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

[Presentation] I hope you like the video. Now I would like to invite our senior management presenters to go on to the stage to take a group photo, George, K.S., and Greg, please? Thank you, gentlemen. I'm Sylvia, General Manager of Investor Relations. Today, we are very pleased to have our CEO, Mr. George Hongchoy; CFO, Mr. Kok Siong Ng; COO, ex Mainland China, Mr. Gregory Chubb, here to give us an update on the annual results and also the strategic plan in the future. Without further ado, I will now to hand over the floor to George, our CEO. George, please.

Thank you, Sylvia, and thank you, everyone, for joining us today. I'm pleased to have K.S. and Greg with me here. I will start with the market outlook. Greg will then present operational updates across our portfolio. K.S. will talk about our capital management strategy, and then I'll wrap up to talk about our strategy and priorities going forward, then we'll go to Q&A after that. [ Menkezen ], excellent track record and on the ground experience as a portfolio manager, leveraging our expertise in real estate space, and we have achieved a robust set of results in 2022, '23. I would like to highlight a few key themes for this year. First, we are on the path of a firm post-COVID recovery. We have pivoted our business strategy to cater for the changing market conditions and emerge from the pandemic in a more competitive and resilient position than ever before. Second, we have strengthened our capital base to navigate interest rate headwinds by being proactive and strategic on our capital management front, we created a solid foundation for driving long-term growth. Third, our diversification strategy, drives resilient earnings and valuation helps create stable return and value for our unitholders and offer protection during different phase of the economic cycle, further reinforcing our competitive edge, one being business resilience. Finally, Link 3.0, growing our asset lighter business and capital partnership. During this year, we drove portfolio diversification and enhanced portfolio resilience by expanding into Australia and Singapore. In the longer term, we want to grow the management fee income to a certain level, which is expected to boost our profitability and distributable income. We are still in a situation where uncertainty in the financial market, geoeconomic fragmentation, ongoing trade dispute, and supply chain disruption still weigh on the market outlook and induce significant risk. Nonetheless, we believe that APAC will continue to be viewed as a safe investment destination. To counter these challenges, we will continue to drive portfolio diversification by entering different parts of the APAC region, further smoothening returns over economic cycles. By deploying these strategies, Link REIT aim to create stability and increase returns while mitigating risk in the fast-changing global markets. As for WHO and the global health emergency declaration for COVID, countries worldwide are gradually returning to a normalcy. This slide showcase market prospects and opportunities as we usher into the post-pandemic era. Border travel between Hong Kong and Mainland China has resumed. And with the tepid return of tourists along with the transparent and liquid nature of the Hong Kong market, the market presents a stable growth outlook. As for Mainland China, the continued rise in consumption, expansion of infrastructure and technological advances have created enormous growth potential in leasing demand. Despite slowing growth, it remains one of the region's fastest-growing markets. Singapore has long been a hub of investment underscored by a low unemployment rate and high disposable income, more corporates position Singapore as a regional hub, along with increasing flow of talent that have made it an ideal location for investors looking for long-term growth and stability. As for Australia, stable economic fundamentals drive real estate return, population growth, changing the demographics, infrastructure expansion present opportunities, particularly in urban centers. Tapping into a strength of these markets in APAC, Link REIT is in a solid position to leverage our expertise in managing assets to increase our presence and benefit from economy of scales. All right. Let me turn over to Greg to go through the operational update.

Great. Thanks, George, and thank you, everybody, for joining us this afternoon. So today, I'm very pleased to present our annual results for the financial year '22, '23, which demonstrates the strength of our diversified platform. Sustained revenue and NPI growth reflects the effectiveness of our corporate strategy of continuous focused asset management and diversification. Reporting year-on-year growth of 5.4% and 4.8%, respectively, which has been driven by new contributions from Australia retail and office, Mainland China logistics and the full year contribution from Hong Kong car service centers. Notwithstanding the challenges posed by the rising interest rate environment, our total distributable amount maintained a growth trajectory and edged up 0.6% of 1% year-on-year. The enlarged portfolio value is offset by the increased number of units on issue due to the 1 for 5 rights issue with NAV per unit decreasing by 4% year-on-year to HKD 73.98. Our Hong Kong portfolio continued to demonstrate its resilience amidst challenging macroeconomic conditions, underpinned by record high occupancy and robust rental reversions. Total revenue for our Hong Kong retail portfolio increased by 3.6% year-on-year. Portfolio occupancy reached a record high of 98% at the end of the financial year thanks to our well-positioned and high-quality nondiscretionary community commercial facilities and our strong asset management capabilities. Average monthly rent per unit edged up to HKD 63.80 per square foot. Average reversion rate maintained its growth momentum and increased 7.1% for the full year. As the market shows signs of recovery, retail consumption, consumer confidence and leasing demand have all gathered momentum. Given predictable footfall, easily accessible and strong connectivity of our community facilities, chain retailers continue to be attracted to our portfolio of assets. Over 670 new leases were signed in Hong Kong, over which 260 are new brands to our portfolio. Activity with fashion and specialty restaurants were the most active amongst top new leases signed, followed closely by learning institutions, light refreshments and bakery. Very pleasingly, the worst of the COVID pandemic is largely behind us. Our Hong Kong tenant sales now mostly exceed pre-pandemic or 2019 levels. Overall, tenant gross sales per square foot posted a very solid 6.2% year-on-year growth, thanks to improved consumer sentiment and the further relaxation of social distancing measures. Overall rent-to-sales ratio further reduced to a very sustainable 12.5%. The full reopening of the borders is expected to provide support of the improvement of economic conditions. The disbursement of the new round of consumption vouchers, along with the increased minimum wage will render further support for our tenant sales. Now revenue from our car parks and related business rose 12.3% year-on-year. The ongoing improvements in our monthly and hourly car parking income have resulted in both rental revenues exceeding pre-COVID levels. The full year contributions from our 2 new car park, car service centers and godown buildings in Hung Hom and Chai Wan have also boosted the revenue with a steady recurring income stream. Income per space per month registered a growth of 5.3% year-on-year to just under HKD 3,300 per month. And this is mainly attributable to the increment in car park tariffs and higher sales of hourly tickets. Average valuation per space increased 19.4% year-on-year to HKD 725,000 per space from both increased income and capitalization rate adjustments. Now just touching on China and our portfolio in Mainland China has experienced operational challenges due to the pandemic-driven turbulence for a large part of the financial year. Rental reversions were negative 3%. In view of the subdued market sentiment, Link provided RMB 48 million in rental concessions and property management fee waivers during the year to tenants who were heavily impacted by the pandemic. Nevertheless, retail and leasing sentiment rebounded strongly after Chinese New Year with our average occupancy improving significantly to 95.2%, and while our overall rental collection rate maintained a very healthy level at 97% for the year. We're confident that Mainland China's economic recovery is on track, and we're very well positioned. Our logistics portfolio is situated in major transport hubs. Our high-quality assets are poised to benefit from the visible economic recovery in China. Driven by the uptick in consumption, our logistics assets in China are 100% leased with a WALE of 1.7 years. Leases across our logistics portfolio provide a stable rental escalation term of 4% to 5%, serving as a natural hedge against inflation. Post balance date in April and May 2023, we completed the acquisitions of 2 logistics assets in Changshu, thereby expanding our logistics portfolio and creating additional room for growth. Given the sustained demand for logistics space, we believe the sector will continue to provide substantial potential for rental growth. Now moving on to Singapore. And the recent acquisition of our 2 retail assets, namely Jurong Point and Thomson Plaza was completed at the end of March. Together with the asset management arrangements for AMK Hub, marking our entry into the Singapore market and also our first step towards an asset lighter business. Our Singapore nondiscretionary retail portfolio with nearly full occupancy exhibits a very promising outlook. Backed by robust operational metrics, including footfall and consumer spending power. The suburban retail market in Singapore continues to exhibit strong potential with rising rentals and heightened demand for leasing. Our operational metrics are moving in a positive direction. Our new regional office in Singapore has been established to explore growth opportunities and enhance in-market capabilities further across Asia Pacific. Our Singapore team will work closely with our Hong Kong team to leverage the strengths of both teams, replicating the successful asset management approaches in Hong Kong and bringing value to Singapore and other international markets. For Australia, the retail sector there has exhibited very positive trends as pent-up tenant and consumer demand as well as economic recovery has bolstered consumer spending. Our tenant sales registered growth of 12.5% since the acquisition of the portfolio there last year, demonstrating business resilience of our assets. As a result of improvements in these tenant sales as well as footfall, our occupancy increased to just under 97%. Robust leasing demand has emerged due to the unique and complementary positioning as well as the trade mix of our portfolio amidst the return of international tourists and improved economic fundamentals in Australia. Our international offices are located in prime CBDs, committed occupancy of our high-quality portfolio stood at around 90%. The flight-to-quality assets in the CBD continues to influence the trajectory of the recovery in the office sector. To enhance the attractiveness and increase our customer-centric offering, we are continuing with many asset enhancements at our office assets, both in Australia and the United Kingdom. Our modern assets feature sophisticated design specifications as well as green attributes that are poised to benefit from the ongoing return of office workers. We continue to take active strategies to unlock the latent value across our portfolios. This included conducting 4 asset enhancement initiatives that were completed in Hong Kong during the year, with a combined capital expenditure of HKD 159 million. The return on investment achieved ranged from high single digit to double digit. As for current projects underway, we've commenced 4 projects in Hong Kong and 1 in Mainland China. Furthermore, we have identified over HKD 640 million of further capital expenditure for future projects that are underway or awaiting approval. Now moving on to sustainability. We've identified 4 strategic focus areas across the portfolio over the next 5 years. Reducing our carbon footprint and reinforcing climate resilience remain our priorities. Our latest acquisition in Singapore has completed a flood risk assessment as part of its due diligence process. This year, we have submitted science-based target Net Zero packages for validation. This is intended to enhance our decarbonization pathways, credibility and transparency whilst aligning with investor expectations. We're an early adopter of ISSB with the latest published report prepared with reference to the earlier draft exposure guidelines. We are setting up an ESG data management system for better data transparency and accuracy and we've also reevaluated our sustainability branding strategy and narrative. This year, we've prioritized 9 ESG KPIs based on our materiality assessment and risk register exercise that is overseen by our Board and also assured externally. Focus areas here include resource management, talent retention, stakeholder engagement and supply chain. Our sustainability leadership aligns with global and industry best practices as manifested by our improved ESG indices performance over the financial year. With GRESB, we ranked 6th in East Asia, and our score there has improved from 73 to 79. As for the Dow Jones Sustainability Indices, or DJSI, we're included in the Asia Pacific Index, where our score has improved from 63 to 71. And with Sustainalytics, we had a Low Risk rating with our risk exposure lowered from 11.3 to 10.6. I'd now like to hand over to K.S. Thank you, K.S.

Thank you, Greg. Good afternoon to everyone. We remain convinced that adopting a prudent management strategy is imperative to navigate through the high interest rate environment. Given that inflation continues to be sticky and the economy showing only tentative signs of weaknesses. The market anticipates interest rates to stay at elevated levels. To mitigate the impact of funding cost on our operations, we aim to keep our fixed-rate debt ratio at approximately 60%. However, the significant increase in funding costs will undoubtedly negatively impact our DPU. The elevated level of interest rates and uncertainty reinforced the importance of having a strong balance sheet with financial flexibility and funding certainty to withstand the challenges, same as other REITs. Our average borrowing cost rose to about 3%. Nevertheless, our financial position has been bolstered by the successful completion of our rights issue which generated a gross proceed of HKD 18.8 billion. As a result, net gearing ratio fell to 18%, and we will not require any refinancing for the next 12 months. With available liquidity of HKD 27.3 billion, we possess ample liquidity to fund emerging new accretive opportunities. Average debt maturity was 3.7 years staggered to [ '29, '30 ] and beyond. We have ensured that our debt profile is suitably diversified, comprising a variety of types, maturities and currencies, making our funding cost competitive. Our A ratings with all 3 credit agencies remained intact, underscoring our solid fundamentals. In response to the unpredictability of exchange rates, we have hedged our Australian dollar, British pound and Sing dollar assets using local currency funding. Additionally, all non-Hong Kong dollar incomes are hedged annually. Valuation of investment properties grew by 11.6%, boosted by acquisitions of assets and fair value gains. Valuation of our Hong Kong portfolio rose 7.6%, fueled by an increase in NPI and higher market rent assumptions, along with cap rate adjustments in retail and car park assets. Excluding the translation difference and on a like-for-like basis, the value of our Mainland China properties went down by 3.7% in RMB terms due to lower income amid the pandemic. Valuation of our international portfolio increased by 2.6x with the addition of newly acquired assets in Australia and Singapore. The cap rate expansion in Mainland China was due to shortening land lease remaining. Whereas Australia and the U.K. were attributable to higher borrowing costs and uncertainties around monetary policies. Cap rates of Hong Kong portfolio were largely unchanged. I'll now pass to George to provide us an update on our strategy. George, please?

Thank you, K.S. So we have, for the past year, continued diversification strategy which aims to tap the emerging sources of growth in the APAC region. As a result, the value of our portfolio has grown to HKD 248 billion. This year, we have captured several opportunities towards further diversification. We won the tender of a parcel [ non- office ] commercial use land of Anderson Road, Kwun Tong, which we intend to develop as a community commercial facility. Our first time expansion into Singapore through the acquisition of 2 suburban nondiscretionary retail assets, and completed 3 acquisitions, a 50% interest in 3 iconic retail assets in Sydney, 49.9% interest of 5 office assets and 3 logistics assets in Mainland China. Due to the geographic breakdown of our portfolio reflects Hong Kong's proportion further declined to 74.1%, while Mainland China represents 14.4% and international increased to 11.5%. Link has continuously transformed and work hard to drive a new phase of growth. And past year is what we call a pivotal year for us in our corporate history, achieving several land milestones. At the same time, we are doing all that with the challenges of the pandemic. To name a few things that we've done, a new senior team was put in place, formal management committees, we established third-party capital raising team was introduced. Diversification continues to drive growth with resilient performance in Hong Kong retail and car park businesses and contribution from new assets in Mainland China and international. Link was -- and then successfully raised Asia's largest rights issue in the real estate sector, with a total subscription rate of over 240%. Closing within 2 months, reflecting strong support from our unitholders. Link also achieved several other firsts, including the first retail development project, first acquisition in Singapore and launching the asset-lighter business. So with the revamp of the Link strategy, we will also couple it with a well thought out communication plan, targeting all the stakeholders. So you have all heard about Link 3.0 strategy and the transformation journey from us many times. But let me give you a brief overview of the key highlights to our Link 3.0 strategy built on our strength in portfolio management, capital management and asset management. We aim to enhance our managed portfolio through diversification and optimization while leveraging the strength of our balance sheet. This strategy is designed to propel our growth, while continuing to pursue quality organic growth in the new phase of our journey. And furthermore Link 3.0 explore new opportunities for enhanced capital management, which will enable us to increase our income streams and expand our asset under management. We expect transition from growing not only GAV but also our AUM with third-party capital. And as always, we maintain a prudent approach and will not rush to any acquisition. We will stay patient and selective and only pursue the right deals in order to meet our objectives of risk management and diversification. Nondiscretionary retail and logistics in key developed markets in APAC remains our top choices. We have confidence in Australia and Singapore, given their robust economic fundamentals. Hong Kong is our home market, and we will not rule out any attractive opportunity as it revises. And we will look at opportunities in Mainland China, especially in top tier cities as they continue to be one of the regions with the highest economic growth. Office is not one of our top priorities at the moment. As we grow our AUM, our investment strategy may be expanded in line with the requirements of our capital partners. In a nutshell, we are fully committed to delivering stable distribution and continuous growth. To this end, maximizing occupancy rate delivering high-quality offering, elevating shoppers' experiences, our top priorities in shaping our business strategy. We will remain cautious and selective in deploying capital, while leveraging our core competencies in asset management, portfolio management and capital management. I'm confident that our Link 3.0 strategy pathway will drive a new phase of growth. And here are the dates for payment of distribution and also a scrip election which will be available. Let's move on to Q&A.

Thank you, management, for the presentation. Now we'll move to the Q&A session. [Operator Instructions] The first question is Sam from Jefferies.

Thank you, management, for the presentation. This is Sam Ho from Jefferies. I have 2 questions, if I may. First of all, Hong Kong retail sales this year will very likely hit double-digit growth, right? So -- occupancy cost at a relatively low level, do we expect to achieve double-digit rental reversion for Hong Kong retail this year? So this is the first question. And the second question is, we saw notable positive revaluations in Link REIT portfolio this year. So with rates likely higher for longer, do you see any need to adjust the cap rate assumption going forward?

I'll take the question on Hong Kong rental reversions. I think it's unlikely it will be double-digit growth. I think it more than likely would be similar to what we printed in the past financial year. But I agree with your points around the sustainable occupancy cost and increasing sales. Probably another focus for us is to build on the record portfolio occupancy. I think is an important consideration, but it's not all about the financial objectives. We've always got one eye on improving the environments that we operate and continuing to improve our retail mix and tenancy offering to our shoppers, which in turn further will increase the sales performance of our assets. So I probably pull you back from double-digit rental reversions and we'll be endeavoring to do whatever we can. But I just would urge you to pull those sort of growth expectations back a little.

On valuation and cap rates, I think if you look at what has happened for the end March valuation, the U.K. office actually has expanded the cap rates from about 5.2% to 6%. So it's already started. And likewise, for Australia, the office property has seen cap rates expanding by about 60 to 80 bps. So cap rates are already moving, especially in the bigger, more liquid markets. And then if you look at Hong Kong, Singapore, I think the [ TC ] has always been that it's a very tight small market. Hong Kong, most of the good assets are never for sale. Singapore, a lot of them are already in the REITs. We are not going to let go of the fees. And so you hardly see cap rates expand because there's a comparative deal out there that's been so at a distress. And again, as international cities with wealth preservation hub family offices. I think the dynamics are sometimes quite different. And then Hong Kong office, our view is that it will hold because car parks, Hong Kong car parks tend to have characteristics of being intrinsically linked to your residential yield. And then for Mainland China, LPR is actually on the bearish side, has been loosening with RRR as well increasing. So I think overall, our outlook is that there is a risk around the U.K., Australian cap rates. But as the overall portfolio it's not big.

I'm going say to supplement my 2 colleagues, operational excellence is probably something that we focus on a lot over the last 2, 3 years. It's extremely important during volatile market condition. One of the things that we started focusing on very early when COVID started was increasing occupancy because if you kind of increase rent, the only way to drive income was to increase occupancy, which we have done. And as Greg said, we're now at record high occupancy rate for Hong Kong. At the same time, because of that, now you fill that up, then obviously, what we want to do is make sure that we find better tenants or improve tenant sales and then increase the rent. So that's a process that's ongoing. If you look at the more risky areas like Kowloon East office that we have 1 property, our occupancy rate is 98% versus the vacancy rate in that area is about close to 20%. So again, relentless focus on actually achieving a little small things that add together. It's very important for us to drive what we have delivered over the past year. The other point I will add is diversification, I think, has worked for us in that during the whole point about diversification is there will be some market that goes up and other markets might be more challenged. And this is exactly what happened last year, what happened in China. The prolonged lockdown was probably longer than most people have expected. But then we have Australia coming in a little bit earlier. We also have Hong Kong rebounding, especially the car parks. So I think having gradually build out a diversified portfolio allow us to resist some of the challenges over the last few years.

Thank you, management. The next question will be from Karl of BAML.

A couple of questions. First, just wanted to talk about Mainland China. Can you discuss -- give us an update on the recovery of retail sales at your shopping malls in Mainland China? And I think there have been a lot of investor concerns about the relatively slow recovery in consumption. Where are you versus pre-COVID sales level. And second question is about the acquisition environment. Have the sellers' expectations have still come down enough to meet your requirements for returns. And given what you said about macro uncertainty and that you have patience, should we sort of imply that the possibility of some deals in the near term does not look that high?

Yes. I'll take the Mainland China equally, like you, I'm also very concerned. I think the headlines has been a bit bearish the last 2 weeks, then you translate to what it feels like when you're on the ground. Clearly, coming out of the lockdown, we have gotten out of the worst that we could expect of China retail. And then when you're on the ground, what you get your sense is that the supermarket and retail are not getting a very strong recovery. The casual dining, food dining, cafes, Al Fresco, those things are doing pretty well. I would say they've pass pre-COVID levels. And if you look at some of the new tenant mix that we put in as lease expiries, surface and spaces available is that you have to start adding experiential staff, rock climbing, skateboarding and stuff. And so we are also evolving the role of the shopping mall. I think that change is a lot more drastic than what you see in Hong Kong. And I think what we have also discovered that the tenant sales have another driver coming up from what they call the night economy. So a lot of young people are willing to be hanging out in Al Fresco dining where they call it [ Sushi ] or night market or just Al Fresco cafes, they see out there until late night. So the trading hours for some of the less physically bound real estate actually has gotten. But overall, I think footfall is clearly this month is back to last year's, not equivalent of 100%. Tenant sales is largely around F&B spending, entertainment. Retail is not as strong as we expect. But of course, in doing COVID, would have continue shopping on [indiscernible]. So what is the big deal that there's no COVID that you've suddenly rush out there to buy versus delivered to your home. So I think the expectations are there. And then what we have to do is to continue to readjust the trade mix to what we think works. And then hopefully, we continue to optimize this portfolio that we have in China.

A number of us, including K.S. and myself been traveling to China just to see what's on the ground. So, January, February, good bounce back, pretty quick. March, April slowdown because I guess that initial euphoria is over. People sort of got back to, I guess, looking at economic outlook, thinking about their jobs, et cetera. Acquisition -- sellers' expectation really hasn't moved that much. Bank hasn't really forced too many people to get into sort of distress level that has poor sales across most of the markets that we look at. For us, if we can get 5%, 4.5%, 5% deposit rate. If we go and do an acquisition with very low initial yield, you will be the first one to put a sale on us. What we will do, I suspect that at some point in time, we probably think that there are some very good assets. And when I say good asset, we will never say these are strategically important, it will be financially very good assets. And it might challenge us for a year to be -- to have some dilution but we strongly believe that we can underwrite the growth, then over the next few years, then we'll probably do those deals. But we're not there yet. The gap between buyers and sellers is actually is widening. I think buyers are adjusting down their pricing expectations, sellers hasn't move. So I think you see deal volume has come down, fundraising have come down, everyone's sort of watching and waiting. And so if you look at some of the curves, interest rate, for some people it was go up and then come down immediately. Our belief is it goes up and then stay up for a while. And so we'll probably see the market to be a bit more interesting for us towards the second half of this year when the distress is a little bit higher.

Thank you, management. So the next question will come from Ken from Citi.

Thanks Management, it's Ken from Citi. I want to take more detail on your Link 3.0, given that this is some of the strategy that you post, I think maybe earlier this year or last year. I think recent, most of the people are concerned on those -- on the LP side, they are quite cautious and entering so volatile U.S. CRE things. I think is this something that you also face difficulties in looking for LP in chipping in for your potential fund management platform. And hence, if it's the case, when do we expect the time line and size? And what kind of assets should we be expecting on this to be announced? Like will that be putting the whole Hong Kong retail portfolio in a fund to sell. And afterwards, I also want to ask about your -- talking about the heavy asset. How many percent of the fund you want to hold at the end. So this is on the fund management side. And secondly, I think K.S. and George also mentioned about the difficulties, obviously more cautious on looking for the new project. Given that this HKD 18 billion outweighs and the rights issue, HKD 9 billion is based on cash. Will we be used to do some early repayment of the debt or anything to save such high interest expense.

I need to perhaps clarify Link 3.0, if we haven't made it very clear in the past. It's not a phase in time so that when we do Link 3.0, we don't do things that we were doing in Link 1.0 and 2.0. This is really something that we add on. So if you recall, Link 1.0 is really, what I mentioned earlier, that focus on operational excellence, that asset management detail, driving reversion rate. We'll continue to do all that. So part of Link 3.0, that is still -- that exists. We are not moving on changing it to asset-light and don't -- there's not only anything become a fund manager. That's not what we say. So that's a key point. So organic growth will continue to be the question that you should continue to ask us how we're driving that. Second is the diversification, how we're doing it. Also means diversification of the funding sources. So that's why capital partner is coming in is something that we're looking at. Whether that is done by doing acquisition jointly with them or capital recycling, we're working on a number of these. And at the right time, when deals will ready, then we will talk to you and obviously announce it. The -- we will be patient. I think the point as we'll need to do the right deal. We were looking at one possibility. And I guess with the uncertainty in the market. Some -- I don't -- I would say some of the potential partners might ask for terms that we don't like. So then we say, hey, we have the balance sheet to hold on to it. Let's not rush into doing -- start this pathway with the wrong deal. So we just hold on. When we were looking at the Singapore transaction, it happened exactly the same way we were going in, hopefully, hoping that we actually go in to do that acquisition with some partners. At the end of the day, we have been able to agree the terms, we have the balance sheet capability, we decided to take the whole thing, which gave us the opportunity to get something at a discount and the other competitive bidder cannot do so. So that sort of leads to the deployment of the rights issue. Yes, we have some money left from the proceeds that we haven't used to pay down. But this gives us that balance sheet capability that when a deal comes, we have the capacity to be able to win transactions. In terms of capacity that we can actually do the deal when others can't, not so much because of pricing but because of balance sheet capability. So we want to preserve that. And in some ways, one of the ways to preserve balance sheet capability also is to do some deals jointly with others. So it's really an add on to all the things that we have been doing well over the last 17-plus years. It's going to take time. And so you can't build in your model, [ X% ] of our revenue becomes free income and all that debt quickly. And the path that might take also it's a little bit unpredictable. If we do it asset by asset, that accumulation will take a long time. If tomorrow, we go and buy a fund manager and they already have 20 funds. Then I'm not saying we are, so don't -- but then that will be a step up. So I can't really tell you today how quickly we can do this. All I can say is if you look at other fund managers who have done this transformation, part of that pathway will always involve some platform acquisitions, to speed it up. But again, it's pricing, it's people issue, et cetera. So it is a directional strategy. It is going to take time. We'll be cautious. And we just want to make sure that we continue to do the right deals.