Manulife US Real Estate Investment Trust (BTOU) Earnings Call Transcript & Summary

Good afternoon, everyone. I'm Meixian from the IR team of MUST. Thanks for joining this briefing at such short notice. And today, we have with us, Mr. Marc Feliciano, our Chairman and Sponsor Rep; along with our CEO, Mr. Tripp Gantt, and the rest of the management team, Carol, Pat, Robert and Chia Yee as well. So as shared before, we have been working very hard towards finding a resolve of our financial covenant breach. So we are very happy today to finally be able to announce the recapitalization plan with everyone. So I will now pass the time to Tripp to make a presentation before we go to the Q&A. So Tripp, please.

Hello, everybody. Good afternoon. Thank you for joining us. Obviously, we're here with an update on the results of our negotiation with our lenders and the announcements that we made earlier today. As you know, back in July, we informed the market about a decline in the valuations of our portfolio that resulted in our Unencumbered Gearing ratio exceeding 60% and the subsequent breach of the covenants in our loan agreements. And since that time, we've been in negotiations with our lenders alongside our sponsor to determine a path forward, and we're glad to announce that we've come to an agreement on a recapitalization plan. And as we've also mentioned before, this has been a very complicated exercise, negotiating, finding an agreement with more than a dozen lenders. Despite the complexity and the challenges of aligning the interests, all the parties have worked night and day to get this across the line, and we're pleased with the speed that we came to an agreement on a path forward. So let's go into some of the details now. We'll start on the slide. So essentially the recapitalization plan is made up of 2 different pieces. The first one is a $285 million funding that will be used to pay down lenders on a pari passu basis. This $285 million is comprised of the divestment of our Park Place asset in Chandler, Arizona to our sponsor for $98.7 million, which is the higher of 2 independent valuations that were obtained. The second piece of this is $137 million unsecured loan from our sponsor, and the details of that, we'll get into a little bit more in some of the slides that are coming up. And the last piece of that $285 million is $50 million of cash from our own -- from the REIT's balance sheet. The second piece of this is really focused on asset dispositions. And the asset dispositions, the funds from that are going to be used to repay our lenders by maturity as well as providing us liquidity to both reposition our portfolio and strengthen our balance sheet to fund CapEx. And in order to do these asset dispositions, we will be seeking a disposition mandate from our unitholders. And again, we'll talk about that more in these upcoming slides. But the $328 million that we're planning to raise from these asset dispositions, again, will be used to both repay debt maturities and fund CapEx in the portfolio. Again, as part of the negotiated settlement with the lenders, we will be also halting distributions through 2025 -- through the end of 2025. And we may be able to resume this early if we were able to reach Early [ Reinstatement ] Conditions. And again, we'll talk about that more in the details about that in the slides coming up. So I think that we've talked a lot about the background of the headwinds that we're facing in the U.S. office sector both in terms of demand and liquidity challenges, creating valuation declines, and both the rising interest rates and the effect that that's had on both buyers in the market as well as the dollar pressure on those valuations. And what this has really put us in the position of doing over the last year is looking at different options prior to this recapitalization plan. We have pursued asset dispositions over the last 1.5 years to 2 years. The interest rate hikes and the lack of liquidity in the market has resulted in some of our buyers -- potential buyers for these properties not being able to secure financing. And in certain cases, in which we were engaged with buyers, some of them have walked away when they were not able to secure that financing. We've also explored the possibility of equity fundraising. Some of the challenges there for us obviously are market cap and difficulty of banks' underwriting. Equity fundraisings right now has made that challenging as well. We've announced to you about our strategic review and potential strategic transactions with partners. We do have a number of parties who are remaining engaged with us, but they're waiting to see the outcome of this. They're waiting to see the outcome of the negotiation with the lenders in this recapitalization plan. We've explored potential mergers, but there's just incredible execution risks and complexity there as well as the fact that, that just really wouldn't address some of the leverage issues and some of the liquidity issues that we would need to deal with otherwise. And lastly, we've also explored the possibility of finding new loans to take out the debt maturities that are coming up, but there's just not a lot of credit out there available right now for borrowers. And so what all this has led us to is these alternative options just haven't given us the things that we need in order to move forward with this recapitalization plan. So we feel like the plan that we've negotiated with our lenders at this point is the best solution to both address the breach of the covenants, give us the liquidity we need to continue operating and adding value to our portfolio and giving us the runway we need to execute some pretty key pieces from a strategic standpoint. So what do we get in exchange for paying down our lenders? Well, the first thing that we get is a waiver of the breaches, both the past and existing breaches. The second key piece is a temporary relaxation of the covenants. As you recall, right now, our Unencumbered Gearing ratio was 60%, and the Bank ICR limit is 2.0. Under this recapitalization plan, that Unencumbered Gearing ratio will be expanded to 80% to take into account. As we've mentioned before, we see continued downward pressure on office valuations, and this will take that into account as well as an easing of the ICR requirement down from 2.0 to 1.5. These temporary financial covenants would be in place until the end of 2025. The last key piece of this is an extension of the loan maturities of the existing facilities, all out by 1 year. And what this really does is it gives us the ability -- gives us the time that we need to execute both asset dispositions and really focus on the portfolio optimization without having to worry about that -- those debt maturities that are coming up in 2024. Those charts at the bottom there, the bottom left chart shows our debt maturity profile as at September 30 of this year. That right chart will show what the debt maturity profile will look like after this recapitalization plan. It's important to note that the weighted average debt maturity also expands from 2.3 years to 3.7 years, and then we would have no debt maturities in 2024, and the first ones will come up in May of 2025. Now taking a look at the terms of the loan from the sponsor. It would be a $137 million loan with a 6-year term, that would have an interest rate of 7.25% with an exit premium of 21.16%, which would give us a blended effective interest rate of about 10% per year. Now our IFA has given an opinion that this 10% rate falls pretty reasonably within other debt mechanisms that may be available to the REIT, and they've determined that it's all normal commercial terms and not prejudicial to the interest of the REIT or its minority unitholders. It's also the opinion of our Independent Directors that unitholders should be able to vote in favor of the Sponsor-Lender Loan. Another key piece that we'll be seeking in order approval for is the disposition mandate. And really what this is focused on is our need to sell some of our assets in a more disciplined way. And what we're really looking to do is use these proceeds to both pay down debt and fund CapEx as well as reducing a lot of the CapEx needs that are in the portfolio and strengthening the quality of the overall portfolio. In order to do this, to be really a competitive seller in the U.S., and you've heard us talk before about that right now it's a difficult time to be selling assets in the U.S. And what we want is really to be positioned and have a strength -- have some competitive strength in the market when those conditions do open up and allow us to transact a little bit more easily. And essentially, having to come back for individual EGMs for each asset disposition would really hamper us in trying this in the U.S. in being a competitive seller. And the reduction of the administrative time, the expenses involved in having to put together EGMs for each disposition is really going to help to make us a competitive seller in that market. Now the way it would work would be that at the time of a sale, we would get independent valuations commissioned by our trustee and that the assets would be agreed not to be sold at less than 90% of that independent valuation that was obtained. We'll talk a little bit more on the next slide about how we categorize the assets and the priority of sale. And the expiration of the disposition mandate would be the earlier either December 31, 2025 when we reach $328.7 million of aggregate proceeds from the sales, or if we're able to get to what we're calling an Early Reinstatement Conditions. And the Early Reinstatement Condition is essentially if we get back within MAS leverage guidelines, which would be 45% or 50% if we have an ICR that's greater than 2.5x. If we are able to reach those conditions, the disposition mandate would also expire. Now when we look at how we prioritize the assets that we want to target for sale, we conducted an analysis of our portfolio, looking at the financial return and the potential factors that would play into that, we're really focused on 3 things. We've talked about occupancy risk, which is really how we feel an asset is going to be from a competitive standpoint for demand. And it can be a combination of both the submarket the properties located in as well as the -- just the overall attractiveness of the asset itself. We also took a close look at CapEx requirements, what -- how much money we're going to need to put into these buildings over the next few years, both in terms of leasing cost and to get new tenants as well as AEIs or maintenance that needs to happen in these buildings. And really, the combination of those 2 things leads to what we're projecting is the total return potential of each asset. And you'll see that we've ranked these assets in 3 tranches: Tranche 1, 2 and 3. The Tranche 1 assets are the ones that we're targeting for disposition primarily, largely because they have either some combination of occupancy risk, high CapEx requirements and relatively low overall financial return potential. The Tranche 2 assets are, again, somewhere in the middle. We have some assets here that we feel pretty positively about. But there are some assets here that we also think, if they can garner interest in the market in the U.S. from a buyer standpoint, that we would be open to sell in perhaps. And the Tranche 3 assets are assets that we feel are the highest quality assets in our portfolio that we would -- that we intend to hold on to for a long period of time. Looking at the financial impacts. This chart is pretty straightforward. Looking at the gross borrowings, the gross borrowings would decline by roughly $370 million for over the course of this entire recapitalization plan from a little over $1 billion to about $655 million in debt. Total assets would be similar, dropping from $1.8 billion down to about $1.325 billion. Our aggregate leverage limit -- I'm sorry, our aggregate leverage will drop from 56.5 down to 49.4, and we see a corresponding decline in the NAV per unit as we sell down assets from about $0.40 to about $0.34. So when we look at what this brings to our unitholders. Really the primary thing here is waiving the breach, getting us out of the situation that we're in currently; and secondly, giving us the time that we need and the longer runway that we need to really execute the plan of the recapitalization. The second key piece of this is this disposition mandate is, again, is going to make us a competitive seller when it comes time to sell these assets. It gives us flexibility. And really, the aim of this is to maximize the proceeds. We want to be able to get as much as we can for these asset sales. And having the flexibility to put ourselves in the strongest possible position to maximize those proceeds. It's going to be really, really critical. And lastly, the recapitalization plan gives us clarity. It gives us clarity on the amount of equity that we're going to have to raise at some point to reach our optimal leverage level to get back to a point where we can resume distributions and then as we look forward, begin to affect effectively have a good strategy as well. So lastly, our Independent Directors are recommending this. They find that it's on normal commercial terms and not prejudicial to the interest of the REIT and its minority unitholders. The independent directors are recommending that unitholders vote in favor of all 3 resolutions, and all of the Independent Directors, who are shareholders in the REIT, will be voting in the EGM in favor of all 3 resolutions. So when you look at what we're trying to do here, what we're trying to accomplish, there are going to be 3 resolutions, as we mentioned. The first is going to be the proposed divestment of our Park Place asset, the second will be revolving around Sponsor-Lender Loan, and the third one will be that disposition mandate. It's important to note that all 3 resolutions are going to be inter-conditional, which means they all 3 must pass. And that leads us to the potential outcomes of what we're hoping is that unitholders approve all 3 resolutions and that the -- and from there, the lenders will grant their waiver and the relaxation of the covenants and allow us to get to work and be laser-focused on executing the recapitalization plan. If unitholders do not approve any of the resolutions -- or any one of the resolutions, the existing facilities are going to remain in breach and the lenders at that point would technically have the right to accelerate the payment of all of our loans immediately, and it's possible that the liquidation of the portfolio could be forced by the lenders at that point if we are not able to have these resolutions approved. So lastly, just some of the important dates. Obviously, we made this announcement today. Over the next few weeks, we're going to be engaging with investors, with analysts. And the last date, obviously, for everybody, it's a [indiscernible] proxy forms is December 11. And our EGM is now scheduled for December 14. So we've been moving with speed on this. I know for a lot of folks, it was difficult to wait for -- to hear word from us, but we're actually pretty pleased with the speed with which we move forward on this. And we're looking forward to the EGM on December 14. So I'll go ahead and stop there. And I think we'll open ourselves up to questions.

Okay. Thank you, Tripp. I'll be moderating the Q&A. So just some housekeeping. So we have Marc with us, first time in Singapore to meet with all of you. It's not his first time here. So we're very pleased to have Marc, who has joined Manulife, I believe, early last year. And we have quite a few questions that has come through, but priority will be given through the analysts and media, who are currently with us on the Teams chat group itself. I would like to just get yourselves to introduce yourself, and then we can ask the questions. So as those who join us on the 3Q results, as promised, there will be no results briefing on Christmas or New Year's Eve, which is what I say. So we have rushed at record speed, and we've heard your holiday schedule and all. And so we're having the briefing today. I know that some of you are also overseas. So appreciate some of you dialing in and joining us at really, really short notice. Okay. Without further ado, first question, Rachel?

Can you hear me?

Yes.

Okay. Great. Nice to meet you, Marc and Tripp. Congratulations for getting this done, long-awaited restructuring plan. So maybe just to kick off a few questions from me. Firstly, I just want to understand why isn't the sponsor buying back [ Phipps ] and then they can do away with the sponsor loan because it's the larger asset. Instead, you have chosen to actually buy back Park Place, which is a smaller asset. If you can give us some rationale on this, yes.

Yes. Thanks, Rachel. Okay. Maybe I'll just let Marc talk about actually how the sponsor package even come about, if I may. I think everyone will be very curious to look at high level how the package came about and [ Phipps ], which was actually had a letter of intent signed, was no longer the asset that then has been in this package. So maybe Marc?

Yes, Rachel, nice to meet you as well. So maybe for some background, as the entire public markets knows, [ Phipps ] was announced as a prospective sale to the sponsor in May of this year. That was with the benefit of hindsight prior to the EOD for the event of the ball. Upon an EOD, that's when the sponsor took a step back, along with the management team and evaluated several options. And with the primary objective of solving for the current EOD, but also what we believe is really the near term to midterm problem, which was or are the looming debt maturities in 2024 and 2025. So collectively with the management team, but also on -- through the sponsor, we very much believe that Phipps alone wasn't sufficient to actually buy more time. So that was the first aspect. And we had alluded to that in the market early or mid-summer that we're evaluating 2 options, Phipps that we sometimes refer to as Option A, but then also a financing option that we refer to loosely as option B. In the context of things, we felt we should optimize for a larger quantum of proceeds that fit both the sponsor's balance sheet, and we're heavily regulated, as you know, being insurance balance sheet, and also fit for the unitholders to maximize what we felt would be the best outcome for the unitholders and achieving what we hope would be a restructuring post the EOD. So a long-winded answer, Rachel. We landed after evaluating many, many options and getting to roughly $285 million of proceeds, of which about $235 million is coming from the sponsor. And part of the reason, secondly is, as Tripp mentioned, this was heavily negotiated with 12 lenders, in essence, 12 credit committees and some Board approvals. And again, for boring us a doubt, some of these approvals still need to come in. We obviously are positive on the expectations of these approvals coming in right around the EGM date of December 14. But part of the negotiations was which assets to sell to the sponsor, which could be perceived, Rachel, as a conflict of interest, hence, an IPT. And hence, that need to be evaluated by the IFA and separately will be voted on by the unitholders. But that was very much a focal point of the discussions with lenders as to what asset to keep or which assets to keep and what we call the unencumbered pool, because it's all unsecured debt, and which assets to actually sell to the sponsor. So again, the balance of the lenders as well as what we felt collectively with the lenders and the management team and getting to what we thought is the best outcome and pushing out the debt maturities by 1 year and also paying down as much as we can with the quantum of proceeds. So roughly, Rachel, about 28% of the outstanding balance of $1.23 billion is being paid down on a pro rata basis across all loan maturities. Again, as Tripp mentioned, all debt maturities are extended by 1 year. So -- I forget the slide, but roughly the first year of maturities, 2025, the debt maturities are now $130 million versus $180 million to put it into context. So we feel we achieved a lot through optimizing what we call the sponsor package to buy a longer runway as well as to pay down as much debt. And what's important about that, Rachel, is that the sponsor loan is last in chronological order, right? We are behind all the other lenders, and we have to stay behind all the other lenders. We cannot be paid down without all the other lenders approving that. So in essence, we're subordinated from that perspective. So we're last in line, and where we landed with the lenders is Park Place versus Phipps.

Okay. I'm just curious, like how do you think about this is better in the sense that with the sponsor loan, you're actually paying a hefty interest cost that could be eating also in into, Marc, cash flow as well on [indiscernible] versus just disposing a bigger effect to the sponsor. And then you don't have to incur the interest, but still be able to get some debt restructuring and buy some time for Manulife. Just trying to weigh why you think this is better than versus paying the interest cost to the [ company ]?

Yes. So if we just go back to the -- what was on the table back in May of this year, which was Phipps, that was roughly, again, based on the latest appraisal value, about $178 million. That alone would not have achieved what we are achieving through this recapitalization and restructuring of $285 million, right? So it wasn't, in our opinion, sufficient proceeds. Now to address your question around what is maybe on [ paper viewed ] as a higher rate loan. To put it in context, there is no financing available in general in the U.S. office property market. So what you saw in that one slide in terms of, call it, comparable pricing across bonds and maybe unsecured debt, that's in the context of that was available for U.S. office properties. So at 7.25%, we think that current -- what we call the current pay rate or cap pay rate is properly priced, particularly in the context of a heavily regulated balance sheet, which we have to properly price the loan. The all-in effective rate of 10%, which is why you see that exit premium of roughly 21%, but the all-in effective rate of 10% per annum is -- I would argue, is probably in the range, if not pretty good in the context of available financing or lack of available financing in the U.S. office market. I can tell you from our experience, as many of you know, I run the global real estate platform here at Manulife. I can tell you for certain that there generally is no financing in the U.S. office market. And if there is, you're often seeing what we call [ alternative ] lenders, asking for 18% plus or minus, including with some type of equity feature or equity kicker if they can get it. But that's only if it's available. So we think while it looks high relative to the current unsecured loans, I think to put it into context of what's out there in the market is -- or lack of, is also another way to look at it.

Okay. Just maybe some housekeeping in terms of your pro forma DPU numbers that you put into the announcement, does that include the interest cost that you pay to the sponsor? And how do you account for your own existing interest cost with your existing loan? Because I know some of the hedges are coming off and whatnot, yes. Just trying to understand your [ pro forma number ].

Robert, you can take that, I think.

Yes. Sure. The pro forma numbers does take into account the Sponsor-Lender Loans. So just to give you context, I mean, although it may be an effective cost around 10%, but $138 million -- $137 million sponsor loan is only about 15% to 16% of the loan portfolio after this first waive of restructuring is done, namely the sale of Park Place and the $50 million cash holding used to pay down debt. We still assume it at around a 69% hedge, and we assume that the hedge is kind of maintained at that level. So it's still around the 4% range generally. It all depends on the timing of when is a Tranche 1 asset is going to be sold and how quickly we are able to further pay down the debt and so forth, and that debt will provide a different kind of [ set ] profile. And the other thing is that although in the third quarter we released that the portfolio only 69% hedged, when you use the proceeds for Park Place and $50 million cash to pay down debt, statistically, the REIT will be about 96% hedge. So that's why the weighted average interest cost is going to ease down, even though the sponsored piece might be a bit more expensive, but the weightage is not a lot.

Okay. So correct me if I'm wrong, on your pro forma numbers, as you think that you're taking into account average cost of debt of about 4%. And then on top of that, you add the 7.5% interest cost to the portfolio. Is that right?

And also factor in statistically, we will be at a higher percentage hedge.

Okay, okay. I see I can...

Yes. We're paying down the variable loan. So with the swaps still intact, it will cause the weighted average interest cost to average down.

Okay. Right. So technically, the swaps are still intact until such a point should the approval or the -- from the lenders [indiscernible], right? I'll...

Yes, correct. So I mentioned this before, the hedge -- actually hedge out all the [ term zones ], they are due in '24, '25, '26 and a small portion in 2027. Those are still in place. All we're doing now is to pay down the variable loan, and we'll let the swap naturally expire in due course.

Okay. Right. My next question is really on the tax implication. Can you explain to us without the distribution payout until 2025, what are the tax implications to Manulife U.S. REIT and also to the unitholder?

Yes. I think on that note, we did mention, if I'm not mistaken, Page 5 -- Page 4 of the circular. So the headline tax could be as high as 43% because of the grossing up effect of the nonpayment of the distribution in the U.S. source, right? But the reality is that the tax rate is only applicable to those unitholders, who did not submit a valid tax form. And we have clarified in a circular that statistically, historically, only 1.5% of debt -- unitholders did not submit a valid tax form. Recognizing that we don't have a distribution cycle, that statistic might widen a bit, but we will -- we'd do our usual kind of notification to all new unitholders to remind them to submit their valid tax form. And with the cooperation, we can actually minimize the tax that we have to bear during the period of nondistribution. So maybe as an example, let's say the nondistribution is $100, $43 will be theoretically taxable, right? We're holding tax, if none of the unitholder respond with a valid tax form. But if there is a 10%, it will be $4.3 million. If there's 1% margin of error, it will be less than $1 million.

Okay. Got it. And if, let's say, you managed to unravel all this and start paying distributions in 1 year forward or what -- is there a refund or this withholding taxes paid?

The withholding tax is pertaining to that calendar year. So for example, 2023, we don't make any distribution. We have to tabulate what is the income that is distributed out of the U.S. and apply the relevant tax as a function of those unitholders that did not submit a valid tax form. So that's the tax amount that we need to remit to U.S. IRS. And the due date for lodgement is sometime in September next year, for calendar year 2023. So there's still some time.

Thanks. Yes, maybe next one, we can have John. John from UOB. John, you want to unmute yourself.

Thank you for the comprehensive presentation. So first question [Technical Difficulty].

John, I think you're breaking up?

Relates to gearing. The -- yes, I have typed in my question.

Are you talking about -- is there something wrong with your speaker?

In the webcast, maybe you can address the...

Hello, John? Okay. Okay. Your question is talking about the gearing has reduced from 56% to 49%, right, under the pro forma stats. Is that right? And you are trying to ask if that includes the income, that includes the divestment -- so that includes the divestment, which is clear, right, in the slide. Hello, John? I think John's question is, does the gearing of 49% factor in divestment of $328 million and income retained in '23, '24 and '25, which is equivalent to about [ USD 120 ]. I think that's the first part of the question. I think the part on tax has been addressed.

Yes, [ Kara ]. The pro forma does take into account all of that, the entire recapitalization plan package.

Okay. And the second part, does it -- okay, I think your question is the gearing is still relatively high, correct, John? So will there be a need to do fundraising? I think -- on the fundraising part, I think we have mentioned before, which is why I think the first step for the REIT really is to get our recap plan in order. So now that we know the sponsor's package together with MUST is equivalent to $285 million, the first bucket that will be used to pay down the debt will be from here. The second bucket that we have in place is from the disposition mandate. So we are required to sell up to $328 million of assets from the gross proceeds raised. And while we are going to start the disposition and all, depending on how much the assets could come in at a price that will give us a bit more clarity on where we are in terms of our gearing. And which is why the final step, which we have also shared before will be the equity fundraising. So until we know how much bucket 1 and 2 actually provides for the REIT, equity fundraising will be the one, I would say, like the more later stage so that we also have a clearer idea of how much equity is needed. Yes. John, does the answer your question? John? I think there's something wrong with his mic. Okay. John, if you have further questions, you can reach out to us separately later. I think there's something wrong with your mic...

Connection is not working, so thank you for responding. Yes.

Okay, okay. Yes. Maybe the next question with Derek from DBS.

Can you hear me?

You're a bit soft.

Can you hear me now? Raised my volume. Okay. Can you hear me?

Yes.

Okay. I've been waiting for this a long while. And I got a few questions, and I think it surrounds around -- I think one by one. So firstly, on the loan details, right? So while I understand the IFA say that it's fair, not -- it doesn't prejudice against MUST shareholders, but I can't help but think that why wouldn't have -- they have left a bit of meat on the table for the REIT, i.e., because you're in with -- in the matter [indiscernible], right? So why is it not in your favor but rather fair? I'm just wondering why should we be accepting this. Just curious, yes. That's my first question.

Tripp, do you want to take that? If you cut off, I think Marc can [indiscernible]. If I may just start off, I think Marc explained a bit earlier. So I think -- just bear in mind, I think we are all aware that Manulife is listed as a company in Canada and 3 other exchanges. So there are constraints, and actually, the [ SSE ] is quite strict, and they also have regulatory concerns, whether what the sponsor is doing is beneficial for their own shareholders. So that's a very high level that I just want to address. So how the package came about, even how the sponsor put it together, it's not something that is without thought. It's been a very thoughtful process. A lot of people were involved to get that through. So I think Marc shared earlier on how the market has been, the credit market and all has been in U.S. And to be very honest, today, if Robert is going to go out and get any debt, I think the ones [indiscernible] going to pick up his phone, if I may, right? Yes. So I don't know, Tripp, maybe you just want to give a bit more color on the U.S. and how is this beneficial for -- the question is how is this beneficial to unitholders, right?

Yes. I think...

Yes, sorry, Tripp. Go ahead. No, my question is -- reduces the exposure of the banks, right? It doesn't even deleverage the REIT. So unless you're telling me, say, the lenders are only willing to lend you a smaller amount post this [ recover ]. So I just -- then this exercise is needed. So I'm just wondering why should we take this 10%...

Derek, if I could just chime in before Tripp has his comment. I think it's also alignment with the lenders. As part of our negotiation with the lenders, they want to see Manulife commitment to the REIT, not only buying assets, but they are now a lender that we have formed a 6-year loan that we can never get for REIT. It generally is 5 years, and they are the last to be paid out, right? So this is trying -- well, Manulife trying to align the interest with various stakeholders, right? Like Marc has mentioned before, before it was option A or B, that means we buy an asset from the REIT or we provide a loan. So now what we've done in our negotiation with the lenders is hybrid. So they want Manulife to be more entrenched and more aligned with the lenders. And the fact that Marc has mentioned, there is no existing lenders that's willing to provide us with financing, no new ones. We even informally consulted financial advisers to say, "Look, Rob, there's no way I can get you the financing to take out the existing lenders. It's best for you to go back and negotiate with existing lenders." And that's where the Manulife sponsor chimed in and make this work, right? And 10% may seem high, but the current variable rate is already about 7% plus, right? So they're 3% wide. And if you look at what IFA has prepared as a comp, this is actually on the lower side compared to all that, I forgot which slide number that was, you can have a look again. It's actually on the lower side. Bear in mind, there is no financier for this loan in the market.

Yes. And Derek, I mean, what I would say is that this is something that we have to do even if we had not had the events of default. Let's just say that we were looking at -- that we were continuing with business as usual that we had maintained our operations and our leverage, our gearing within -- if we had not had the EOD and we were looking at a May 2024 debt maturity of $130-something million -- I'm sorry, [ $140 million ]. We would have probably had a similar cost of financing in order to refinance that debt if we had been able to find it. The cost of borrowing for nonrecourse lending to the REIT has gone up, and this is the market price now. And so I think that, that is -- having the sponsor in as a cooperative lender alongside the other lenders has gotten us through the situation, and the lenders have very clearly said that they want to reduce their exposure. So I think that all these things combined makes this -- this is our option. And it would have been our option even in a non-EOD situation.

Got it, got it. Okay. I understand now. Okay. Just my next question is on fees, right? So for the next 2 years, I'm just wondering whether are you still taking fees in units? Or will you be purely cash? The reason being the sponsor the related entities potentially breached that 9-point shareholding group and you take Visa, yes.

Yes, I could take that. I mean, actually, because of the unit price and the market cap at the moment, Manulife position is 9.1%. We're big stock now because actually, there are due to fees in unit for the second half of next -- last year and first half of this year. So process-wise, we have to sell before we can take on new units. So given the current unit price and the market cap, the model just doesn't work. And in fact, it's actually more dilutive for the unitholders going forward because for a given some of dollar value in fees, you have to issue a lot more units at now maybe $0.09 a unit. So I don't think it will be an interest of the unitholders for us to continue with this practice. And we still have a backlog of units to be issued to the sponsor.

I see. Yes. So it's cash. So you'll be [ reverting ] to cash. That's how you look at it.

Yes, yes.

Okay. Got it. So just a last question for me right? So I think your earning -- Tripp, I think, it was great to get a sense on where you align, where -- which -- the different tranches of assets that you think you sell. I'm just wondering, firstly, on Tranche 1, right, was there an attempt to speak with the sponsor to also probably take 1 or 2 assets from there? And secondly, my second question on that is, based on your pro forma, there is an assumption that you will bring gearing down below 50, if I'm not wrong, and that is selling all the assets in tranche. What kind of sale price, have you assumed in numbers, if you can give us some guidance on that.

Yes. Well, $328.7 million assumes that we would sell Tranche 1 assets. So those would be the assumed sales prices of those assets. So that was your last question first there. In terms of the sponsors buying back of one of those Tranche 1 assets, I think that, that had not really been an option to us before, again, largely because the sponsor has its own unitholders. And they're not a buyer typically of that kind of asset. It's -- the capital that they have at the moment, does not have the appetite for those kind of office assets. Marc, maybe if you want to touch on that a little bit?

I think that's right, Derek, nice to meet you but virtually. As Tripp noted, you could more or less label the Tranche 1 assets as nonstrategic. What we need to do going forward is really threefold. A very detailed executable capital market strategy that starts off -- we're dealing with the lenders in the context of the EOD. And then number two, a very detailed asset strategy, which is more or less laid out in the context of -- the team has already done that work by virtue of what you see Tranche 1, Tranche 2 and Tranche 3, and that leads to what they call very detailed portfolio strategy, that irrespective of the current situation, just needs to always be reevaluated, called -- what they call the nonstrategic assets. The market has changed particularly for what they call nonstrategic office, decide which ones to keep and then ultimately, which ones to acquire over time. So when you think about why no assets, Tranche 1 were sold to the sponsor, again, as Tripp noted, they're nonstrategic. They are not strategic for the lenders, and I'm going to come back to that. They're nonstrategic for MUST and the MUST team. They're nonstrategic given that we're a heavily regulated balance sheet. And that brings us to Tranche 3, Derek, if you see in Tranche 3 Phipps, and I'm back to Rachel's first question, Phipps is part of Tranche 3 along with Michelson. So considered long term, strategic assets that are among the best 2 assets that in order to avoid adverse selection for the benefit of unitholders, you want to keep Phipps and Michelson. So that was part of the conversations as well as from a lender perspective, you call this the unencumbered pool. Would you rather hold Tranche 1 assets and get rid of Phipps? Or -- so that's how we landed there in terms of the discussions. And I probably should have mentioned that in my response to Rachel. And that's how we landed on Park Place by definition, is avoid adverse selection. We can't be Tranche 1. That sort of leads you to conclude, Derek, Park Place was somewhere between Tranche 2 and Tranche 3.

Got it, got it. Can I -- just 1 clarification, right? For this particular loan to Manulife -- the REIT right, the Sponsor loan, where we'd see it on the sponsors, so the balance sheet, a private fund or a credit fund ? I'm Just curious.

Balance sheet -- the balance sheet. If it were a fund, obviously, we'd have other investors, third-party investors. And again, it'll be consistent. That's why we keep on referring to our own shareholders, meaning MFC shareholders, as well as being heavily regulated to various regulators that we have to deal with in terms of being an insurance balance sheet.

Thanks, Derek. Maybe next question we had from [ Gula ].

Yes. I've unmuted myself. Yes. So can I just go back to Robert and the tax part. What was the question -- yes, yes, yes. So can I just get this right? So it is -- the tax charge is 43% of the unitholders who don't fill up the W8-BEN form, is that right, Robert?

It's up to 43% if there's a gross-up effect. If not, this should be around 30%. So if, say, you are the unitholders that failed to provide a value tax form, we'd take 30% of that theoretical distribution for this year to you and we retain that at the REIT and remit that amount to U.S. tax authority. So it's like paying on behalf of you.

So -- okay, and this money that you have -- these monies that you haven't distributed, they are going to go as part of the recap -- I mean as part of paying back the lender?

Yes. So whatever we retain net of whatever the tax that we have to -- we're holding tax away to remit to IRS, basically, that pool of cash will be used to do all sorts of things to fund CapEx to further pay down the debt and service interest.

Okay. And then -- okay. So previously, there were these tax shields and one of the tax shields was depreciation. And now you've had these [ reval ] losses, et cetera. So doesn't that sort of shield you from having, I mean, to pay any tax? Or have I got it wrong? Because from that side, I mean, I don't know how it works.

Right, from the U.S. front, the 2 most effective tax shield is essentially the building depreciation, you're right, call it, 40% of the income issued from that. The other 60% is this entity called, we call it beta interest, right? So Singapore entity SPV has extended loan down to U.S. level to basically claim interest deduction, right? So that 2 items is effective in neutralizing -- shielding the U.S. income from tax. It's not so much the revaluation because revaluation is not realized. It's unrealized. You can't use that to shield your income tax.

Okay. All right. Got it. Got it. I didn't realize it. Okay. I thought Donald Trump used [ reval ] losses to shield his income tax. But I'm sorry, Okay.

Anything else, Gula?

No, I mean, for the time being, that's it on this part.

Okay. Rachel, you have additional questions. We can give it over to Rachel.

Yes, sorry. I thought there's no hands on. I have a few more other questions. So on the disposition mandate, can I understand at what price level would the share -- I mean, if the unitholders approve that, at what price level are you allowed to sell? And for the disposition mandate, if the sponsor one of the party who can buy back. If you cannot find a third party, sponsor then be the last resort of a buyer for your assets?

Yes. So the disposition mandate, Rachel, is for third-party sales only, not sales to the sponsor. Any sales to the sponsor would require a separate EGM. So this is only for third-party sales. Again, the mechanism -- we've talked before about how the U.S. transaction market is really stumped right now and it's challenging. And the valuations have been uncertain largely because those transactions haven't been happening. And so what we really want to do is get -- by the time you get to a place that we need for the market to kind of stabilize, for lenders to come back in, for there to be real price discovery between buyers and sellers. And -- but we need the flexibility to act relatively quickly when that market opens up and to try to maximize the price. Now we haven't set a minimum price in terms of the disposition mandate. We've set up this mechanism where we would have an appraisal done at the time of sale and use that as the basis for the sale price that's approved and that we would actually sell that. Now the restructuring agreement with the lenders does have minimum release prices for specific assets. And so if we were to -- if the price of an asset -- if the appraised value at the time of sale of an asset was to be below those prices, we would have to go back to the lenders for approval to sell it at that price. What we're doing is, though, is we're trying to -- it's a much more easier and streamlined process to get a majority of the lenders to vote for that than it is to go to an AGM and have the unitholders approve that for each disposition. So there is not a minimum sales price, per se, in the disposition mandate. It's driven by those appraisals. Those appraisals have to triangulate and compare to the minimum release prices set by the lenders in the restructuring agreement.

And I would just add to that, Tripp touched on it a little bit and just to clarify. The disposition mandate is, as Tripp said, the market in the U.S. is really at a standstill. As we've discussed at great length here, there's very little debt financing available for office at all. So there's really very little equity financing as well. And we just feel that if buyers are subject to an EGM, which implies very high transactional risk and lengthy time. Not only made it scare buyers away completely, and they'll just say, pencil down because they'll just have too many other options to spend time on such that we become a persona non grata, so to speak. Or they will price in even greater discounts than I think we would otherwise have to face just based on they're trying to compensate themselves to the time and the risk that they'll have to face with subjecting themselves to an EGM. So it just creates really big complexity and downward pricing on the assets in an open market transaction.

Yes. That's a great point, Marc. It's important to point out this disposition mandate is not for convenience. It's to help us achieve the maximum possible proceeds in a sale because to Pat's point, buyers are not -- they're either not going to engage with you because you have this EGM process or they're going to discount the price that they will offer to account for that transaction risk. So this -- the disposition mandate is all about maximizing the proceeds of a sale.

Okay. Got it. My next question is really the follow-up in terms of how you talk about the comparison of the interest that the sponsors [indiscernible] the bond use. Are you comparing with the current trading bond use? Are you currently the use that bond at par?

Rob, do you want to take that?

Sorry, Rachel. Can you say that again? I missed that.

I think you were comparing the interest cost that the sponsor is charging on [indiscernible] project. So I'm just wondering, the bond that you have taken, is it the current bond trading volumes? Or is it the bond use at par?

No, I'm referring to what the IFA has used as a comp. It's in one of our slides, I forgot which slide number that is? Slide 6, right? As it comp to the U.S. corporate debt yield index, the noninvestment grade unsecured bonds and other publicly sourced or secured debt comparables as a reference point. But as we mentioned before, bear in mind, this is -- if there is a financier to our loans, [indiscernible] is around if -- if someone is bringing up the slides? So I'm talking about this slide.

Yes, yes. So just wondering whether this is -- I suppose this is the current trading bond use, right, not yield on par?

Well, on the second part, the unsecured bond yield between 5 to 7 years. It's -- yes. I think in the circular, there will be attachment on the IFA letter regarding this. Yes.

Okay. No, I'm just trying to understand because I think there have been instances in other REITs where the sponsor actually lends to the REIT and the sponsor actually lend at more favorable terms, either no interest or at lower interest. So I'm just trying to understand because I'll probably be getting questions to say that how is Manulife Sponsor being -- giving this at a more favorable terms to Manulife being a sponsor and [indiscernible]. There are other examples in the REIT -- listed REIT space that have seen that sponsor loan is interest free loan.

Yes. So Rachel, I think it comes down to who Manulife is, being a large insurance balance sheet, predominantly putting aside Manulife Investment Management. So again, we're heavily regulated. From that perspective, we have met various insurance regulators across the globe and within the United States [indiscernible] state and as well as in Canada. I'm not sure what sponsor or sponsors are referring to here in Singapore. But again, from our perspective, we had to go through various committees, various perspectives, including risk, audit, and that includes the perspective of any potential regulator and, of course, our own stockholders or unitholders as well.

Okay. Got it. Yes. Just one last one, a quick one before I go, in terms of the shareholders' approval, how much approval do you see, percentage?

50%? Thanks, Rachel. Can we maybe next on Vijay from RHB.

Sorry, I'm a bit overseas, my line is not very clear. So in case I drop off, it's okay. [Technical Difficulty].

Vijay, you got cut off.

I'm back. Sorry.

You're back. Okay. Can you hear me?

Yes. My first question is, is there any specific reason why all these 3 resolutions has to be interconditional? Why can't the resolution of disposition mandate be separately voted by unitholders instead to being all 3 has to be interconditional upon each other? Is it the lenders issued decision? Or is it a referral initiated by you?

Yes, Vijay, it's part of the negotiated agreement with the lenders. And it is part of that package. And the lenders -- and I think that we all tend to agree with this actually. The lenders see that it's going to be critical to be able to be a competitive seller and dispose off assets. And I think that we all realize that in order to be competitive seller in the U.S. market, this disposition mandate is necessary.

My second question is in terms of asset sales, are you just going to market the tranche on assets at least point of time? Every asset in your portfolio at this point of time is still available for sale in the market. Because Tranche 1 is most hardest to sell in this point of time in terms of market in terms of buyer pool. Is this the only asset that is going to be put in the market? And related question is that what happened if the market actually bottoms up -- bottoms down and valuation starts getting up at that point of time? Would you wait for an asset to sell? Or would you be -- how would you judge the market in terms of selling at a price when the market is actually bottoming and you are selling at 10% below valuation, when eventually the cap rates could compress the next year and the valuation could expand? How would you -- how are you going to take a call in this kind of position? Can you -- maybe go through the rationale and explain a bit? Because my concern is that possibly you expect to start cutting rates. Your cap rates could compress a bit and some of the asset valuation could go up again by the end of 2024. In that case, you could sell the asset too early and at a 10% discount devaluation, it couldn't be the best value for unitholders. How are you going to judge s*** in this point of market?

So maybe I'll take that, and Tripp and team can add to it. But one of the primary objectives through this recapitalization and restructuring was to buy as much time as possible but in the context of without this prospective restructuring subject to unitholder approval. But the next debt maturity, as Tripp mentioned, would be in May of 2024, so $140 million. So to answer your question directly, the benefit of this restructuring is that we have, in essence, bought 19 months before we have to execute roughly $329 million of sales identified primarily through what we call Tranche 1. We've built in flexibility gratefully and thankfully to the lenders who have behaved rationally. And as Tripp noted, has also allowed us collectively to move with speed and getting this outcome in 3-plus months. But to answer your question, that comes back to what we mentioned earlier around portfolio construction and portfolio strategy, which is to maximize the value for unitholders. So ideally, we would sell what we call the nonstrategic assets and what we've identified as being, in essence, the nonstrategic assets are really Tranche 1. So it's a function of -- we don't see there being long-term returns that are in the context of the risk profile of those markets and assets today and going forward. And then number two, those are very CapEx-intensive assets in general. So we're partly managing cash flow in addition to creating value for unitholders. So ideally, we do consider Tranche 1 first. We built in flexibility to where we're not restricted to do so, although that's subject to lender approval. And lastly, with respect to your second question, yes, we're going to look for better execution going forward and finding the right moment over the next 19 months to 2 years to sell assets at a better value, again, to create value for the unitholders post this restructuring and recapitalization.

Pat, do you want to add anything to that?

No. I think Marc summed it up nicely, but I would just reiterate what he said. The Tranche 1 for a reason and in terms of our view on the total return potential of these assets, and so in some ways, it's prudent for us in terms of portfolio construction and driving unitholder value to trim assets that we don't feel are going to deliver economic value over the near, medium or long term. It doesn't mean, to Vijay's point, that we go out and just sell it what's the absolute bottom. But we're going to be diligent about and try to find what is the right time and engage with the market. And as Marc said, we did try to maximize as much time as we could with this restructure. So we do have some time to ease into 2024 and figure that out and engage with the market.

And Vijay, to add to that, at some point, irrespective of the current EOD situation, we do have to deal with, what may be, the looming debt maturity that happens to be currently outside of potentially approved restructuring in May 2024. If we didn't achieve this or prospectively achieved this together, we'd be forced to sell, or God forbid, the lenders could accelerate the debt and essentially be a forced disorderly liquidation. But even the absence of an EOD in this restructuring, at some point, we'd have to deal with what is now the 2025 debt maturities in 2026 versus '24 and '25. And again, we feel that this is about a given outcome as could be achieved in the context of all the options that Tripp laid out, I think, on the second slide that were evaluated. So we're going to try to do our best to be responsive or react to where the market liquidity is. But also to stress, if there's a little bit of luck, we don't necessarily need to sell. If the equity markets pick back up, we could go raise equity. But right now, that's probably a low probability scenario until we see real -- what we call real recovery in the public markets.

Just to clarify, if you want to sell any assets other than Tranche 1, you need to go to the lenders to get an approval before you can do that at this point of time. And just to again clarify what happens if these assets are not sold by that end of the period of December '25? What happens at this day? And also, what happens if the valuation comes back? Do you really -- I mean, let's say, theoretically speaking, valuation comes back by about 10 percentage for the next year, and you're getting -- [ gets ] adjusted. Do you still need to sell all these assets to fix this issue? Or you might exit out of this position?

Yes. So the lenders primarily care about our -- getting back to some type of normalization. And you can think about twofold, one, is with respect to the basic MAS guidelines. The gearing ratios of 50% and 45%, but then also what all of you may know is what we call the unencumbered gearing ratio and the financial covenants of the various unsecured facilities. So with a little bit of luck, Vijay, if the markets did appreciate and that led to the gearing ratios being under those thresholds, we won't need to do anything. In fact, as Carol may have noted earlier, that becomes somewhat of a reinstatement event where that would allow us to begin distributions as well during the next 2 years. So again, the value of philosophically buying as much time through this restructuring, of course, we would love to have 2 or 3 or 4 years extensions. But as you can imagine, that ends up being a very different tension point and the negotiations with the various lenders.

Yes, something I would point out to on that is that if we do get into an environment where we begin to see a turnaround in values, the Tranche 3 assets are going to gain value first. The higher-quality Tranche 2 assets will gain value first. The Tranche 1 assets will probably be the last ones to begin seeing any valuation increases. It's not like every property in the portfolio is going to increase by 5% or 10% once value starts coming back, in the same way that they haven't all dropped at the same pace. And so we could even see a situation where Tranche 1 and some of the Tranche 2 assets begin to see some valuation increases and the Tranche 1 assets continue to see some devaluations. So I think that we're, again, in a very dynamic valuation situation. So I think I'd be careful not to assume that the entire portfolio is going to raise at the same rate at the same time.

That's my last question in terms of management fees. I think under these conditions where you are actually in a disposition mandate looking like Tranche 1 assets basically for disposition. Does it make sense to have the entire management be collected as a part of the whole total asset value when the actual mandate is being currently being dispositioned? And should it also be looked at that $131 million sponsored lending, should it be taken out when considering -- taking into account the management fees, which is paid by the unitholders at this point of time to be fair to unitholders also?

Who will take this one?

I'm not sure I understood this question.

Sorry, Vijay, I think you were breaking up a little bit. Could you just repeat the question?

Yes, I'll repeat my question. My question in terms of management fees paid by the unitholders [indiscernible] that point of time. Actively speaking, Tranche 1 assets are basically in a sale mode. You are looking at potentially from a sale point of view. Shouldn't these assets be excluded typically from a management fee calculation for the REIT at this point of time when you are not managing, and in fact, looking at selling it? And the second point is that there is a sponsor loan, which is [ $131 million ], which is effectively replacing assets at this point of time. At least shouldn't that be taken out for a management fee calculation? Or should the management event fee we relooked at this point of time when the REIT is on a mode of disposition and sale rather than managing the asset? And why should the sponsors actually -- unitholders actually pay the management fee at this point of time, this corresponds to that.

So the best part is on the management fee, booking of first the Tranche 1 Asset. But if the [ Tranche 1 ] assets go, then basically the distributor income will drop and then the percentage of the 10% for the management fees will also go down in accordance, right? Because it's based on a formula. But we hear you. So, Vijay, that was what you were saying, right? I mean, the Tranche 1 is we did put aside but when putting aside, that doesn't mean that we don't manage them. We still have property managers, asset managers, leasing brokers on these assets doing the day-to-day job. The lights and escalators still have to keep on going. So there are still fees that we need to pay for those Tranche 1 assets. It's just at the Tranche 1, you may not see us put in heavy CapEx for the modernization of sorts because that may not be the best place to put the money. So I think maybe that addresses the first part. The second part is about the sponsors loan, right, taking that out from the...

I didn't understand the reference. So what was the reference to the asset?

Vijay, I think I take away the management's -- we use the management fees in accordance to the sponsor loan that the sponsor is providing? Is it like $137 million? Vijay? Sorry, you're on mute.

Sorry, yes, that's the part I'm coming from, meaning that unitholders are paying fees for the loans as well and also paying management fees. Shouldn't that be taken into consideration is what I'm coming from.

Yes. I think in short he is talking about the management fees. No, I mean, we hear you, I think something that we will think back also. And also, we have not started the disposition for the Tranche 1 as we speak. Also bear in mind like the sponsor in the last 1 year has also waived disposition fees that we sold to them [indiscernible] and also for pop shop place, there will be no disposition fees that they will be taking. So, yes.

And I would add, there was no origination fee with respect to the financing. I know that might sound trite and superficial. But there was no origination fee just the base rate, so to speak and the -- while they normally have been an accrual that built in as an exit premium to get to the 10% effective rate. But, Vijay, on the point of management, because of where we are today and the property capital markets as well as what we call the operating property markets one of the biggest things any manager can do, whether it's a fund manager, in this case, a manager of a REIT, is the first deal, with this existing financing. We're in an environment in which we're more than likely a higher rate strip longer. And then secondly, we also know that the V, as in LTVs, are also significantly lower. So much of the work even before you start to touch the asset for any lender even in the absence of -- for any borrower, even in the absence of an EOD, is very much dealing with our existing financing. So there still is a lot of work that we collectively need to do, both management as well as sponsor, that this is what we believe is a very big, first important step. And what we hope is stabilization, ultimately, recovery and what we hope on the back end of the next 2 years can be growth. But this is a very important part and dealing with financing and what we call capital market strategy is really the first step.

Yes...I think in the -- sorry, Vijay, you have something else to add?

No, no. That's all I have.

Okay. Yes, I was just going to say in the interest of time, we are at the hour. We have another meeting. But I just want to thank everyone for your time and maybe just let me just take a very quick recap. I think since I am gearing kind of like breach and close to breach in end December 2022, I mean all of you have been asking about what's Manulife's take on the REIT and also on sponsor support. And if you look at what has happened, very unfortunately also, I think we have a valuation decline that brought about breach in bank covenant. So throughout this period, I think we have been working very hard with the sponsor. Marc has been appointed Chairman of the Board just 1 month plus ago. And I think throughout the negotiations with the lenders, I think the sponsor has been very critical. If not for the sponsor, I think there will be no today to get to where we are. And of course, I think there's been a lot of questions, and we hear you on the sponsor loan, on the interest cost and whether is this best for unitholders. From where we sit and together with the Board, I think this -- where we are, this is the best for unitholders because having run through all the alternative options, the option will be the lenders taking back the REIT and calling for default immediately. And if you look at where we are today, the fact that even the top lenders are with us, believing that we will get through it, we have negotiated really hard and heavy and it has been a very true way. The lenders are also with us to make sure that the next 1 or 2 years, we have the ability to turn ourselves around because the assets that we have, there are some winners, there are some losers, but it doesn't mean that giving up is the right time to do now. If the asset is going to be liquidated today, equity holders will not be in any better position than where we are. So I think what we want to focus moving forward is really to execute the recap plan that we have put together. And that will, I think, build better confidence in investors and for us to make sure that we get the first step right and then we can maneuver our way through further headwinds. And just bear in mind that, I mean, Marc he didn't want share it, but Marc will be relocating to Singapore. I'm not sure if it's for us. But right up there in Manulife Group, I think there's been a lot of focus on the REIT in the last couple of months, definitely. With Marc being appointed on the Board and now the Chairman and with him being based in Singapore because the focus of Manulife will still be in Asia. I mean, to give everyone some confidence that we will do and continue to work hard to do what's right for unitholders. So bear with us as we go through the recap plan and really would like to seek unitholders to vote favorably to help us get through this first step. And as we go through the journey, we'll keep -- we'll keep updating the market on what we are doing, and we hope to deliver and say less and do more. So with that, I mean, if you have more questions, please let us know. Also do let your clients know that we have quite a bit of IR activities and non-deal road show, maybe a deal road show in the coming days. So they are happy to get in touch with us or you want to arrange a group meeting to call for your investors or for your clients, please feel free to get in touch with me and my team. With that, just thank you, everyone, for your time and at least we have a good Christmas, hopefully, and happy New Year.

Thank you.

Thanks, everybody.

Thank you.