years, we've seen according to the URA Index, I mean we're seeing close to 20% increase in residential prices. So, it depends how the prices continue to perform. I mean, I think the increases were necessary also to cover us for the extra cost. So, I think that was something that we were grateful for. But very hard to say where the stabilized margin is. I mean if I look across my portfolio, I have projects that have a gross margin on cost of a high single-digit all the way to through high double-digits, be it in the teens or even over 20% or 30%. So, it really depends. So, I think it's hard to make that call right now for that. Was there another question? Was there another part to your question, Joy or...

Maybe if I could just follow up. Do you think we've seen the worst margin? We're really down sort of substantial, if I look pre-COVID versus today, even if I adjust for your impairments, probably down more than 10% in terms of margin. So, just trying to figure out where we should really be looking at.

So, your question is have we seen the worst?

Yes, have we seen the worst?

Again, I don't have a crystal ball, but I would like to think that I think things can only improve from this point onwards as costs start to come down on the construction side. Obviously, we have to be cognizant that interest rates are rising as well. So again, with every positive, there may be a negative to offset it. But I think things will be quite resilient, quite stable going forward, especially in Sing resi. You've heard one missed the chances. I mean there's a limited supply, at least relatively speaking, compared to some of the previous years when we had very, very record supply in the market, right? So, I think these factors really helped us, still continue to drive a resilient momentum in the resi market. And I hope to see things gradually improve over the next few years.

Okay. Yes. Maybe I'll take the question here.

Simon from DBS. I just have 2 questions. If I can point you to Slide 36. Is it possible for you to share maybe prediction on the charts that you put out seem to suggest that U.K. and the rest of Europe seems in terms of RevPAR terms seems to have performed better than pre-COVID. Can you give us some context to that? And also, I'm curious if we were to exclude in the currency impact and look at local currency terms, organically, which countries do you expect to perform better from the Hospitality segment?

So I think your question is about whether this give a bit more background or color on this rate increase. I would say it is a rate increase in both rent and occupancy increase compared to 2019, right? 2019, typically, we do see -- I mean, those were the pre-COVID days. I think right now, there is an element of pent-up demand. And I think these are the markets which, of course, opened up earlier. So, there's a lot of open travel. So, I think that's where you see the upside coming from. Sorry, what's the second...

Maybe I paraphrase that. I think what Simon is asking is which region would you probably see as one of the star performers this year?

Going forward?

Going forward.

In local currency terms because I think what you present on 36 is in Sing dollars, I assume. Is that right?

Yes. What is presented here for alignment is all in Sing dollars. It has removed the exchange impact because it's not translated on the same exchange.

Okay. Then the second question I had is maybe for the broader group for my benefit. Is there a difference between -- from the company's perspective, do you see the PRS as being different from say service apartment property? And what would the differences be? How would I see that difference?

That's a good question. I think it's something that people have raised before. They are not too dissimilar in terms of assets, but I think people still -- a lot of people don't see service apartments as a long-term stay as in some where you can stay and call home for the next 5 years or 10 years or something. I mean I think service apartments are still more geared towards hospitality. Private rented sector apartments, these are apartments for rent. They may or may not come with service. There will be amenities designed in there. but they could be just standard apartments. They could come fitted out or not fitted out. It depends on the country and on the tenants' requirements. But usually they do come fitted out. So, I would see those more as apartments for rent like a condo for rent versus a service apartment that will come full-fledged like a hotel, right, I mean with all the necessary amenities and services. Many PRS don't have it. I mean they're just apartments for rent but when we buy into PRS or when we develop it ourselves, we ensure that we give the facilities that they would want. So, these PRS apartment complexes would not be much different from a condo that you see in Singapore, many of them would have all the full-fledged club house, pool table room, entertainment, cinema, AV room, all that, so that there's a lot of opportunity for communal gatherings. So, I think I would see PRS is more like a condo, but except for rent, yes, whereas the service apartment is really more geared towards hospitality and welcoming overseas guests. And yes, in a way, also, I see that the PRS tends to target more in terms of local -- locals who will stay there versus service apartments tend to be geared towards foreigners. Absolutely. I think absolutely. I think now having said that, it depends how the rents are priced. We all know how residential rents have performed in the last year. They've gone up a tremendous amount, especially for landed property. [indiscernible] will be smiling here because she covers the GCB sector very well, but we've all heard about all these record rents, right? So I think PRS would certainly work well here depending on how the rents are priced. But I think Singaporeans would certainly relish having the opportunity to have rental apartments rather than, again, what I mentioned earlier, having to [ forego ] a big down payment and take on a mortgage to be able to own a property, at least not at that stage when, let's say, someone has just graduated and they want to have their own space, move out from their parents place. I think at that stage, not many people are well equipped to go and buy an apartment.

Okay. Maybe I will take Brandon.

Brandon from Citi. Just 3 questions. The first one is, I think, given how well the hospitality sector is doing this year, do you think we could see another kind of Millennium Hilton Seoul divestment? That's my first one. The second question would be could we be looking at some form of share buyback this year? I think you sort of talked about it earlier, I think somewhere last year that perhaps buying a platform is a better alternative to using capital. But I think I just want to see whether you have changed that? The third one is on -- can you share more details on why you're looking at St Katharine Docks if possible?

In terms of divestment, yes, we hope to see more divestments this year, Brandon. But having said that, obviously, it's very hard to hit something of the magnitude of Millennium Hilton Seoul, that was really a very, very big windfall and Kudos, to our Chairman. I mean, years ago for having acquired the assets decades ago, in fact. So I mean, we will look towards again, further divestments. But as I mentioned earlier, I think it's got to be something that's looked at in tandem with acquisitions, right? No point I go and sell everything I have and end up with a lot of cash and have nothing to buy, right? I've got to put this money to good work, having cash that sits on the balance sheet. We have enough already for rainy day, I mean, over $2 billion. Having more cash than the balance sheet without being put to good use and driving our return on equity is also not a good use of not an efficient capital management. So, I think it's something that we'll continue to look at. In terms of share buyback, good news, I guess to share everyone, our Chairman and our Board has approved a share buyback plan. So, whether it gets put into action depends on the share price. Obviously, the share buyback plan is tied into a certain -- the predetermined share price. So, we will only acquire at or below that share price. And so it depends -- I mean, obviously, on one hand, I hope it never hits that share price, so maybe we don't have to start our buyback. But if it does, I think we're ready to put things in motion. Lastly, St Katharine Docks, again, because we're in the midst of advanced due diligence and I don't want to so-called share too many details on this. But when you see the metrics after we complete if we -- if and when we complete this deal and share the metrics, I think you will understand why we looked at it. And on top of that, I mean, this acquisition, as it's been widely reported in press is circa GBP400 million. So, I think that also gives us the right scale. I mean in the past, as you remember, when we tried to do the IPO, our 2 assets added together have a value of -- our 2 U.K. office assets and together a value of about GBP600 million or thereabouts and probably still a bit too small, I think to do an IPO or even a fund, especially if you want to attract strong institutional investors. Now with this new acquisition, it brings our so-called assets under management to around GBP1 billion. And I think we're well poised then, I think, to reevaluate again what we want to do, be it a public format like a REIT IPO or a private format like a private equity fund.

Maybe I'll just take one more question from the webcast audience. Tan Xuan from Goldman Sachs. She was asking whether you can talk a little bit about the capital deployment in 2023? And where do you see the opportunities, whether in Singapore or overseas?

Yes, unfortunately, as you know, we get this question every analyst briefing. And I again have to disappoint you, we do not share our capital deployment. We have full-fledged plans internally that I think management has presented the Board as well as our capital deployment, our allocation via geography and asset class, but it's something we do not share publicly. These are our own internal targets and aspirations. But in terms of -- what was the second part of the question?

In terms of asset class, whether in Singapore, overseas.

In terms of opportunities, I think, again, it's what you see me present earlier. So, we will continue to look at resi development sites in Singapore to replenish our land bank. Overseas, we have also, over the last 5 years, been steadily acquiring new residential development sites. So build to sell, build to rent. I think we've been acquiring this. We've been acquiring overseas office assets. And of course, we have also branched out into the living sector in the last few years, and that will be a key for us. And I think while we will continue to strengthen our local presence, but overseas is very, very important. I do believe that for our overseas investments, we can drive stronger returns. So certainly, overseas needs to make up a larger element of CDL's portfolio.

Okay. Yes. Maybe I'll ask Derek.

Derek from DBS. I just have one question regarding the hotel operations. Perhaps could you share what's the core EBITDA margin, excluding the gain from divestment of Millennium Hilton Seoul? And perhaps where do you see EBITDA margins heading going forward?

Maybe I can address the margin one first. I think we do have some slide on the GOP margin. I think we do not mention EBITDA margins, but -- and of course, every region is different. But generally, of course, the margins have been better than pre-COVID. I think part of the reason is I think what we shared earlier, we have been trying to optimize technology more because there's a need to, right? I think there's a shortage of talent, not just in hotel, but across many different industries. So, I think we have had no choice. We have been utilizing that to kind of become more efficient as well. So -- but I do think that as demand increases, we will, of course, naturally have to increase their workforce as well. So, I think the margins may trend back towards 2019, but not -- I think we are aiming, of course, to be more efficient than where we were back then. Sorry. Do you have the number for me? Yes. No, the one about the shipping out the gains from the divestments.

Looking at EBITDA margins excluding divestment gains, right? To be very frank, that's not the most meaningful comparison, but it's in the range of about 15%. But using ES analysis, actually, for hotels, operations, GOP margin is actually our key indicator because below GOP margins, there's actually, like insurance, union costs, et cetera, those are kind of fixed costs. So, we typically only look at GOP margins, EBITDA margins might move because the bulk of the fixed cost are stagnant.

Yes. Okay. Okay. I'm going to take one last question, and then I got to round up. So Krishna, maybe you can go.

Just a couple of quick questions. Just on the rest of U.S., I heard that you said things are getting a bit softer. So, maybe can you just give a quick color on how many rooms you have or what percentage of assets in rest of U.S. hotels? And then the last general question, are you willing to kind of give a guidance on any kind of ROE numbers that you want to stick with or you want to achieve maybe the next 3 years or so?

Yes. I mean, just as a rough guide, I think 1/3 of our portfolio is in the U.S. in terms of the contribution ideally. But in the past years, of course, I think it's been less so. U.S. has been a bit more challenging, especially in terms of the GOP margins. So, when I say regional U.S., excluding New York, we only have about, I think, 13 or 14 hotels that are in the regional U.S. Not all of them, of course, are facing a bit of softness in the market. But I think -- I don't think the impact will be that material, and it will be covered by the other regions that we're seeing a lot of upside on.

So with regards to your question on ROE, I think it's the same, the so-called interim target because that's obviously not where we should end up and be pleased to it. But the interim target, as I mentioned, to the crowd quite a while back is 8%. I think we've been trying to drive towards 8%. I think if you look back the last 10 years or so, I mean, CDL's ROE has traditionally trended within the 5% to 5.5% range. So certainly, we've got some work to do to shift us towards 8%. And once we get there from then on, we can start to aim higher.

Okay. Thank you very much for your questions. It's been a very exciting morning, but I'm standing between you and lunch. I just want to give an opportunity for the panel, especially Mr. Kwek Leng Beng to give us some closing remarks. Mr. Kwek, please?

I just want to say a few things. In the first place, it is not possible to say that the hospitality business is bad. I predicted years ago, it would be good. It will still be good. I always go against the trend. If everybody wants to go into this, I will get out. If nobody wants to go in, I will go in. This is my philosophy. I've done it for years and it has proven a good result. For your information, I'm the biggest in New Zealand. Nobody ever dreamed of North Island and South Island, but I am the biggest in New Zealand. Now today, of course, they got flats everywhere. But for the time being, it is not frightening. I also want you to bear in mind, the interest rate cannot go on forever up, up all the time. This is -- doesn't make sense. Today, it's up, tomorrow, it come down. How far more can we see it going up? I don't think so. It can't done forever. So, I'd like you to bear in mind that today, we have technology, robots and so on. If you go to my M Social, you can see the robot there. This is new technology. You have not seen before. I urge you to go and have a look. You'll be so pleased with the results that I have today. Thank you very much. I'm very happy all of you are here. I want to thank you once again and may God bless you.

Thank you very much, Chairman. So, on that very positive note, we look forward to the New Year ahead. And we just want to say thank you to everyone that joined us on webcast and also at the M Hotel. Thank you very much, and we hope to see you soon.