Link Real Estate Investment Trust (823) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to Link's Result Briefing for First Half Financial year 2021/'22. I'm Sylvia, General Manager of the Investor Relations team. Today, we are pleased to have our CEO, Mr. George Hongchoy; CFO, Mr. Kok Siong Ng who is joining us from Shanghai; and CSO, Mr. Eric Yau, to give us an interim results update and management strategy going forward. [Operator Instructions] I'll now turn it over to Eric, our CSO. Eric, please.

Thank you, Sylvia, and thank you, everyone, for joining us today. I'm pleased to have George and K.S. with me today. And I'll start with key highlights for the last 6 months and our progress on Vision 2025. K.S., in Shanghai, will cover our operational updates across our portfolio and also key items in our financial position. And George will finally wrap up with our portfolio management strategy and details on our recent acquisitions. For the first half of 2021/'22, we saw operations have largely resumed to normal. With COVID-19 impact, we're actually subsided. This is well reflected in our results. Revenue and NPI recorded a remarkable increase of 10.4% and 8.8% year-on-year, respectively, including the HKD 0.07 discretionary distribution. Distribution for the period amounted to HKD 1.5959 per unit, representing a double-digit increase of 12.7% year-on-year. NAV per unit rose by 2.3% to HKD 77.99, due to newly acquired assets and adjustments in investment property valuation. Leasing progress has been healthy, and Hong Kong Retail occupancy hit a record high of 97.5%. Mainland retail occupancy excluding the newly acquired Happy Valley Shopping Centre, which is undergoing AE planning, also reached over 96%. Demand for quality office space remains solid. Thus, all our office assets occupancies remained steady in the last 6 months. With the improving business environment, both Hong Kong and Mainland retail portfolios recorded positive reversion rates at 3.4% and 12.1%, respectively. Rental collection rates were close to 100% across our portfolio. We have made several acquisitions in these few months. George will give more color to the strategy and various transactions in his strategic updates part, including in our recent acquisition, of 75% interest in 2 logistics assets in Guangdong Province, 50% interest in 3 retail properties in Sydney CBD and 2 buildings in Hong Kong with car park/car service centres, and godown. A total value of our asset portfolio together has reached HKD 221 billion. Our investments now are diversified across regions and sectors with the resilient Hong Kong portfolio remain as our core at around 78%, while Mainland China at around 17% and overseas at around 5%. We value our stakeholders and endeavor to co-create solutions and share values for the benefit of all, anchored by our business as mutual ethos, our portfolio performance has been extraordinarily resilient throughout the last 2 years. Our aspirations in pursuing our medium-term growth target, Vision 2025 remain intact. We believe this holistic framework will be a critical success factor in delivering our brand promise. We link people to a brighter future and materializing our long-term growth targets in a sustainable manner. We continue to progress towards Vision 2025 across the 3 pillars. On portfolio growth, our organic portfolio continued to grow sustainably with high occupancy and productivity across different asset types and geographies. Inorganically, our newly acquired Qibao Vanke Plaza recorded a remarkable reversion of 31.3%. And we're also tapping into the fast-growing logistics sector by acquiring 75% interest in 2 warehouses and co-investing with an experienced partner. We also added new inorganic drivers in November, including the acquisition of 50% interest in 3 rare iconic retail assets in Sydney CBD and 2 buildings with carpark/car services centre and godown in Hong Kong to further diversify our portfolio. All these business drivers are well supported by our financial strength. Credit ratings from the 3 agencies all remain at A levels with stable outlook. We pride ourselves in fostering a strong culture and growing a team of talented linkers with drive and aspirations. On culture of excellence, we launched a series of programs to encourage linkers and the community around us to receive vaccination. To date, over 70% of our staff are vaccinated. To increase our portfolio productivity and better manage our growing presence in Mainland, our Shanghai Regional Centre was strengthened by reorganization and talent acquisition. These efforts continue to be recognized in the industry through various HR awards, including the 2021 Asia Pacific Stevie Awards and Best Companies to Work For in Asia 2021. Social connectivity and creating flourishing communities are at the heart of Link and contribute to the ongoing sustainability of our business. Following our announcement of Net Zero 2035 target, we have further defined 2 interim targets to chart our progress towards achieving this ambitious goal. We aim to reduce our electricity consumption by 5% and carbon intensity by 25% across our portfolio by 2025. To create extraordinary experiences and enhanced social bonding, we leveraged our assets and expertise to incorporate more community space and experiential venues. This includes the recent transformation of TKO Spot's rooftop to a free sports ground open to public. We also welcomed Gerontech Education and Rental Service Centre in Yu Chui Shopping Centre in Sha Tin. This centre serves as a hub for our stakeholders to co-create solutions and facilitate the elderly to age at home. I will now pass on to K.S. to talk about operational updates. K.S., thanks.

Thank you, Eric. Retail sentiment in Hong Kong improved in the first half as we recover from the pandemic. Total revenue of our Hong Kong Retail portfolio increased by 6.2% year-on-year and occupancy rate reached historical high of 97.5%. Reversion rate also went back to a mount positive level of 3.4%. Average monthly unit rent was HKD 62.4 per square foot. Leasing progress in the key site has been encouraging as committed occupancy increased to 93.8%. Hong Kong tenant sales have largely recovered to pre-pandemic 2019 levels, benefiting from government's consumption voucher scheme and our effective marketing. Overall tenant sales growth has been resilient and increased by 8.9%. With restaurant business returning to normal, F&B sales recovered significantly and surged 25.7% year-on-year, while general retail sales also increased by 13.4%. Supermarket and foodstuff sales recorded an 8.6% drop due to switching out to F&B dining. Occupancy cost of the overall portfolio has further normalized to 13% as tenant sales recovered during the period. As business and leisure activities resume, total car park revenue recorded a year-on-year increase of 12.2%. In particular, hourly parking recovered significantly with the lifting of COVID-19 restrictions. Monthly car park ticket sales also increased slightly. Income per space per month surged 12% year-on-year to slightly over HKD 3,000, as visitations to malls as well as hourly parking tariffs increased. Average valuation per parking space also went up by 4% to HKD 581,000 per space compared to March last year. Mainland portfolio performance has also been stable. The increase in revenue was mainly due to new income from Happy Valley Shopping Mall with the overall rental reversion at 12.1%. Average occupancy has declined to 91.5% due to occupancy rate of Happy Valley as we are planning for asset enhancement. Excluding Happy Valley, average occupancy was 96.2%. Our Shanghai office market is competitive due to new supply. Our occupancy maintained at 96.7%. Link Square's rental reversion recorded negative 12.1%, but it only relates to around 8% of the total leasable area. Our stable premium overseas offices serve to diversify and smoothen our income when the retail market suffered last year. These quality assets provide strong occupancy, excellent tenant profile with long WALE and built-in rental uplifts. Quality office assets with good defensive attributes fit well into our diversification strategy. We are refreshing 100 Market Street lobby entrance with a small enhancement to up keep its premium status. While Link stays acquisitive to expand the portfolio, we are able to maintain healthy debt metrics as we continue to adopt a prudent capital management strategy. We managed to further compress the average borrowing cost to 2.3% for the first half of this financial year, which is 54 basis points lower than the same period of the previous year. The liquidity remained high at HKD 9.4 billion, and 63% of our total debt was at fixed rates. Our gearing was at 19.5% and we owe to 23.6% after taking into account the announced acquisitions. Debt maturities are well staggered over the coming 17 years with an average maturity of 3.2 years. Our credit ratings remained strong and stable. Taking advantage of the low interest rate environment during the period, we have secured a number of new financing in the bond and loan markets. Since April, we have issued 4 CNH private placements totaling CNH 1.7 billion to fund our new investments in Mainland. We have also issued a total of HKD 1.6 billion of private placements and arranged a total of HKD 5.5 billion of bank loans at competitive rates, of which HKD 2 billion are sustainability-linked loans. Valuation of investment properties increased by 3.8% compared to the end of March 2021. There was no adjustment in cap rates for Hong Kong and Mainland portfolios. The value of our Hong Kong Retail properties in car parks increased due to increase in NPI. The increase in our Mainland properties was mainly due to newly acquired assets. Excluding the translation difference and on a like-for-like basis, value of our Mainland properties recorded an increase of 0.8% in RMB terms. I'll now pass to George to talk about strategic updates. Thank you.

Thank you, K.S. We are devoted to actively manage our portfolio and construct a highly resilient and productive platform. Organically, we have been focusing on helping our tenants strive and recover from the pandemic. Regarding the organic drivers, we continue our prudent approach in assessing a range of opportunities to further solidify our platform and achieve Vision 2025 growth targets. We have revised our management guidance to reflect the opportunities available in Hong Kong, Mainland top-tier cities, and the surrounding delta areas and selected overseas markets. We will consider assets that fit our growth strategy and expand our platform in a balanced and sustainable manner. We have been actively managing our portfolio to improve its productivity and resilience, and this includes applying both asset management and enhancement initiatives. Active asset management includes introducing new retail concepts, organizing marketing and promotion campaigns, refreshing retail experiences and ensuring community care elements as our properties serve the vast public. As for asset enhancement, despite returns on investment for our recent enhancement projects, we're impacted by dampened leasing market during the pandemic. We will continue to identify more opportunities. The enhancement of Link CentralWalk is at the final stage and its target completion is by the end of this year. We are still finalizing the asset plan -- enhancement plan for Happy Valley Shopping Mall. To meet our strategic needs, maintaining ample liquidity and strong capital base is our priority. Our gearing is at a comfortable level with diverse funding sources, including distribution reinvestment scheme to support portfolio growth. Our 3 A credit ratings are underpinned by our strong property portfolio and stable income. Such financial resilience allowed us to enjoy low funding costs. While we continue to diversify geographically, we are prudently managing our foreign exchange exposure. Forward contracts were arranged to fix distributable income from offshore properties to Hong Kong dollars. We are committed to 100% pay out since IPO, and our commitment on the HKD 0.14 per unit discretionary distribution remained intact for this financial year 2021/2022. While we have bought back 1.3 million units in the first half, we will consider further buyback and other appropriate ways to return capital to unitholders. We continue to seek core-plus and value-add inorganic drivers to continue our growth trajectory. Our 50% interest in Shanghai Qibao Vanke Plaza and 100% interest in Guangzhou Happy Valley Shopping Mall offer upside potential through upcoming lease expiry and an enhancement program currently under planning. A few days ago, we announced the acquisition of 50% stake in 3 iconic retail properties at an aggregate consideration of AUD 538.2 million. This acquisition is a rare opportunity as the portfolio is offered for sale publicly for the first time. Located at the heart of Sydney CBD, the 3 shopping malls are occupied by leading brands and appeal to both local and international shoppers. With excellent natural footfall, these 3 malls offer strong productivity and their moving annual turnover ranks among the top in Australia. Coupled with the strategic partnership with Vicinity, a leading retail asset manager in Australia, we believe this is a desirable and prudent entry point into Australian retail. We have also taken a small and prudent step in further diversifying our portfolio and adding exposure in a fast-growing asset class. Our maiden entry into logistics is through the acquisition of 75% interest in 2 recently developed modern warehouses at RMB 754 million, which was completed in October. There are 2 story warehouses located in Dongguan and Foshan and Guangdong Province offer quality specifications, excellent connectivity to transport network, and they were leased to well-known tenants in retail, third-party logistics, e-commerce, grocery and consumer tenants. The assets own excellent attributes that complement our current portfolio and fit our portfolio management strategy. The 2 recently developed warehouses -- our own strategic location in the Greater Bay Area and service one of the key logistic hubs among top-tier cities. We will partner with an experienced key player, First Priority Group, to leverage on its expertise in the logistics field with potential further collaboration opportunity. With this immediately yielding nature, a small size of less than 1% of our portfolio, this addition is a relatively low-risk entry to a new sector. They are both fully occupied by quality tenants and this ensures income quality and security. This investment enable us to tap into the fast-growing logistics market. They're fueled by growth in retail needs and solid macro fundamentals. It helps us to track our growth trajectory and serve our diversification strategy. The investment is transacted at about 4% discount to the valuation and this is going to be fully funded by new debt facilities. As an immediately yield accretive transaction, the assets will contribute to Link's cash flow and distributable income. Following this acquisition, we are seeking other similar assets and have higher experienced professionals in the industry to ensure that we can add value to these new assets. We are also happy to announce another deal, which is in Hong Kong this time, and we are acquiring 2 mixed-use buildings with car park/car service centre and godown in Hong Kong and Taiwan. The 2 buildings were completed in 1980s with unique specifications to serve tenants' requirements. The agreed property value totaled HKD 5.8 billion, which represents a 4% discount to their valuation. These are rare commercial assets located in urban areas. The Hong Kong property is just 3 minutes walk from MTR station and Taiwan, probably, is next to the seafront at the eastern end of the Hong Kong Island. Both assets have long lease arrangement and with annual rental increment secured. And they are leased to a blue-chip tenant that is a long establishment in Hong Kong. Supported by tight supply of godown and car park spaces, the market outlook for the Hong Kong and Taiwan assets will be very positive. This shows the locations in Hong Kong amongst a very densely populated area in the Kowloon side, and Taiwan in the eastern tip of the Hong Kong Island. This acquisition, again, will be fully funded by our own cash resources and debt facilities, over assets income generating from completion, which will provide us with stable and quality income stream, and we will hold them as long-term investment, and they have further helped us to diversify our portfolio exposure in terms of asset type and tenant base. For our Board, we have welcomed our newest Director, Jenny Gu, who joined us in August 2021. She brings with her a wealth of expertise in online and offline retail, including her experience currently as the CEO of Richemont, China and earlier, as the CEO of Nike, China. Finally, the dates for payment of interim distribution and scrip dividend -- scrip election are set out here for your information. We now open the floor for any questions. Thank you.

Thank you, management, for the summary and briefing. [Operator Instructions] Our first question comes from Mark Leung from UBS. It's regarding the Hong Kong Retail. Management, can you give Hong Kong Retail rental reversion guidance for second half and also for next year? Management, please?

Sure. Thanks, Mark, for your question. The first half rental reversion is 3-point-something percent in Hong Kong, which we are very encouraged with, with a positive reversion given the rather difficult operating environment in the last 2 years in Hong Kong. And as I have explained to many buy and sell-side analysts in recent months, the leases that we are reverting right now, with our typical 3-year lease tenure were leases that expired and were negotiated in 2018/'19, which was before COVID and before the social unrest period. So at that point, the lease terms were quite good and the rental levels were quite high. So to be able to still maintain a low single-digit reversion in the first half, we think it's already a pretty difficult feat. And we do expect full year to be around the same level to be low single-digit reversions, at best. But so far, we are seeing -- and we are encouraged by the level of occupancy that we see. Obviously, at 97.5%, it's as high as we've ever had. But reversion wise, it will be a bit tough to be any higher than that. And I do want to remind you that even though the average is 3-something percent, behind that average is a huge range of very positive, strong and to some, very negative weak reversions. But overall, all in all, we managed to achieve a very small positive reversion. And we expect that to last until the end of the year -- financial year.

The next question comes from Peter of Goldman Sachs. He would like to ask about the recent Hong Kong acquisition. So what is the rationale of acquired car park, and what is the NPI yield? Will it be similar to the gross yield? And also, is there any rental uplift potential, given your lease back to [ Zhongfu ]? Management, please?

We have continued to look at diversifying our portfolio. Hong Kong is our home base, so we're always very keen to look at any opportunities in Hong Kong. This particular acquisition is subject to a sale and leaseback arrangement. So there's very little management -- property management cost for us because the entire building -- both buildings are leased back to [ Zhongfu ]. So we think that this will allow us to carry quite a good margin from the initial yield -- with the funding that we are currently arranging and there is an agreed annual increment to the lease to rent as well.

Thank you, management. There is another related question from Raymond of CIMB. So you think this is a surprise for -- to see Link acquire Hong Kong assets? And also, should we expect Link to buy more Hong Kong asset? And what kind of assets are we looking for? Management, please.

As I said, we are very keen on investing in Hong Kong to the extent that the opportunity makes sense for us. This is -- shouldn't be a surprise to you. This is our home, and we want to continue to invest more. We have put in a bid to try and get the Caroline Hill development site. We failed in that incident. We continue to look at other opportunity, whether they are completed operating assets or development opportunities. Our focus is obviously those few asset type that we already invested in, office, retail, et cetera. And now adding logistics warehouses to the asset mix, but if there are opportunities in Hong Kong, we always give it a priority.

The next question comes from John from UBS, and it's regarding our recent acquisition of logistics assets. So he wants to know who is the seller and who is the partner. And also who is going to manage the asset. And will Link acquire more logistics assets? If yes, what's the target percentage of logistics in our portfolio? Management, please.

K.S.?

If I could answer this, in a way, starting from the partner. I think first property is a significant player established almost a decade ago in the Guangdong area. And we got to know them, and we understood that they wanted to sell. And as we went through [ ideally ] meeting the team, we are very comfortable with who they are, the quality, as well as the underlying characteristics of the warehouses as well as their leases. So we took 75% of them. We kept 25%. They remain as manager. And our hope and view is that we would like to partner them to do more, especially given that they have great access in terms of stakeholder relationships in the South. What is our allocation? I don't think we have set a level -- of what that level. I think what we are trying to do here is to slowly enter into a sector that we have explored for a long time. At some point, it was a bit too pricey. And I think this is one of those deals that we feel comfortable with the place of where the assets are, comfortable with the partner, comfortable with the pricing and comfortable with the product that we have reviewed. So I think it's still early days. It's [indiscernible], so just watch this phase, and we hope to do more with this partner.

I will supplement with 2 points. One is that we look at how we allocate our capital for inorganic growth without too much priority on any particular geography or asset type, we're really comparing different opportunities that are in front of us at any particular time and try to find the best investment. So as K.S. said, these 2 assets are fully let, giving us a very good yield. We have a good partner and we have no development risk, no leasing risk unlike some of the other opportunities in the logistic view. So it's a good start for us to learn and invest. We have also hired a number of people who have experience in this area. And we hope that as we build our own management capability that we will continue to do more, but there's no particular percentage target at this stage.

Thank you, George. Thank you, K.S. The other question comes from Peter from Goldman Sachs regarding the capital management. How would Link finance the recent 3 acquisitions? And what is the cost of that? Will Link consider asset disposal to finance the acquisitions? Management, please.

K.S., where's the money?

In Shanghai. We are funding the recent acquisitions or through gearing through debt. And I think in the presentation, we've articulated at post, all the announced acquisitions gearing accreted to just below the mid-20s. And I think on top of bonds, bank loans and all, clearly, we have benefited from investor confidence in the dividend reinvestment scheme. And so clearly, with the outlook being a bit more stable, we are comfortable that any valuation downside risks has been -- will be mitigated. I think disposal, leave it to George, but I think it's time to pass our portfolio discipline. First ranking, [indiscernible] portfolio is that it's time to refresh and then we look for growth in capital gains in other new acquisitions.

There's no immediate plan for any disposal for our capital recycling. Currently, there are enough financing opportunities, allowing us to fund these recent acquisitions.

Thank you, George. Thank you, K.S. And the other question is also regarding capital management. So will Link consider for more share buyback program? Thank you.

It's formal share buyback program. I mean -- what I meant in my view as formal is that we are formal mandated to protect the share price, protected share value in the event like last half year, where we see trading down to a discount that we think is not relevant to the value that we think it is. So I think there is a formal understanding management and board that we have that we do to buy back to protect the value. We are not announcing any formal allocation of funds because in the past, those practices, when we dispose assets with the gain, we were trying to return capital in a very formal way, whether it's through a special dividend or through buyback.

The other question comes from Cusson of JPMorgan. It's regarding our strategy. So what do management think the growth composition going forward between organic and inorganic? And what's the target gearing after these acquisitions?

Thank you, Cusson. The Vision 2025 target to grow our portfolio in high single digit is an overall target. There are times when we happen to be more active in acquisition, which obviously in the last few weeks, we have been. So it would be more heavily weighted on the inorganic drivers for -- to achieve Vision 2025. At times, when the organic portfolio is difficult, such as over the last 1.5 years, during COVID, then it may be less weighted on the organic part. I hate to say -- it's never going to be a linear parallel line between these 2 organic and inorganic drivers and happening all at the same time. There are times when -- as for all acquisitions that Link has undertaken since, we have done the first one in Hong Kong [indiscernible] Plaza in 2011. All acquisitions will be necessarily opportunistic. I guess what management, all of us here are endeavoring to do is to ensure that when the right opportunity comes, we are well equipped to take it on. We will be doing our shareholders, our unitholders a disfavor if a right deal comes, but either because we don't have the people to do it or we don't have the capital to do it or we don't have the capacity to do it. I guess, we have been working very hard, as you can tell, with our inorganic growth drivers, completing -- negotiating several deals in all in one go and announcing within the last 72 hours. But this is a testament to how we have been seeing and our commitment to deliver Vision 2025 to you as promised. So in summary, it's hard to say how it's split, because how that is split will differ from different periods and different times. But we look at that holistically as a goal, delivering both organic and inorganic growth to achieve Vision 2025, a high single-digit growth in our portfolio.

There is a question from [ Ken Yang ] about the target gearing after the recent acquisitions. Management, please.

There's no target -- I mean there's no target gearing after the announced acquisitions. We will be nearing to about 24%, 25% LTV. And then of course, potentially, with dividend reinvestment, you'll start to see things coming down again. And again, going down the road to valuation, hopefully, we start to see valuation uptick and then value gearing comes down. We don't really have a view on the sense of the target gearing. And I think the target gearing is a feeling of the comfort and confidence we feel internally, when we look at how we have stacked our maturity profile, where are we in terms of [ ISR ] and the outlook of our business. And then in terms of the confidence with the market as we engage the bond market, the bank market, the credit agencies, I think so far, we still see very strong support all the way to reverse inquiries on private placements. And that's why it's remained a strong investment-grade credit issuer. My sense is that we are comfortable at these mid-20s, stretching slightly towards 30, my sense is we are still able to manage our balance sheet.

Thank you, K.S. Due to time constraint, we are going to take the last few questions. So the other question comes from Will from CIMB. It's about our asset allocation. So after the recent Hong Kong acquisition on car park, the Hong Kong portfolio [indiscernible] location goes back to 78%. So do we still have our target of 60% to 70% on Hong Kong? And how to achieve this in 2025? Management, please.

That percentage in Hong Kong will naturally reduce as we add more from other countries. So as the -- I get bigger and if we don't add to Hong Kong, that percentage will drop and that just will be done naturally. So that's basically -- and our guidance in terms of those percentage remain as we have reported.

And the other question comes from Karl Choi of BAML. So in more diversification moves. So what is the management's response to investors concern that there is no clear functional or geographic focus, and that may lead to a valuation derating? Management, please.

Thank you, Karl. The intention to pursue Vision 2025 was announced and communicated, as you all know, several years ago. So this intention to look at different geographies. And we highlighted it's Hong Kong, Mainland China, 4 first-tier cities and the 4 overseas markets as well as asset classes, not just retail, office, but also logistics. This is something that we have been communicating to the market. So we just -- we are and we have been actively pursuing to act on it and progress on it. We believe every time we enter something new, there's always the question about, "Oh, do we have the expertise, do we have the know-how to do it?" And I guess, we try to prove time and time and again that we do, and we will do it prudently -- do it selectively. And given our status as a REIT, where the distribution to our unitholders are of prime importance in addition to achieving Vision 2025. So how we have been adopting this expansion strategy, diversification strategy, whether it's through partnership, we identified good local partners and to share in the expertise and to tap into their expertise, do it in maybe a small, measured secure manner. For instance, logistics, where we now acquired 2 small assets fully leased and with a great partner. And so as we build up our expertise, as we build up our coverage, we will gradually grow and move towards Vision 2025. This has always been the Link strategy and whether we entered into Mainland China in 2015, whether we entered into the office space in 2015, whether we entered into development at the end of 2015 and now -- then of course, overseas in Australia and U.K. as well. So we haven't really departed much from it, but it's just a continuation of the strategy.

Just supplement by perhaps running through what we have done in China when we acquired one asset at a time, we in-source a team that has been running those assets for some time into part of the Link team. Only 1.5 years, 2 years ago, when we started to see a critical mass building up, we've decided to set up a China head office in Shanghai, now K.S. is operating from there, at least a few months. And then we build the management structure there. We have hired local people. So apart from the asset management team, we now have accountants, lawyers, project team members, et cetera, in our Shanghai head office. And with the expanding critical mass, we are going to make sure that we have the system to monitor -- to manage these assets locally, but also from head office, we have a clear line of sight. We will do the same in other countries when there is a critical mass. In new asset type, we have -- when we got into office in Hong Kong [indiscernible] but also hired people who know office leasing. With logistics, as I mentioned, apart from the partner that will help us to manage the 2 assets, we have hired senior people to join our team based in Shanghai to help us look for new assets and to do the underwriting and then management afterwards. In Australia, we've now 4 assets and the plan to continue to look for more as we look at all the different other markets, you wouldn't be surprised that just in the last few days after the announcement, how many people, through LinkedIn or e-mail contacted us about joining us and you'll probably see some hiring to build our team in Australia at some point and then we'll do the same in other places. So the expertise are growing, but we are quite prudent in doing that. We don't want to do it too early in advance. It's always a chicken and egg situation that we're trying to manage. But so far, I think China is a good example to see how we have steadily built up that platform so that we can manage the asset properly.

Thank you, George. Thank you, Eric. So here comes to our last question. Does management think growth from the Hong Kong recovery and also the recent acquisitions can more than offset the absence of the discretionary distribution in next financial year? Or we should see a sharp deceleration in DPU growth? Management, please.

K.S.?

I think we are confident that we are not going to break the record with the acquisitions. And I think in a way, where we are standing here, I think Hong Kong has indeed come out and bottom out in terms of the [indiscernible] days in the past 2 to 3 years. I don't have more to add, otherwise, I think Eric will take exception to giving forecasts.

We are obviously adding inorganically to help and China and Hong Kong is doing really well.

Thank you management for answering all these questions. If you have further questions, please feel free to reach out to the IR team. And thanks a lot for joining us today, and thanks for your support. We do hope to meet you soon. Thank you, and goodbye.

Thank you very much.

Thank you. Bye-bye.

Bye-bye.