Mapletree Logistics Trust ($M44U)

Good afternoon. Welcome to the Fourth Quarter Results Briefing for the Financial Year ended March 2026. This is the Mapletree Logistics Trust. I will hand over the session to Charmaine Lum to kick off the presentation. Charmaine, please.

Thank you for taking the time to attend our briefing. I'll take you guys through the 4Q results as well as the key highlights before passing on to the rest of the team to take you through the rest of the slides. So for 4Q FY '25-'26; for this quarter, our gross revenue and NPI are higher by about 1.7% and 0.9% year-on-year -- lower by 1.7% and 0.9% year-on-year mainly because of absence of contribution from our divested assets as well as FX. In terms of DPU, we are declaring $0.01819. This is 7% lower year-on-year. If we are to strip out the divestment gains from the DPU from last year, DPU from operations at $0.01819 is actually 0.9% higher year-on-year and 0.2% higher quarter-on-quarter. In terms of portfolio occupancy, we are slightly higher 96.9% versus 96.4% last quarter. Portfolio rental reversion is a positive 3.3%. If you were to exclude China, that's a positive 4.2%. WALE stable at 2.5 years. In terms of capital management, aggregate leverage is slightly lower, 40.6%. We managed to keep our interest cost stable at 2.6%. About 83% of our total debt has been hedged into fixed rate and 75% of our income for the next 12 months have been hedged into Sing dollars. So if we move on to 4Q FY '25-'26 versus 4Q last year's results. Revenue is 1.7% lower. This is mainly due to the absence of contribution from divested assets. We continue to face currency weakness in certain currencies although this is partly offset by appreciation of Malaysian ringgit as well as Aussie dollars. The currency impact is also partly mitigated through hedging. The lower gross revenue is actually mitigated by contribution from our completed redevelopment of Mapletree Joo Koon Logistics Hub at our AEI and higher contribution from Singapore, Japan and Vietnam offset by lower contribution from China. We remain conscious of our cost containment and for property expenses, we are slightly lower, 6.3% lower although this is offset by contribution from Mapletree Joo Koon Logistics Hub. If you were to exclude the impact of divestments and FX, gross revenue and NPI would have increased by $3.6 million and $4.1 million. In terms of borrowing costs, slightly lower, 3% lower mainly due to lower base rates on our SORA rates, interest savings from repayment of loans with divestment proceeds partly offset by interest incurred on loan drawn for our AEI that's recognized in the P&L post TOP as well as replacement of hedges at higher cost and higher rates for JPY loans. All in, DI to unitholders is 6.1% lower and our available DPU is 7% lower at $0.01819 versus $0.01955. But if you were to strip out the DPU as mentioned earlier, it's $0.01819 versus $0.01803, that's 0.9% higher. 12 months this year versus 12 months last year. Revenue and NPI, both lower mainly for the same reasons as 4Q; absence of contribution from divested properties, regional currency weakness, which is mitigated with hedging as well as mitigated by full period contribution from acquisitions in the last financial year as well as contribution from our AEI, higher contribution from Singapore, Japan, Vietnam, Malaysia and Hong Kong offset by lower contribution from China and South Korea. Excluding the impact of divestments and ForEx, gross revenue and NPI would have increased by $6.1 million and $5.4 million. Similarly, gross revenue -- borrowing cost is lower mainly due to lower base rate on unhedged Sing dollar as well as Hong Kong dollar loans, interest savings from repayment of loans with divestment proceeds partly offset by interest incurred on loan drawn for the AEI and capital expenditure as well as replacement hedges at higher cost and higher base rate for DPI loans. Accordingly, our DI to unitholders is 8.9% lower. If we are to strip out the DG component, adjusted DI to unitholders were 2.5% lower and adjusted DPU from operations is actually 3.4% lower, $0.07262 for the full year versus $0.07519 last year. Moving on to quarter-on-quarter results. Gross revenue is slightly lower mainly due to currency weaknesses as well as absence of contribution from divested properties mitigated by higher contribution from our AEI Joo Koon. Property expenses increased slightly due to higher repair and maintenance expenses. All-in NPI is slightly lower by 0.4%. Borrowing costs slightly lower by 1.7% mainly due to 4Q being a shorter quarter than 3Q. Amount distributable to unitholders higher by 0.3% resulting in a higher DPU of 0.2%, which is $0.01819 versus $0.01816. Moving on to the balance sheet. You will see our investment properties higher than last quarter mainly due to 2 key reasons. One would be the completion of our India acquisition of about $56 million that completed on the 27th of March. We also have some valuation gains, which resulted in higher investment properties and loans. I think Chow Mun Leong will take you through the valuation assumptions later. Total debt is higher due to additional debt taken to fund the India acquisition partly offset by lower net translated loans due to weaker JPY, Hong Kong dollar and U.S. dollar against the Sing dollar. Resultantly, NAV is stable at $1.22, same as last quarter. Leverage was 40.6% and managed to keep our interest cost at 2.6% for this quarter. Moving on to our debt maturity profile. Our debt maturity profile remains well staggered with a healthy average debt duration of 3.6 years. We have about 2% of our debt that's due for refinancing in the new financial year. We have sufficient committed credit facility of $700 million on hand to refinance debt due in the new financial year. In terms of the interest rate and ForEx management, we remain disciplined with our hedging policies so about 83% of our total debt is hedged or drawn in fixed rate. Of the fixed rate component, about $700 million are due for refinancing in the new financial year. So we expect to replace this at higher cost. Together with the macro uncertainty and risk of higher rates, we expect our interest cost in the new financial year to be about 2.7% to about 2.8%. In terms of ForEx, we will continue to hedge our FX. But as of this quarter, we have about 75% of our income for the next 12 months has been hedged into Sing dollars or derived in Sing dollars. I'll pass over to James for portfolio update.

Thanks, Charmaine. I will now go through the portfolio update. So in terms of the portfolio, we remain stable in 4Q. Developed markets continue to account for 70% of our portfolio by AUM and revenue. There's only a slight increase in India contribution in 4Q from the latest acquisition in Mumbai. We have a diversified tenant base of close to 1,000 customers who are handling mainly consumer related goods. Majority of the tenants, about 85% of our revenue are serving domestic consumption and only about 15% of revenue are serving the export market. Pleased to announce that in 4Q we had a set of strong operational results. We had occupancy increase of 0.5 percentage points to 96.9% in 4Q. So 5 of our MLP countries registered positive occupancy increases while the other 4 maintained the full occupancy in 4Q. For rent reversions, we posted 3.3% positive rental reversion as compared to 1.1% in 3Q. Excluding China, it was 4.2%. The lease expiry for FY '26 went up to 36% by NLA. In 3Q, it was 32.8%. This was contributed mainly from the leases from China that we renewed and replaced in 4Q, which had a rate of less than 1 year. Overall, WALE is 2.5 years by NLA as of 31st of March. Our Top 10 tenants remain stable contributing 19.7% of our overall gross revenue. I will now ask Chow Mun Leong to talk about acquisition.

Thanks, James. First talk about accretive acquisition. I think last month we have announced a successful completion of the acquisition of a freehold Grade A warehouse in Bhiwandi, Mumbai. Purchase price about $50 million. It is 100% occupied to 2 of India's leading listed online e-commerce companies. There's a long WALE of 3.9 years. And it is newly completed in August '25 with modern Grade A specs. Moving on the next slide. As you all know, we have been actively doing recycling and selective divestments. So for the full year last year in FY 2026, we have actually managed to divest 6 assets at an average premium to valuation of 20%. And next slide so the portfolio valuation. As you can see from the chart here, our latest valuation is about SGD 13 billion. It's about 1.6% lower than last year of SGD 13.3 billion. This is due to a few reasons. First, we have divested -- as I mentioned earlier, we have divested 6 properties last year. And then of course due to the strength of Sing dollar, there's a currency loss of about SGD 300 million and this is offset by a few positives. And the first is we have a positive net value gain of about $47.8 million and then we have also completed our redevelopment project and of course the acquisition of the new asset I mentioned earlier in Bhiwandi Mumbai, India. So a bit of color on this fair value gain of $47.8 million. Most of the countries actually we have seen a fair value gain except for China and Hong Kong where the market is still in transition and recovery space. Next slide. I think the last slide is really what we usually present.

Okay. Now I'll just quickly take you through a couple of slides on the sustainability front, what the progress that we have made. Pleased to say that we have hit all the major KPIs for the year. Also, the self-funded capacity was up 24% to 58.9 megawatt peak against our target of 55 megawatt peak. And as for the total solar because of a rather strong ramp-up in China, it increased 85% year-on-year to now 131.8 megawatt peak. And with that, we are pleased to say that we have now 3 countries that have achieved neutralized Scope 2 carbon emissions; they being Malaysia, China as well as Hong Kong. Then for green buildings, similarly our target was to achieve 60% green certified space by GFA and we hit 66%. And for green lease, likewise we have made good progress increasing from 51% to now 64%. As for green financing, we achieved or rather we secured $300 million of new green financing during the year and that contributed to about 28% of our total borrowings. So that's a quick sum up. I'll now hand over to Jean to wrap up.

Okay. So I think amid all the tariff headwinds and the global uncertainty, MLT as you've seen from the presentation done by Charmaine and James, we have posted very resilient operational results. You have seen high occupancy and then you have also seen us achieving occupancy rate that is above the industry average. For example like China, this quarter we have 94.2% and then industry average is still primarily around the 80%s region. And also reversion is higher this quarter with China assets posting negative low single digits, but that has slightly moderated from last quarter. And I think importantly, DPU operations have shown stability for consecutive 4 quarters. I think lastly, on the Middle East conflict, which is resulting in higher oil prices. We're not seeing any significant impact in terms of the MLT operating cost as the net electricity cost is negligible less than about 2% of our property expenses. And then in terms of leasing demand, it has remained stable so far. We have not seen any meaningful evidence of pullback in demand or any delay in decision making for now. But having said that, I think tenants with the higher cost pressures, they are likely to face some weaker operating margins. So from what we have gathered so far based on our interactions, I think tenants are currently focusing on optimizing the energy usage, enhancing the operational efficiency and passing down the cost to their customers where possible. But having said so, I think with the Middle East crisis evolving, we remain closely monitoring for any second order effects that could actually influence the business and consumer sentiment as well as the leasing demand. Well, I think a lot of you are probably waiting for the outlook on the China. So I think in terms of China, what we are seeing now, it appears that there are signs of stabilizing, bottoming out and we expect that the necessary rent reversion will continue to narrow. But I think really it will take some time to turn to 0. If you look at some of the recent news, I think incrementally it's more positive and hopefully, it will spur the domestic consumption. I mean if you look at the China Tier 1 prices, it has reported some modest growth after 10 months of decline. PPI turned positive last month reversing 3 years of decline. And I think in terms of the current oil shock, China seems to have weathered it pretty well I think largely due in part to their diversification of their energy mix as well as they have also increased their focus on green energy. And in terms of the market supply and demand by region, in terms of the -- it remains that the West and Central China seems to have bottomed. In fact I think for some of the lower-tier cities like [indiscernible], we are seeing stabilization, in fact some higher rents being signed. And in terms of the South, there is going to be a rising supply, but we have limited exposure only to assets and they are still having high occupancy. In terms of region North and East China, Greater Shanghai, it is still a concern due to the high vacancy. But I think in terms of the expiry profile in the coming year, we have very little coming up from the North. But though we have some -- we have more coming up from the East; but we think that in terms of the absorption, we expect the East region to recover faster due to the higher consumption power. So I think that's the outlook on China. For Hong Kong, there is still very -- in terms of the leasing sentiment, it remains cautious. But if you look at the retail, it seems to have bottomed up and residential housing also seems to be on a recovery mode. But in terms of the supply, we have seen that the market vacancy is increasing. So we already started engaging our tenants for the upcoming expiries. Prelim discussion is most likely they will renew, but I think the rentals would probably be -- in terms of outlook would be probably very modest reversion outlook. So I think that sums up some of the key market outlook that I have. And maybe I think I'll leave it for Q&A.

Okay. We now start the floor for Q&A. Can we have Mervin?

Congrats on the results. Noticed the adjusted operating DPU first year-on-year increase in over 3 years and, as you mentioned, fourth consecutive quarter of Q-on-Q improvement. So very excited by that. Just on China, I think you seem to be pushing out the time period when the reversions head toward 0. I think previously you guided fourth quarter or first quarter '27. Do you have a time when that 0 number may appear? Second question I have is any updates in terms of divesting some of your China properties to your sponsors renminbi fund? Has the sponsor raised money for that renminbi fund and timing of these divestments in quantum?

Okay. I think on when it will turn neutral, I think we are probably looking at another 3 to 4 quarters in terms of turning neutral for the reversions in China. And then your next question on the China divestment. So far, we have done -- based on the 1 deal that we identified, we have done about $270 million to date. In the current financial year, it's [indiscernible]. And in the pipeline that we are looking at, we are targeting about $200 million to $300 million and that includes the renminbi fund that we are currently working on. There has been some delay and right now we are looking at 2Q of the new financial year to actually sign some binding documents primarily because there has been some change in the LP partner and then the new replacement LP partner is undergoing due diligence at the moment. So I think hopefully, I think by the second quarter, we can look at China divestment coming on stream.

Derek, DBS.

Congrats once again on having a stable set of results. I'm looking forward to that. My first question is on your reversions. I noticed that Hong Kong is also tapering off. I think you're guiding that it will likely flatten out. But just wondering whether if you look forward to the next financial year, will Hong Kong turn negative or is any other country that you think we should be a bit more cautious about at this moment? That's my first question.

Okay. Derek, so I think in terms of reversions. For now the negative reversions will be pertaining just to China. For Hong Kong, we are not seeing negative reversions at this point in time or in the new financial year. It is most likely a very modest kind of reversion, maybe 0.5% kind of region that we are looking at -- that we're aiming at currently. I mean the rest of the market remains good.

Okay. Okay. Got it. Then my next question is on your asset recycling. You mentioned you sell $200 million to $300 million. How about acquisitions? Could you give us a sense on your acquisition strategy for the next financial year?

Okay. For acquisitions, I think right now our target markets are still the countries that are beneficiaries of the supply chain diversification. So we are looking at Vietnam, Malaysia, India. So that is still the strategy that we are looking at to actually increase our presence in this structurally growing market. At the same time, I think in terms of Singapore, we are also looking at some opportunities in Singapore, but it still remains pretty opportunistic. And for Singapore, if you recall, we have so far been focusing more on the organic growth in terms of asset enhancement initiatives. So we have just completed our first Joo Koon last year and right now we are planning for our first one in Singapore and that's going to come up in the East of Singapore. So it is something that we are looking at organically to grow the Singapore portfolio. Then for Korea and Australia, I think in terms of the deal spread, it is very tight. I think particularly for Australia, I think it is very difficult for us to do any accretive acquisitions and then we are looking at RBA, looking at high inflation with planning for a rate hike. Korea is something that we are still exploring, but it depends on how strong is the acquisition. And for Japan, Japan though the interest rate outlook is on the rising trend, but if there are opportunities that shows organic growth or a more better rent reversion or built-in escalation organic profile, I think we are open to pursue as well.

Okay. Got it. And just last one. So interest cost, I think Charmaine has done a great job, 2.6% is flat. So how much more can you hold it at this level or should we be pricing in some increase?

Yes, you should be pricing some increase. I've been able to keep it at 2.6%. I guided earlier that we have about -- I think that on the interest cost front, we are facing higher interest costs in a lot of the currencies. So a lot of -- we have about $700 million of hedges that will be falling off. So this will have to be replaced. So included in the $700 million are JPYs that are locked in at 0.3% base rate or 1.7% Aussie dollar base rate. So all these would have to be replaced. We'll see how we manage the portfolio. We will tweak the currencies around a little and target to keep it at about between 2.7% to 2.8%. But yes, it will grow and we are forecasting it to grow in the new financial year.

Next we have Rachel.

Congrats on the good to see the growth in DPU. A few questions from me. I think firstly, I think your reversions especially for Singapore has been quite strong. So any guidance on your reversions for the coming year?

I'll let James answer.

Rachel, last quarter we registered quite a high rental reversion because of supply for new warehouses and we had a few expiries, which was renewed in our ramp-up warehouses in Pioneer. Since it's Pioneer, we'll work hard on demand. So that helped us to push out the reversion. So in the next few quarters, depending on the lease expiries in the various quarters and whether they are in old properties or ramped up properties, we are still fairly confident to maintain between, say, 3% to 5% positive reversion.

Okay. Sounds good. Then maybe my next question is on the Mapletree Joo Koon Logistics Hub. Very good that you are fully leased out. But how much has been recognized -- of the income has been recognized in fourth quarter? And how should we look at in terms of rental income coming through in FY '27? When we will see the full income coming through?

We will see the full contribution coming in in the second half of the new financial year.

Okay. Fourth quarter was very minimal, is it?

Fourth quarter, we are looking at about $3 million.

Okay. And maybe just to follow up. I mean you are expecting some increase in interest expense. Do you think that the rental income from this Mapletree Joo Koon can offset the increase in interest expense?

In terms of the interest expense that Charmaine has mentioned, 2.7% to 2.8%, yes, we should be able to absorb that. Yes. If you're looking at the additional income, the full year contribution from Joo Koon itself will be sufficient to offset the higher interest cost.

Next we have [indiscernible].

First question is on the lease expiry of 36%. How much is China? And the earlier rent reversion guidance 3% to 5%, has that already taken into consideration China at 0 to slight negative?

The 36% lease expiries coming next year, China is contributing about 55% of that.

Right. And on the rent reversion, it's a portfolio basis including China?

The 3.3% includes China.

I meant the reversion guidance of 3% to 5% for next year.

That's for Singapore. I think the guidance for China, it is actually still in the low negative single-digit territory for China.

Okay. Do you have a portfolio reversion guidance?

No, we typically don't do that because as you can see, yes, it's 9 markets.

Then on the divestment, how are you thinking about redeployment of proceeds? Is it to acquisition, debt repayment and also on perp, any plans to pare it down, this expiry in November this year?

Yes. I think if you look at what we have done last financial year, our recycled proceeds have been channeled through AEI as well as we channeled into acquisition. So I think looking ahead, if the -- I mean while we are going out for any acquisitions, meanwhile definitely the recycled proceeds at first would go down to pare down the debt from recycled proceeds. That would be the first thing that we would do and thereafter, we will see in terms of the opportunities that we have to rechannel our funds. So what we have done last year is to the India asset as well as to the AEI. So we would look at the similar approach. On the perps, maybe Charmaine.

I think divestment proceeds other than that, it also depends on the timing of the divestment proceeds. Yes, we have a batch of perps that's coming due for refinancing. Depending on our -- with the divestment proceeds, depending on our leverage at that point in time, we could look at refinancing it with perps or a mix of perps and debt.

Okay. Next, we have Brandon.

Just want to touch a bit on the lease expiry profile again. Could you sort of share with us the split by region for this 20% of expiries in China for FY '27?

I think for FY -- in the new FY in terms of the expiry by region, the majority is coming out from the East followed by Central and then North. So East, we are looking at about 45% of the 20% due; Central, we are looking at about 28%; North about 16%. Then for West and East and West and South, 4% and 7%. That's the breakdown in terms of the lease expiry profile for the new financial year in China.

And what's the rough retention rate that you're looking at?

Right now if we look at so far historically, we have about 90% success rate. If you look at lease expiry for the past 2, 3 years, our expiry has been hitting about 30% and we have managed to retain them. So that's why in terms of occupancy, you have seen that it's still maintaining very high. So in that sense, we have been able to achieve a high success rate. That's why our occupancy remain pretty resilient.

Got it. Okay. And I also want to go back to the your comment on acquisitions in those supply chain diversification countries like Malaysia, Vietnam and India. Is it correct to say that this will be mostly coming from your sponsor pipeline? And a follow-up question is if you look at the way the currencies in this business are growing, right, especially for India, even though you get a pretty strong reversion, but they're all eaten up by the depreciation in the ForEx. Why do you still want to look at this market?

Okay. So I think in terms of these 3 markets, is it because of sponsor? I think it's also because where if you look at the supply of Grade A assets in these 3 markets, it is generally little bit more limited in terms of the product spec. Opportunistically, there may be some coming up from third party, but it has been pretty on a smaller scale. So in terms of access to sponsor pipeline coming up from these 3, we have access back on. And to your question on this ForEx, I think in terms of where possible, we will adopt the natural hedging by taking on the onshore loan. So just to give an example, in the recent India acquisition, what we have done is we have increased the natural hedge by taking on a 40% loan onshore. So that helps to mitigate in terms of some of the ForEx movement. And then where possible, I think from the income hedge perspective where the hedging cost makes sense, I think we will try to also lock in some to actually kind of mitigate the ForEx risk. And I think if we look at more on the deal attributes, I think in this case in terms of the markets where we are looking at structural growth, these are the 3 markets that are showing potential, giving higher growth, having a higher GDP compared to the rest of the Asia. And particularly if we look at this India acquisition, we are looking at some inherent attributes that cannot be replaced. We are looking at an asset that is in a very good location, prime logistics corridor and it's a freehold asset. I mean admittedly in terms of FX, if we look at the last 12 months, Indian rupee has been very volatile I think due to the global headwinds. But if we take a more medium- to longer-term outlook shipping out the 12-month impact, taking a 5- to 10-year kind of depreciation trend outlook, we are looking at about 3.5% more on the medium to longer-term horizon. And if you look at the rental growth that is in this market, like again I take the example the recent one that we did in Mumbai, we are looking at about 5% rental growth. And I think in terms of underlying rentals compared to where we are where some of the newer tenants are signing, we are actually -- there's actually a 10% kind of reversion opportunity. Currently, it's about 10% below the market rent because one of the tenants there recently expanded into a nearby warehouse where they are signing rent 10% above what they have locked in in this asset. So I think that there are some trade-offs indeed. But I think if you look at more on the medium- to longer-term horizon, they present some growth opportunities in that sense.

Next we have Derek Chang -- Joy.

Just 2 quick questions. First, can you share in terms of hedge FX rate for this FY and also what can we expect for the hedge FX for next FY?

Sorry. Do you mean what are they hedged at or what the hedge ratio is?

Yes. So can you share that? What are the rate that you are hedged for your key currency for FY '25-'26 and what can we expect for '26-'27?

Should be for next 12 months, '25-'26 over.

For the next 12 months, if you can share what was for the last 12 months, that will also be very helpful for us.

Okay. We'll come back to you. Let's take a look at what we have by the time we have. Do you have another question?

Yes. The second question, can you confirm earlier you mentioned about the China fund. Did you mention that there's a change of LP?

Yes.

Can you give the background of the LP that decided to drop out and the LP that are currently doing DD?

I think it's a pretty sensitive info. I think what we are able to share at this point in time is that we have found a replacement LP and they are right now in due diligence and we are progressing hopefully towards signing and combining in the second quarter of the new financial year.

Next we have a question from Dale.

Congrats on the results. Just wanted to check. I mean you guys have some meetings going on and then potentially higher interest rates. Just wondering in terms of FY '26-'27, where should we be looking at your DPU? Should we be expecting some form of growth or should it be flat based?

Okay. I think looking at what we have achieved in the past 4 quarters, the base case outlook that we are looking at is also around $0.018 per quarter. This is barring any major economic downturn as well as significant movements in terms of the ForEx as well as the interest rate. So I mean we mentioned earlier in terms of there will be organic growth from countries like Singapore and then the 3 smaller markets of Vietnam, India, Malaysia. The Joo Koon will also be contributing in the second half and that should help to offset the higher interest cost that Charmaine has guided earlier, the 2.7% to 2.8%. So net-net, we are looking at a pretty flat view.

Okay. And my second question is I think earlier you did share that with all this rising oil prices, rising utility, you guys are quite insulated. But not sure if the second order impact, I mean because in logistics, I'm assuming freighting costs would be a major thing for your tenants, right? So are you seeing any specific group of tenants or any specific regions that are at risk of higher cost or being out of business?

Okay. I think from the 3PL tenants, what they are trying to do; the larger ones, they are trying to pass on the -- in terms of the higher air and shipping costs via imposing some fuel surcharge. And also some of the larger tenants, they are able to pass on some of the cost to their end customers based on their contractual agreements. But I think what will probably have a bit of suffer is probably the smaller ones, they may face margin squeeze from their operating costs. So that's on the 3PLs. And I think we do have a very small number where they are importer and exporter of products. They are also trying to pass on to their end customers. So I think right now where possible, they are trying to pass down. But I think the other smaller group, which we are probably also monitoring closely is those maybe our cold storage tenants although we don't have a lot because they are typically a high consumption user. So that's something that we will remain watchful.

Okay. And probably it's still a bit too early to tell.

Yes.

Okay. Next we have Vijay.

Two questions from me. Firstly, in terms of India acquisition, would you be able to provide the NPI yield for that?

NPI yield is 7%. I mentioned it's about 10% below market. So if we look at the current market, it's probably 7.7% rent.

So you bought the asset 10%. Based on the market trends, it should be 7.7%.

Yes. Because right now, the rental that lock in is 10% below market in terms of the rent.

Second question is in terms of some of your shorter lease assets in Singapore, the 5% of your portfolio, which is below 20 years. Have you been able to increase authorities in any of this? And what should we expect for some of these lease, which the land lease are coming closer to below 20 years and closer to 10-year marks?

Okay. I think for those that are with short land lease, we have where possible for assets with redevelopment potential, we have been trying to engage the authorities for some potential lease extension. So some of the assets that are under the 10-year mark, we are still talking with the authorities. So what we are working on is potentially we need to find -- we need to secure or find a good anchor tenant in terms of their business plan and financial projections to discuss with the authorities. So where possible we will try to have that land lease extension. We have also tried to divest some of the shorter land lease. But because of the nature, it is a bit more opportunistic and it depends on the profile of the users that's looking at because typically, these assets that we have in Singapore, these are mostly pertaining to Singapore, the short land lease. There is more older type of generation kind of industrial assets. So we are looking at which -- we are still sourcing tenants or buyers that actually find such a facility suitable for their business operation. Yes. So Vijay, I hope that answers your question.

Okay. So as long as you have a tenant backing, I think authorities are ready to extend the lease.

If there is a good business plan, they remain prepared, I mean provided that the region or the vicinity that we are looking at is not subject to the master redevelopment planning.

Brandon, you have a follow-on question?

Yes. I just wanted to go back to the divestment part. Can I just confirm that your FY '27 target divestment amount is $200 million to $300 million?

Yes.

And over the past 6 months, your divestment momentum seems to have significantly slowed. Is it because you were spending all your time on China and that got delayed or is it because the environment has just become tougher to sell?

No. I think what we have wanted was the China divestment. So that has been delayed. So in that sense, you are right is that we were working on the China piece. But whether the buyer sentiment has died down, I think no because if we focus on the China market, in fact we still continue to see interest from buyers. It is just that there is a pricing disparity that we are looking at right now. In terms of interest level, in fact we have a bit more compared to last year. But the pricing disparity remains the same. But having said that, there are some which are looking at a bit narrower price gap. I think that's something that we are also exploring.

And the goal is to sell at book value.

Yes.

Okay. And just to close out the loop on your reversion guidance, can you just share with us what we could see for Japan, Korea, Malaysia for FY '27?

Yes. I think, James, you want to take that.

So for Japan, 4Q we recorded 6.2%. It may seem very high and that was coming from 2 leases. One of them was a longer lease of 5 years so was mark-to-market for the one. And so looking at this trend for the next few quarters, there could be a couple of leases that could be renewed similarly. So the guidance that we can apply for the new guidance in the next 2 quarters could be between 3% to 5%. Korea could be closer to 3% because we think the market is picking up.

Okay. And one more thing on the East redevelopment that you just mentioned? Can I just confirm that is these 2 Chinese South plots which you buy? And then could you give us some absolute value in terms of timeline when we intend to start this?

In terms of the timeline, we are looking at next year, more the second half of the year. And in terms of the quantum, it is about 200 range for now, yes. We are still fine-tuning the numbers. But I think in terms of the implementation timeline is the second half of next year.

Derek Chang.

Jean, I think you're earlier alluding to the second order impact amongst your tenants. Could you break it down across the markets? Because obviously I think Southeast Asia, India will be more formidable and maybe even Japan. So any thoughts on those markets and maybe Singapore also?

I think right now it's more the -- what we are looking at is more the tenant sector. So I think I mentioned earlier in terms of the 3PLs, the larger ones and the smaller ones, the level of margin squeeze that they will face. So more from the tenant perspective that we are looking at. But if you look at on the country level, right now I think on the government level, some of the countries like China, Vietnam, Malaysia; they are either having some form of fuel subsidy or cutting in terms of their import fuel levy to kind of cushion that. So I think right now it's still a bit too early for us to quantify in terms of the leasing demand, but I think that's what we are seeing right now.

Okay. And what about Singapore? Is there anything you can share?

Singapore in terms of like Jean has shared, I think -- like what Jean has shared earlier, the larger logistics companies are definitely more muscle to pass on the increased cost for transportation at least. Transportation cost typically is 60% to 70% of the logistics cost. The balance could be warehousing and some packaging costs, et cetera. So 60%, 70% of transport cost for 3PLs are able to be passed on most of them through surcharges for transportation. So again we also receive feedback that some of them take time to negotiate because some of the contracts are fixed for, say, 2, 3 years. By and large, the bigger boys are able to pass on the cost to the customers. It's the smaller boys that they have less resources and less offer to negotiate. So the margins will definitely get squeezed. The other thing from our observation, there's no significant increase in demand for short-term space from the shipping disruptions whether it's for inbound or outbound to the Middle East. So we didn't see the so-called spike in short-term demand requiring short-term spaces. So that's 1 observation that we see.

Okay. So no just in case demand?

Rachel?

Just 1 follow-up. You mentioned the AEI is second half of next year, it means this financial year, is it?

No, next year. Calendar year is 2028.

Okay. Then my next question is on Hong Kong divestment. Is the Hong Kong asset divestment included in the $200 million and $300 million? And any update on potential Hong Kong debt?

In terms of Hong Kong divestment is a part of the $200 million to $ 300 million. We are still trying to divest one more midsized one. But that one, we are still working on it. But I think we are also having some very small shorter units that potentially may have some interest. So while we are trying to actually sell the larger ones, but at the same time we are seeing some interest on our shorter units, which are very, very small units. So Rachel, I hope that answers your question.

Yes, yes. And then 1 last one on China. The reversions, I think last time you guided that you will break even soon, but it didn't. Is it because the East market is worsening a little bit? Are you seeing a bit more supply coming through?

No. I think in terms of the North and East, the vacancy remains high. So that's why -- and then also with the high proportion of our expiry coming up from East so we remain a bit cautious and watchful. So we want to see how our expiries in terms of negotiation are panning out for the first quarter because right now in terms of the renewal cycle, it is getting very, very short. In terms of short leases, quite a number of our China tenants are still doing pretty short leases. So in that sense, the visibility on the rents that we are signing, it is very dynamic.

Understand. Any improvement in demand at all or still the same?

Absorption that we see in the East has improved. We doubt that's still a large supply. But the East China, some tenants that we see because of the higher consumption power, the absorption is pretty strong.

Yes. I think if I can point out some color on the improvement in occupancy fourth quarter versus 3 quarter. The improvement largely came from the East, Central and West region. So that is the sign that we saw in the fourth quarter. So there are improvement occupancy coming up from these 3 regions.

Andy?

In terms of valuations, can I just get some clarification? Like for example, your China rebound was only down by about 1.5% and rental reversions was more negative right throughout the year. Hong Kong as well was marked down, but your reversions was generally slightly positive. Then for Vietnam, strong uplift, cap rate looks like the same. So was it driven mostly by rental increases assumptions? And overall, do you expect some cap rate expansion for this new financial year especially in markets like Australia for example?

In terms of Vietnam, it went up a bit is largely coming up from the organic growth in terms of the rental growth. And then in terms of Hong Kong, it is actually coming up from some expansion that we are looking at -- some cap rate expansion happening in Hong Kong. So for this set of numbers, in terms of expansion, we are seeing in Hong Kong and then 2 coastal assets in Korea. And in terms of the compression, we are -- some are seeing it actually happening in Australia, Malaysia and India. And the rest of the improvement are largely coming up from the better rents.

Okay. How about China?

For China, it's mainly due to the lower rent.

But why were the assets not marked down by more because the reversions was kind of more negative compared to the 1.5% that we saw that was impact. Is it based on the assumption that the rent outlook will improve fairly materially?

Yes. I think what the valuers do, they basically if you are familiar with valuation, they do a DCF over the 10 years. So they actually have a view of where the market rent is. So like what you said, the rental reversion is there, the negative rental reversion. However, the valuers will take a view of when the leases expired and is renewed, where will be the market rent and then how we go going forward over the 10-year period.

Okay. So they will have baked in some recovery over the medium to longer term. Would that be a right assumption?

Yes, that's right.

And another question in terms of AI for logistics, I'm just thinking from a landlord perspective, do you need to kind of provide any AI or do you need to use any AI to kind of entice tenants or are the AI kind of tools, et cetera, driven mostly by the tenants themselves?

Well, in terms of AI, what you see is they really started using consider AGVs, autonomous guided vehicles. They are really being operated by some of the e-commerce distributors in places like Hong Kong. So the requirements are basically [indiscernible] and which we need to develop and build our surface. And secondly is the power supply. So power supply has to be adequate to be upgraded to cater to the extra power usage to drive this automation equipment. So in terms of AI, well, it's more the hardware today other than ours.

Okay. That brings to the end of the Q&A. Thanks very much. Please send me questions you still have. Thanks. Bye-bye.