Mapletree Logistics Trust (M44U) Earnings Call Transcript & Summary

Hi, good evening. Welcome to Mapletree Logistics Trust Second Quarter Results Presentation for the financial year ending March '22. We have the full management team, who's here with us today are led by Kiat, CEO; Charmaine, CFO; Jean, Head of Investment; and James, Head of Asset Management. Without further ado, I will hand over to Charmaine to begin the presentation.

Hi. Good evening, everyone. Thanks for dialing in. Let me take you through the key highlights for 2Q FY '21/'22. Gross revenue rose 25.2% year-on-year to $165 million. NPI grew 21.5% to $144 million. Consequently, amount distributable to unitholders grew by 19.2% to $93.4 million, translating to a DPU of $0.2173, 5.7% higher than last year. DPU rose on the back of better performance from existing properties, accretive acquisitions completed last year end contribution from the completed redevelopment of Mapletree Ouluo Logistic Park Phase 2, which [ DOP ] in May last year. As at 30th September, MLT's portfolio occupancy stood at 97.8%, with a well-staggered lease expiry profile and WALE of 3.7 years. Average rental reversion for leases renewed or replaced in 2Q, 2.4%. Capital management-wise, aggregate leverage ratio stood at 38.2% as at 30th September. MLT's debt maturity profile remains well staggered with a debt duration of 3.6 years. Approximately 76% of total debt has been hedged into fixed rates. And about 76% of MLT's income stream for the next 12 months has been hedged to Singapore dollars. In addition to the proposed acquisition of 9 Changi South Street in Singapore that we have announced at the end of last quarter, we have also announced the proposed acquisition of 1 facility in Melbourne, Australia for AUD 43 million; Mapletree Logistics Hub Tanjung Pelepas in Johor, Malaysia for MYR 405 million and Yeoju Logistics Center in Yeoju, South Korea for KRW 135 billion. We expect to complete these proposed acquisitions over the next few months. In August, Fitch Ratings assigned MLT with a credit rating of BBB+ with a stable outlook. Moving on to financial review. For 2Q this year, MLT started and ended the quarter with 163 properties, 17 additional properties from 146 properties at the end of 2Q last year. Gross revenue increased year-on-year by $33.2 million, mainly due to contributions from the enlarged portfolio, higher revenue from existing properties and higher occupancy from the redeveloped Mapletree Ouluo Logistics Park. Property expenses grew year-on-year 58.6%, in line with the enlarged portfolio. Consequently, NPI increased year-on-year by $25.6 million. Borrowing costs increased by $4.4 million, mainly due to incremental borrowings drawn to fund FY 2021 acquisitions. This is partly offset by lower interest costs arising from lower average interest rate. Accordingly, DI is higher, $93.4 million versus $78.3 million, an increase of $14.9 million, that's 19.2%, translating to a DPU of $0.2173, 5.7% higher than $0.2055 in 2Q FY 2021 after accounting for an enlarged issue unit base. Included in amount distributable to unitholders is a divestment gain component of $1.8 million as compared to $4.7 million in 2Q last year. Excluding divestment gains, adjusted DPU would have increased by 10.4% as compared against last year. The trends and reasons behind the variances for first half results are largely similar to 2Q year-on-year results. Gross revenue increased year-on-year by $64.6 million. The increase resulting from the enlarged portfolio, higher revenue from existing properties and contribution from Mapletree Ouluo Logistics Park Phase 2. Property expenses increased year-on-year by $13.7 million and NPI increased by $50.9 million. Accordingly, DI is higher, $186.1 million versus $156.1 million, an increase of $14.9 million, translating to a DPU of $0.4334, 5.7% higher than $0.410 in first half last year after accounting for an enlarged issue unit base. Quarter-on-quarter with 153 properties in both quarters. Gross revenue increased marginally by $1.3 million. Property expenses marginally higher by $1 million and NPI marginally higher by $300,000. Borrowing costs, the same as last quarter. DI is $670,000 higher than last quarter at $93.4 million, translating to a 0.6% increase in DPU from $0.2161 in first half -- first quarter to $0.2173 in the second quarter. MLT has a healthy balance sheet. Total investment properties as at 30th September stood at $10.8 billion, $19 million higher than last quarter. Total debt increased by $4 million, mainly due to higher net translated foreign currency loans. NAV remains the same as last quarter at $1.32. We remain prudent in our capital management. Aggregate leverage ratios remain the same as last quarter at 38.2%, with weighted average interest rate of 2.2%. Average debt duration and interest cover remained stable from last quarter. Other maturity profile remains well staggered with an average debt duration of 3.6 years. Debt due for refinancing for the rest of the year is 3%, about $110 million relating to our JPY MTN that's coming due in December. We have available committed credit facilities of $674 million on hand. This is sufficient to meet our refinancing requirements for the rest of the year. To mitigate the impact of interest rate risk and FX risk on MLT CTU, we've hedged 76% of our total debt into fixed rate and 76% of our estimated distributable income for the next 12 months has also been hedged either through currency for contracts or derived in Singapore dollars. I'll now pass the mic to Jean, who will bring you through portfolio review.

Hi, Yuen May. Can you hear me?

Yes, we can hear you loud and clear.

Okay. I'll start on the portfolio review. And now the presence across 9 geographic markets offers diversification as well as a regional network of quality assets located in key logistics hub and in close proximity to large consumption markets. Based on first half FY '21, '22 asset under management and gross revenue, the mature developed markets in Singapore, Hong Kong, Japan, Korea and Australia continue to account for the majority at about 70% to 75% of the revenue or AUM, while the faster-growing developing markets in China, Vietnam, Malaysia and India account for the balance 25% to 30%. In terms of the geographic breakdown of the occupancy level, our portfolio occupancy remained healthy at 97.8% as at 30th September 2021. This is due to higher occupancy in Singapore, mainly from 2 assets in 76 Pioneer and 10 Changi South; and Japan, from an improved occupancy at Higashi Hiroshima; and lower occupancy in China from properties located in Shenyang, Tianjin and Chengdu and Hong Kong, some transitional downtime at Grandtech Centre. The rest of the 5 countries remained stable. On the lease expiry profile, our lease expiry remains well staggered, with a WALE of 3.7 years by NLA. For FY '21/'22, we are let with 2 SUAs, 1 in Korea and 1 in Malaysia, and the team is in renewal discussions with the tenants, which are expected to finalize in the coming quarter. Similarly, on the MTB leases of 13.9%, renewal discussions are ongoing with the various tenants with high probabilities of renewals. In FY '22/'23, 28.5% of our leases by gross revenue are due for expiry with most of the expiries coming from leases in China, Singapore and Korea. We started negotiations with our tenants 9 to 12 months ahead for larger leases and about 6 to 9 months in the brand's more smaller leases so that we can finalize early renewals and secure replacement tenants early. The next one, on top 10 tenants by gross revenue. Our top 10 customers account for about 25.4% of total gross revenue. This quarter, we have a new tenant, Hong Kong TV entering into our top 10 tenant chart. Previously, it was Nippon Access Group from Japan. So Hong Kong TV is an e-commerce player in Hong Kong, expanded and doubled the space with us by leasing an additional draw in our Tsing Yi warehouse. As a result, their contribution to portfolio gross revenue increased to 1.3% as at 30th Sept. as compared to the last quarter of 0.7%. Next one on the diversified tenant trade sector, Besides offering a pan-APAC network across 9 markets, MLT has a resilient portfolio that has a high-quality tenant base of 753 customers from well-diversified trade sectors with about 3/4 of portfolio serving consumer-related sectors such as consumer staples, fashion apparels, health care, F&B products and electronics. I'll now move on to the investment review. Today, we have announced 4 acquisitions with a total purchase consideration of $250 million with each property, 1 in Singapore, 1 in Australia, 1 in Malaysia and 1 in Korea. So as mentioned earlier by Charmaine, for the Changi property in Singapore, this is located in the eastern part where there's limited supply of warehouse and where its location is good for time-sensitive, high-value products being in close proximity to the Changi Airport. So this transaction is currently pending JTC approval. On the right side of the picture is the cold storage facility that is fully occupied with a long WALE of 13 years. It is located in Leviton North and inner west precinct of Melbourne, an established logistics region. We expect to complete the transaction before end of the calendar year. The next slide, the 2 acquisitions on the left side is Malaysia. It's an acquisition of a 1.4 million square feet Grade A warehouse sponsor located in Tanjung Pelepas, southern part of Peninsular Malaysia. The completion is expected to be by quarter 4 of FY '21/'22. On the right side shows the recently announced acquisition located in North Yeoju, South Korea. This is $150 million property with an entry yield of 4.2%. This is in a newly located logistics hub within the Seoul metropolitan area and has excellent connectivity and accessibility to Seoul. This asset is fully leased with a leading online fashion retailer as one of our key tenants. The completion is also expected to be by quarter 3 of FY '21/'22. The next one, just a quick recap, just a quick summary. MLT AUM stands at $10.8 billion as at this year set; WALE of 3.7 years by NLA; portfolio occupancy, 97.8%, having a tenant base of 753 accounts across 163 properties in 9 markets. On the outlook, on our tenants, our tenants continue to operate with minimal disruptions to their business and operational activities. In terms of outlook, the demand for warehouse space is expected to remain resilient with the economic recovery as more countries learn to live with COVID-19 with the easing of restrictions, higher destination rates and reopening of the country borders. In space-constrained and developed markets like Hong Kong, Greater Tokyo, Greater Osaka, and cities in Sydney, where the vacancy rate is very low at less than 2%, the demand for Grade A warehouse continue to be robust. The overall demand is underpinned by recovery in economic and business sentiments and driven by e-commerce and 3PL demand for our warehouse space. As for the emerging markets like Malaysia, Vietnam, India, China, we are seeing pickup, some pickup in domestic consumption, although it's still below pre-COVID levels in this country with the easing of COVID restrictions and increased vaccination rates. Similarly, we expect the logistics demand to remain firm, with e-commerce as key drivers of the warehouse demand. Overall, in terms of the demand for warehouse space is expected to remain resilient with stable rents and occupancy rates. With that, I end my presentation. Thank you.

Right. Thank you, Charmaine and Jean. We have also James here, who will take questions on the operational side. So shall we do question, Yuen May?

Yes. We'll now open the floor to Q&A.

[Operator Instructions] Can we have the first question, please?

This is Derek from DBS. Can you hear me?

Yes.

Got a few questions. First one is, could you share the rental reversions by country? I think this quarter numbers, a slight uptick from Q-on-Q. Is there room for some optimism?

This is James here. Yes. I'd like to go through the 2Q rental reversions country by country first, right, before giving you the answer. Singapore is 1.7% rent reversion; Hong Kong, 2.6%; China, 2.5%; Malaysia, 3.0%; Vietnam, 3.0%; Korea, 2.0%; Japan, 1.5%; Australia, 1.2%. India, there was new -- because there was no new renewal done. So overall, 2.4%. It was a slight increase from 2.2% in first quarter. So most of the countries that we see, like, high-growth emerging markets like Vietnam and Malaysia, rent reversions continue to be strong with the high -- in the 3% range. China was still 2.5%. It was increased from 1.7% in 1Q. And the other countries remain fairly robust.

So I think, Derek, to answer your question, whether we are seeing an uptick in optimism, right, I think with the new COVID situation evolving over different countries, the tenants are still cautious, meaning that, yes, they are prepared to take up new additional spaces. But as far as rental reversions, they are still pretty, I would say, resistant to high levels of reversion rates. So that gives you a flavor. So I think, in general, tenants are confident, but they are cautious. So they will take up additional space, but they are not prepared to give you like a 10% rental reversion or even a 5% rental reversion easily, unless there is a very specific or unique requirement on their part. So I think -- yes. You have another question because I know you're going to ask me about acquisition, right?

Yes, I would ask you. But before that, can I ask you about your China? Actually occupancy has been moderating a little. And you mentioned before the closer cities are doing better, the inlands one are weak. Are we still seeing that same trend? And maybe you can share what kind of demand are we seeing in terms of trade sectors that's taking up the space, specifically on China, if you can.

Yes. James?

Yes. For China, the slight drop in occupancy in 2Q was a loss of about 12,000 square meters. In the scale of things, it's not that much because the team is going to -- [ back to lead ] in the third quarter. So this is in cities, in Shenyang, Tianjin and Chengdu, which are provincial cities, right, in their own right. So demand will continue to be fairly strong and robust. However, in the so-called Midwestern region like in Chengdu, there seems to be a slight drop in demand, but we are obviously watching the market, right, because of a slight increase in supply in the second-tier markets. So we have been -- we see fairly strong demand still in the provincial cities or in provincial capitals and also, of course, first-tier cities like Beijing, Guangzhou, Shanghai that we're operating in. But second-tier cities, we're monitoring the situation.

Okay, okay. I'll just ask my last question. I mean, something I'll just ask you about. I'm just thinking aloud that you look -- look at your cost of capital, right? So it's been quite stable, but cap rates have been compressing. I'm just wondering how are you thinking about acquisitions? And are you relooking your underwriting assumptions?

Okay. I think, in terms of acquisitions, we're actually seeing quite an active pipeline for MLT. And we have also spoken to the sponsor, and then the sponsor is also getting quite active to divest some of the properties there. So I think in a nutshell, this year, our total acquisition value will be quite substantial, yes. So in other words, I think, coming out, we are expecting a fairly large deal coming up from Japan. We think that from the sponsor side, there should be a fairly large pipeline that's coming as well.

Okay. Are you diverting to Japan? And I thought China has been something that you've been looking to acquire quite actively.

Yes.

So is it more Japan now?

No, China, we will get from sponsor because I think you know that the quality of the warehouses in China third-party acquisitions, the quality don't tend to be Grade A. So we will be looking at sponsor for the China Grade A warehouses for acquisition. But for Japan, I think we are in -- Jean is in the process of hopefully closing a deal soon over the next 1 month or so. And in Japan, that should be quite a nice property with a sizable GFA.

Wow. Okay, this is from a third party then?

Yes, third party. So I think the trend will continue. You will see from the sponsor, the China, Vietnam, Malaysia pipeline that you always see in our charts. So that one will continue. So we expect that to come on stream. And then the other -- for the third-party acquisitions, we think this -- Japan has got good visibility of 1 or 2 deals coming up. And then we think that maybe Australia and Korea will complement it with 1 or 2 other acquisitions. So I think this year -- last year, we did acquisitions of how much? $1.6 billion. So I think this year, hopefully, we can still do something around that range.

Can we have the next question?

This is Tan Xuan here. Can you hear me?

Yes, Tan Xuan.

I recall last quarter the guidance on acquisition was roughly about $400 million from third party and then none from the sponsor. It seems that it has changed materially. Can you walk us through what has changed since?

Okay. I think what has changed is we have managed to excite the sponsor into exiting some of the pipeline and give them a nice divestment gain. As what Derek has mentioned that our cap rate -- our trading yield now is quite -- put us in a pretty good position. So you will expect to see China, Vietnam coming up. So that is one major change. And then the other is we -- the acquisition coming up from Japan is larger than what we expected. So that one will be, again, a good addition to our portfolio. So Tan Xuan, does that answer your question without me breaching [ MAN ] rules.

Yes. That's very helpful.

This is Donald. I have some follow-up questions on the acquisitions, right? So you probably expect large deals coming in. What of divestments? Will divestments trend also be in tandem for this year?

We are looking -- in fact, James has already put out some properties, some of those poor-specification, cargo lifts. So they tend to be smaller properties in value. So James and team has already soft tested some of these properties. So we hope to be able to push out some of these divestment initiatives hopefully, later part of this year or early part of next year.

Okay. who is buying the poor aspect type of assets?

They tend to be end users themselves. So for example, like in Malaysia, it will tend to be a specific end user themselves, who probably will not just look at warehousing, but also production. So that is one angle. And then -- so I think for the poor-specification assets, we still find like a sweet spot. Because these guys, they look at a certain size that they are comfortable with. So we're not talking about like a $200 million property that they can take. So it's probably within the 20, 50 kind of range. So -- and then if we push out a few of these, then we'll see a divestment of maybe $100 million, $200 million.

And again, you mentioned that you're willing to underwrite a lower -- higher valuations given your cost of capital now, that's why your sponsors are willing to negotiate. I mean, without disclosing what kind of valuation for the upcoming acquisition, what sort of -- how have cap rates compressed for China leading up to...

Start -- yes. Yes, I think -- so I think recently, Capital Land, they did some acquisition. So the -- So I think the cap rates have definitely compressed especially for very prime locations. We still get Chinese companies keen to buy in China because there's this restriction of capital that they can bring outside of China. So they are still keen to buy some of these properties. So I mean, a very prime location, we get guys still looking at 4% kind of cap rate. So I think, with the sponsor, the negotiation will be that it's going to be slightly more expensive than what we see last year, but it will be cheaper than, let's say, we go and try to compete with some Chinese investors to compete for -- to buy a portfolio of Grade A buildings.

And just curious also, did you look at the Qantas deal in Sydney?

Yes. Yes, Donald, we did evaluate that portfolio. But I think, unfortunately, in terms of that portfolio, it's very expensive. I think they are looking at cap rates of about -- of cap about 3.5%. So NPI yield, we are looking at about 3.3% that kind of range. So I think that is not something that we are keen to pursue further.

3.5% for that kind of property to an investment...

Yes, yes. correct.

Okay. My last question is for James. Sorry, could you repeat on your reversion breakdown again? I failed to capture it.

Okay. I'll repeat again. of Singapore, 1.7%; Hong Kong, 2.6%; China, 2.5%; Malaysia and Vietnam, 3.0%; Korea, 2.0%; Japan, 1.5%; Australia, 1.2%.

Can I ask one question? It's Brandon here.

Brandon, go ahead.

Just going back to what you mentioned to Don on Australia. So you -- if you did look at the Qantas deal, does it mean that you are now actively looking at development opportunities as well?

I think before -- okay, before we get excited and think that Mapletree Logistics Trust is going to be a developer, the answer is no. I think what we are looking at is what we call asset enhancement. So if there is potential for further development on a particular site or there is -- as part of a portfolio, there's some development, we are prepared to do that. So -- but if you're looking at just us going out and buying land, compete on land price and build, no, that's not what we're going to be doing. It will have to -- yes, so development will have to be part of larger portfolio or there's some value that we see that we would like to capture. So for example, if it's a property that's right next to our existing property, where we buy and develop, the answer is yes. But will we go and find a piece of land somewhere out there and buy, no. So I'm not sure whether that gives you some clarity. So there's no intention of turning into a developer at all.

Okay, okay. Then just back -- just want to get some clarity on your Australia strategy. So I mean, you mentioned a few -- several months back, you did participate in the milestone deal, right? And obviously, I think there's been a lot of transactions in that market, including things at airports and there's been a stake in the [ Nexus ] fund, right? So that's -- could we potentially see you making some changes in the way you expand in this market?

Hello?

Yes. Can you hear me?

Yes. So okay, Brandon, I don't -- I didn't quite catch your question. So I don't know whether you can see the slide. So we did buy something in Melbourne at NPI yield of 4.3%, right? Yes. So are you saying that are we still looking at Australia? The answer is yes. We -- and the unfortunate thing is we know that portfolio acquisitions in Australia are getting very, very expensive. So we were prepared to go to an NPI yield of about 3.8% for the -- what you call the milestone deal because it is a sizable transaction. It gives us a certain immediate -- it gives us a market advantage immediately. So I think this is not a tradeoff that we will do. So will we be looking at another portfolio? Yes. Does it offer -- if it doesn't offer the kind of so-called strategic value, like what the milestone deal has shown, then I don't think we will be willing to compete just based on the cap rate alone.

Okay, okay. All right. Just one last question from my end, right? Have you been seeing a bit of vacancy risk in your [ Zhenjiang ]portfolio, given that I think we've been hearing that more and more MLCs are looking to exit some of these low-cost manufacturing hubs in Asia?

If you're referring to ASEAN, you're looking at countries like Malaysia and Vietnam, right? So we do see more demand rather than more vacancy rates, especially demand for good Grade A assets, especially in the Klang Valley, Shah Alam area, where we're positioned today. So that's 100% full in Shah Alam 1 and 2 properties. And for Vietnam, right? All our properties are 100% occupancy, both in the north and south of Vietnam, in Hanoi, in Bac Ninh area and also in the South in Binh Duong area. So this shows that the demand is still fairly robust because we are positioned more for domestic consumption in these 2 markets, right? Vietnam, to some extent, is export-driven, but we are not in those port cities, in Haiphong, so we are less affected. But nonetheless, we are catering to the urbanization and the growing middle class, growing consumption in Vietnam. So the demand continues to be robust.

It's Mervin from JPMorgan. Just want to follow up in terms of the acquisitions and maybe capital structure. Just wondering how you're seeing your maximum gearing, because a lot of these are starting to push towards the low 40s. And for strategic acquisitions like milestone, will you consider acquisitions, which are DPU neutral initially before it's accretive in the medium term given the significant compression cap rates?

I think, Mervin, I've known you -- I think you have been covering us for a long time, so thank you for that. The -- what we have kept to is if it's a strategic acquisition, meaning that we are unable to control the timing, but we really would like that portfolio to be added to what we have, then the initial gearing for it to increase beyond the 40% is something that we are prepared to do. But I think you have seen us come back to the market to raise an EFR whenever we have a sponsor pipeline. And I don't foresee ourselves changing that. Because every year, we expect to get pipeline from the sponsor. And we will always take the opportunity to reset our gearing for the third-party acquisitions that we are unable to control the timing. So I'm not sure whether that's the answer that you're looking for.

Yes, I just -- yes, because, obviously, there's CapEx compression in your portfolio. Value will also fall by hopefully year-end. You can push it, maybe, to low 40s and by year end, drops back down to 40 or below 40 again. Just wondering how you -- should we be thinking that way in terms of -- yes?

Yes. We will -- when we do not have the ability to control the timing of the acquisitions that we would like to take, then I think that's where we are prepared to push the gearing more.

Okay. So Japan want to see a temporary increase in gearing, I would imagine, just as much...

Yes. It depends, yes. It depends on -- yes, it will see a temporary increase. And then with the sponsor pipeline coming, depending on which one we can push the time line and then we'll reset that very fairly quickly.

Sure. Just a question for me. Just in terms of Australia and then India NPI. I mean it's small against [ certain ] things, but just curious. Occupancy has been flat Q-on-Q, but the NPI is actually down Q-on-Q. I'm just wondering what's happening. Is that some incentives there yet to provide?

So which country again, Mervin, sorry?

Australia. Looks down about nil plus Q-on-Q.

Australia, let me see.

I think there is, as we renew some of the leases, there is a one-off rental incentives that we give, right? So the -- and yes -- and also there is the accrued land rent that we have to pay for Coles Brisbane.

Are there similar drivers for India as well? And -- yes.

Yes. Yes. This is the one-off rent amortization that the absence of that, Charmaine, correct?

Yes. So in the last quarter, it's -- we made a rental adjustment for -- accounting adjustment for rental amortization on the straight-lining. This adjustment, while it affects the NPI, it doesn't have any DPU effect.

Okay. All the best in the acquisition front.

Thank you, Mervin.

It's Nicholas from Credit Suisse. I just have one question to ask. Your management fees and units, these has crept up sequentially this year as well. Just wanted to understand, as we get more acquisitions, and we're able to get more inorganic growth that way, will we think of kind of moving that fees in units back to more -- back to more cash and hence kind of offset a bit of the accretion?

I think you are asking about the -- for the acquisitions from the sponsor, right? So acquisitions from the sponsor, the acquisition fees are in units.

I was referring to just, like, the normal base and performance fee that you get every year. When I look at the ratio, I think this first half, about 70% or so is paid in units. So I'm just wondering if you -- if I -- just say 3 years ago, so it was below 50%. So I'm just wondering if the ratio will eventually switch back towards a more cash -- more cash paid for the management fees.

Okay. I think, for the management fees, what -- there's this other dimension. That is you noticed that as we come out to the market to raise EFR, the sponsors, they get diluted, right? So they basically would like to actually have more exposure or at least maintain and -- or if not, not lose so much of the exposure to MLT. So this ability for them to collect fees in units actually is something that the sponsor will be keen to do. So moving ahead, we do not expect to change it to fees and cash in a substantial way, unless it's on third-party acquisitions that we have some consideration. But other than that, the fees and units that we get from some of these base and performance fees will continue. Two reasons. One is that we'll continue to at least help the sponsor maintain exposure to MLT. And the second is alignment of interest between the manager and the REIT itself.

We have a question from the webcast audience. With regard to the perpetual that is facing the first call in November 2021, whether we can share some color on the plans?

We are still evaluating on the options with regards to this maturing perpetuals. This includes the possibility of raising new perps to redeem the maturing perps.

Do we have any more question?

From Morgan Stanley.

Wilson. Wilson is that -- Wilson, is that you?

Oh, no. Derek from Morgan Stanley.

Derek from Morgan Stanley, sorry.

Yes. I just want to ask a question on China. Given the exiting China power cuts with respect to some industrial tenants, just wondering how your warehouses are faring. And do you see any potential impact on gross lending operations and potentially any occupancy impact there?

Derek, you're referring to the community group? Derek, are you referring to the community group buying?

No, just in general, the China power cuts, yes. And does that impact your tenant operations and occupancy?

I see Okay. On the power -- power constraints and restrictions, that was more critical before the 1st October nationality holidays in China. But there were certain constraints and power restrictions more for the production companies, not so much for the warehousing side. However, having said that, right, the government is increasing so-called co-production to meet the coming months' demand for LNG. And also in our logistics parks, we do have backup generators in each of our logistics hubs. So that will help provide some backup power when there's a need. However, our tenants are also -- when they are required to consume more power, they do rent their own generators. But we do see that this -- among our logistics parks in operation, the need for our tenants to rent these backup generators themselves is not so great because there's sufficient power in our logistics parks to run the operations. So that's what we see at the moment.

So it's a not an issue right now?

Not at the moment, yes.

Okay. Understood. And just I guess a follow-up, last quarter, you mentioned the, potentially, development of 51 Benoi. But I guess now with the excise actually covered, would that still be on the [ cusp ]? Or not anymore?

Oh, we're still on track. It's pending, really, consent and approval for the rezoning to [ 2.5:1 ] ratio by December this year or January early next year. So we're still on track.

Is there a dollar amount that you have in mind for this redevelopment?

I couldn't catch you. Can you repeat again?

Is there a dollar amount that you have in mind for this redevelopment?

$250 million due to the development cost.

Any final question? Okay. If there are no more -- if you have any more questions, you can always reach out to Yuen May and her team, right? But thank you for your time. And then we hope to bring more news to you soon. Thank you.