Mapletree Pan Asia Commercial Trust (N2IU) Earnings Call Transcript & Summary

Good morning, analysts, investors and members of the project. Welcome to Mapletree Pan Asia Commercial Trust, or MPACT Analyst briefing and live webcast for the fourth quarter and full financial year 2023, '24. I am Li Yeng and have the pleasure of hosting today's results briefing. Allow me to introduce our speakers for today's briefing. They are Ms. Sharon Lim, Chief Executive Officer of MPACT, Ms. Janica Tan, Chief Financial Officer of MPACT; Mr. Chow Mun Leong and Mr. Koh Wee Leong, our Co-Head of Investments and Asset Management. They will be presenting our financial results, providing key business developments and sharing market insight. Following the presentation, we will open the floor for a Q&A session, where we invite you to ask questions and seek further clarification on our results. Without further ado, I will hand the floor over to our CFO, Janica.

Good morning. Thank you for joining us today. Before we get into the details of our full year FY '23, '24 results, I would like to give more color to the 3 key themes shaping our broad business environment. The first is the global market has been very much affected by the ongoing geopolitical conflicts and economy uncertainty. Second, we, including MPACT are navigating through a new era of high interest rates, following the 11 rate hikes in the last 2 years in an attempt to cut rampant inflation. And this significantly impacted cost of financing for banks and businesses. Third, financial market has been volatile. ForEx fluctuation has particularly impacted REITs with overseas exposure affecting their earnings, distribution and asset values when they are converted back to Sing dollar. Despite these hurdles, MPACT had shown resilience with our teams adapting their asset and financial management approaches to meet these challenges head on. So for fourth quarter, FY '23, '24, MPACT gross revenue, NPI and DPU overcoming broad market headwinds, including ForEx challenges and high interest rates. Gross revenue of $239.2 million was 2.6% higher as compared to last year's same period and NPI was $183.1 million, 3.2% higher year-on-year. And this growth was primarily driven by Singapore portfolio, which delivered positive contribution. Hong Kong and Japan delivered steady performance on a local currency basis, whereas China has underperformed as compared to last year due to lower occupancy. Property operating expenses were 0.3% higher at $56.1 million, mainly due to higher staff costs and property management fees, partly offset by lower utility expenses. And on a constant currency basis, the year-on-year growth in gross revenue and NPI would have been higher at 3.8% and 4.4%, respectively. Net financial expense for the quarter were 10.8% higher at $56.4 million as compared to fourth quarter last year, and this was mainly due to higher interest rates on both Hong Kong dollar and Sing dollar borrowings and this was partly offset by the Hong Kong dollar and CNH swap executed during the financial year. Amount available for distribution rose 2.2% year-on-year to $120.5 million mainly driven by higher NPI, which more, has caused increased interest costs. And consequently, fourth Q DPU was $0.229, up 1.8% year-on-year. This is the year-on-year contribution by properties. The Singapore properties contributed $6.6 million or 6.3% of higher NPI with better performance across all properties whereas Japan and China were impacted by the adverse ForEx headwind and China, lower occupancy. Contribution for Festival Walk [indiscernible] On the full year, gross revenue and NPI rose 16% and 15.2% to $958.1 million and $728 million, respectively. This increase was mainly due to the yearly contribution from the oversea assets acquired in the merger, although the merger gains were tempered by a stronger sing dollar against our foreign currency. On a constant currency basis, the year-on-year growth in gross revenue and NPI would have been higher at 17.5% and 16.6%, respectively. The finance cost for the financial year were 39% higher year-on-year, and this was also mainly due to the full year impact on interest expenses from the merger asset, the acquisition debt and the elevated interest rates on Sing dollar and Hong Kong dollar borrowing. So for the full year amount available for distribution was $468.6 million, 5.2% higher year-on-year and the full year DPU, $0.0891, 7.3% lower year-on-year, and this was mainly due to the enlarged unit base. Personal property was up 5.4% in gross revenue with improvement across all major revenue categories, including fixed rent, car park income and A&P income. And the higher NPI of $15.7 million after fully covering despite utility expenses. The next 2 stats are on our independent valuation. There was a change of values for the year in compliance with the property guidelines. So changes to cap rate and discovery is any were due to the deferred house view of the value. Overall portfolio valuation was $16.5 billion as at 31st March 2024. Value of our properties increased by 2.7%, particularly VivoCity, which saw $126 million up lease in valuation. The valuation decline in the overseas properties was largely attributed to a stronger Sing dollar against all foreign currency, about 87%. Operational valuation MPACT from -- of the overseas assets accounted for a minor portion of the total value variance. And this was mainly due to the revised market expectations for China and specific adjustments for Seiko building which is undergoing conversion into a multi-tenanted building of [indiscernible] when Seiko instruments lease expires on 30th June 2024. So consequently, NAV per unit was $1.75 at 31st March 2024, lower as compared to March '23, mainly due to the impact from ForEx. As at March 2024, the total gross debt was $6.8 billion, leverage ratio, 40.5%, and at 40.5%, the debt headroom was $3.2 billion to 50%, and assuming total debt remained unchanged, it will take $3.2 billion in investment property value for gearing to reach 50%, which translates to a cap rate of 94 bps expansion across the entire portfolio. Okay. But with the average all-in cost of debt for the financial year was 3.35% per annum and the adjusted ICR approximately 2.9x on a 12-month trailing basis. By the close of the financial period, MPACT had a financial flex of about $1.5 billion in cash and undrawn committed facilities, ensuring sufficient liquidity for working capital and financial obligations. The debt maturity profile remained well spread with no more than 21% of debt due in any financial year. On the next slide, on the percentage of fixed fee debt at 77.1% as at 31 March '24 and at 77% fixed -- every 50 bps change in benchmark rates is expected to impact the DPU by $0.13 per annum. And as at the close of the quarter, approximately 93% of MPACT expected distributable income based on rolling fourth quarter was derived from or hedged into Sing dollars. Okay. On MPACT unit price. MPACT unit price, especially in the last year, has been disproportionately affected by interest rate hikes and broader market aversion to these specific markets. So as a result, our unit price growth at $1.28 as at March 31, '24. And from the leasing unit price of $0.88 and including total distribution of over -- $1.07 to date, the total distribution unitholder is approximately 168%. This slide is on the distribution detail. [indiscernible] May 2 and payout is on 6th June. Before I hand over to Leong, I would like to emphasize our continued focus on delivering long-term sustainable returns to our many holders. While we expect ongoing headwinds in the broader market, especially in the new era of higher interest rates, our strategic objective is to position MPACT effectively for future opportunities. And to navigate this landscape, we have set 3 strategic priorities. So first, is to strengthen our capital structure and redefine our portfolio mix. We are actively pursuing opportunities to recaliberize our capital structure and this involves an agile portfolio management strategy that responds to current market conditions. We will also undertake initiatives with [indiscernible ] unitholder value. Second, continued proactive asset management efforts. Our operational backbone remains resilient, our China asset market has unperformed since last year, but they are either at par or better than market. So we remain focused on maintaining healthy occupancy and ensuring the rental income. So by adaptively we aim to stay ahead of the mortgage interest, ensuring that our assets thrive even through volatile conditions. And third, our Singapore portfolio. Singapore is at the core of our stability accounting for about 55% of our AUM and 60% of our NPI. So looking ahead, Singapore will continue to be a key component of our portfolio, providing a stable foundation as we navigate through record. Thank you.

Good morning, everyone. I'll try and -- I'll bring you through the portfolio performance before I hand over to Mun Leong to cover the performance of our retail assets in Singapore and Hong Kong. So if you look at the -- starting with occupancy. So you see that on a quarter-to-quarter basis, we have had a very slight dip in occupancy. That's largely due to reductions in the occupancy at MBC where we had 1 or 2 -- we had about 2 or 3 tenants move out over the quarter. Occupancy remains at 96% as we have good lease [indiscernible], which will commence over the next 1 to 2 quarters. You will see that there is a weakness in the China properties. There is improvement over the last one year. One year ago, on 31st March '23, we were at 86.5%, that's improved to 87.5%. That is largely due to improvements in our banking property, Gateway Plaza, where the occupancy now stands at just over 90%. It was in the mid-80s one year ago. Shanghai still remains a challenging market, both because of the economic headwinds as well as the amount of supply, which is coming onstream even within the same market where Sandhill Plaza remains -- so Sandhill Plaza is now running at about 80 -- low 80s in terms of occupancy. And there is very -- and it doesn't seem that we will be able to increase occupancy for the next few months. Okay. Japan is now running at about 98% occupancy. However, we do have the Makuhari lease that is expiring on 31st of March. With that expiry, the committed occupancy will drop to 93.8%. Korea remains a strong market for us. CPG has remained at 99.1%. Looking at rental reversions, rental reversions are positive for the Singapore properties, MBC [indiscernible] other Singapore assets all recorded positive rental reversions. You see that VivoCity's rental reversion is 14%, which is improvement over the last few years for sure. Festival Walk in China remains challenging for us. Festival Walk is still dealing with some leases, which performed at pre-disturbance period, and those have reverted downwards in the current period. China is a strange set of numbers and Gateway Plaza actually has a slightly more negative rental reversion. And that's actually driven by more new tenants at the building where you generally have given a slightly lower rental as they generally have to incur CapEx and improvements costs. Sandhill Plaza, this -- Sandhill Plaza had some reversion, which is only very slightly negative is largely due to renewal tenants, there have actually been very few new tenants at the building over the last 1 year, okay. Japan is very slightly negative, and Korea continues to show very positive numbers. The client profile remains fairly stable at about 2.4 years for the portfolio, 2.1% for retail. And 2.7 for business park. I'll try to give you a little bit more color on the performance of the Office and BP assets across all different markets. So for Singapore, occupancies continue to remain strong. However, the reality is that there are very few large space takers. Gone are the days that we could expect a 80,000, 100,000, 200,000 square foot tenant. The vast majority of our leasing deals are actually under 10,000 square feet. We do have a small number of 20,000, 30,000 square foot tenants which have come through at MBC. And that's the 1 or 2 tenants that I mentioned with leases that will be starting in the next quarter or so. Tenant retention remains strong, largely due to the fact that the tenants are reluctant to spend CapEx. Hence, they are -- it's a lot easier to retain tenants than finding tenants. Rental reversions have actually been strong across the board. China, looking at the performance of our assets against your peers in the market, especially for Gateway, Gateway has done well against the market where occupancy is crossing 90%, which is better than most of the other properties within the submarket as well as throughout the Beijing area. Sandhill Plaza is running at a low 80% occupancy, and that's par cost for nearly all of the assets in the downtown area. Tenant retention remains fairly good, but bear in mind that most of this is actually driven by Sandhill Plaza -- Gateway Plaza and Sandhill Plaza, rental reversion is at minus 2.7%. So Japan is a mixed market for us. Half of our assets are doing reasonably well, retaining fairly high occupancies. The 3 Chiba assets, like I mentioned earlier, we have an expiry of the master lease at MBP and that is expected to have a forward reduction of the committed occupancy to 94%. So well, Korea, one of our smaller assets remains -- continues to perform well as the market dynamics in the downtown area are fairly positive for all these malls. I think let me hand over to Mun Leong, who will run through the detailed assets.

Thanks, Wee Leong. Good morning, everybody. Yes. This is Mun Leong. So I move on to Slide 28. I think this is the snapshot of the performance of our retail assets in MPACT, diversity at the mall. I think I got to actually a share that actually both assets are going in the very local market conditions, right? So far, if you look at diversity and [indiscernible], they have committed higher occupancy. And close to 100% at 99.7%, right? Tenant retention rates are still pretty high at 82.2%, at Festival Walk it's at 63.2%, right? But I think as we have also shared previously, I think this, we can exclude the short-term retention. If we include the short-term retention -- short-term leases, the retention rate would be 84.4% in Festival Walk. And then at VivoCity it is actually achieving very strong rental reversion 14%. Whereas over in fact, we see a narrowing negative gap, right? If you recall in the last few years was minus 20, then was minus 12, this year, we see minus 8.5%. And as what had alluded earlier, huge power is minus 8.7% due to pre-COVID leases that we signed -- and to date, right, there's still about 6% to 8% of the leases that too are pre-COVID leases. And we will continue to see some of these negative rental reversion mix but they are narrowing, right? So moving on to Slide 29. It's a detailed chart of VivoCity. Again, I think we are pleased to announce that actually VivoCity has again achieved a record year in terms of tenant sales of almost 1.1 billion, right? This is the second consecutive year for the CP to achieve above 1 billion tenants sales right? This is a second consecutive year for VivoCity to achieve a growth in tenant sales. This represents a 2.6% year-on-year, right? And if you look at the quarter -- 4th quarter sales actually came in very strongly at a 6.5% growth year-on-year. And on the other hand, shopper traffic has still been increasing tremendously well at 10% year-on-year. So for VivoCity [indiscernible] of resources, if you compare to other Singapore listed assets, right? And so compared to Singapore retail market as a whole, we can see actually we will actually outperform all these other benchmark, right? So I think we have actually done very well for the full year '23/'24. Moving on to Slide 30, I think as this is coming to the full year, you just summarize some of the AEIs that we've done over the year, right? So on the left, I think the team -- the analysts probably are very familiar. These are 2 years we have actually successfully executed in the last year, right? First is what we call the -- TANGS AI what we did was we actually took back some of the space from the e TANGS and actually, we created a new cluster with the cosmetics and F&B. So we could actually generated more than 20% ROI for us, right? On the right side, we have this what we call internally the F&B cluster because previously there was a few tenants, which is the [indiscernible] right? So these are huge large spaces for F&B. What we did was actually took out the space and we subdivided it, optimized retail space into like 3 to 4 F&Bs. So we also -- by doing that, we also improved the F&B offerings in VivoCity, which we think is a very important component for our shoppers, right? So today, this area has been successfully suite as well. And there it is now a very vibrant color of the VivoCity, right? It has delivered more than 20% ROI for us. Okay. I think just to keep good trading beside some of the new tenants that has been -- that we introduced to us the in last quarter, that's extent there's a cost and also. I think most recently, which is to [indiscernible], which is actually attracting a lot of attention from the media, right? So it's a fixed house for King in Japan. As we say open in it this has been attracting a lot of media attention, being the first store in Singapore right. And I think just could just quickly cover the next 2 slides. I think it's a large [indiscernible] event that VivoCity has been [indiscernible] a unique flagship again, like the Chinese New Year. And I think recently, we also had a discoloration with the Kung Fu Panda 4 -- and we actually distributed a description of Panda over VivoCity, very memorable moments for our shoppers. Moving on to Festival Walk. I think the environment in Hong Kong is slightly more challenging. I think we'll probably read a lot of news about Hong Kong is moving to Shenzhen to shop, right? And then this [indiscernible] over the last quarter, right, where there was the Easter Friday [indiscernible]. A lot of people actually moved to travel up north to Shenzhen for shopping, right? So -- but I must say that despite that, I think the mall has done pretty well. They have actually created a very unique [indiscernible], to actually tame some costs, right? So I think there are at least some shoppers to be a lower amount, but there are still people coming to sort of this unique [indiscernible] what has been organizing. So on the fact that before looking on the tenant sales, I think despite a very challenging operating environment in Hong Kong, I think we are glad to say that actually Festival Walk has kind of like stabilized sales compared to year-on-year, right. If you look at the chart on the right, you can see that it's quite apparent the fourth quarter, there is a minus 10% drop for the fourth quarter year-on-year. And when this we also want this spot long [indiscernible] clear that there is a lot of this traffic moving to Shenzhen, right? And then shopper traffic, again, I think, against a very challenging environment. I think the traffic has kind of like stabilized at 6% year-on-year. And then again, if we bring your attention to the last quarter, there's indeed some drop compared to the last year from 8.4% related to sales, which is at minus 14%, right? So we are continuously monitoring. I think recommendation on monitoring to see whether the long distance cadence is a one-off incident. And I think on the team, they are continuously to come up with very creative and unique [indiscernible] to attract shoppers. So moving on to the next few slides, I think these are some of the [indiscernible] I think that these are achieving the plan, including our flagship, our Chinese New Year event. And then we also, like I said, we actually organized this Haikyu, which I heard is a very famous anime series, right? And then this Fat Jai in Hong kong throughout the mall and was even managed to attract a lot of a big cost despite some of them moving to Shenzhen for long superlong shopping still coming to that's why I can show it from the photo? right? Then moving on, I think the other, I think what we believe is really we need to create all these experiences for the shoppers. So this platform invest will be one of them, right? Moving on to the nest slide, I think quickly run through the top 10 tenants. I think you should have everything. We will have MBCs, -- so maybe our update on this, as you look long, I think beyond the lease, I think TaSTe expiry is July 24, we are in negotiation. I that's based on the final negotiation, then moving to Seiko. As you know, the master lease is going to end in June 2024. To date, about 25% are staying, the activity market taking the rest of the building. HP is in 2026 so it's not up for re-lease right now. Merrill Lynch is not. NTT I think -- also I mentioned earlier, right, the NTT master lessee is leaving in -- has expired in March '24. To give a bit of color, right? NTT today actually occupies roughly about 2% of the building NTT,?So about 1/4 of the lease has decided to leave. The remaining 3/4 has decided to stay, right? So I think we also mentioned earlier that the occupancy of Japan will move to -- from 97% to 93% following the NTT UD expiry. Arup has also renewed their occupancy this year. Arup has actually re-leased until 2030. So that's all. Yes.

Thank you, Janica, Wee Leong and Mun Leong. We are now ready for your questions. We kindly request that all analysts clearly state their name on the phone before asking the questions. And for our online participants, we will submit your questions through the text base platform. So first, we have Karen from JPMorgan.

Could I ask on this revised strategy, given that you're looking at the revised strategy, how does it affect your asset recycling plan, or how committed are you [indiscernible] like your own divestment -- that's the question.

Okay. I Thank -- Thanks, Karen for your question. It's part and parcel of our 3 prong where we look at how we manage our assets. Number one is definitely looking at operational. Again, when you look at capital management, or constitution of portfolio that has to be reviewed every year and a very serious review every 5 years, okay? In terms of recycling, as I previously mentioned, anything that is not core, which is VivoCity and MBC, if it makes sense for our unitholders, I think we will definitely consider whether in relation to book, in relation to the impact on the balance sheet, in relation to the impact on the DPU, whatever, we will be open. I think we will take a very disciplined approach. If the market is right, offer is right, and it's not the 2 core assets, we are definitely -- we'll definitely consider. The other issue that we are very mindful of is Singapore will -- Singapore will continue to be core, okay? It will unlikely come to a point where we're going to swing our asset contribution where Singapore will only be a very, very small amount, okay? So Singapore will still be core. We will not touch MPC -- MPC and VivoCity, reason being they have, in our view, very long-term longevity in terms of sustainable numbers and we see the assets being able to sell through a good long period, okay? So I think we are committed. If it's right, we will do it. And when the -- we are as and when the deal is done or whatever, relevant announcement will be done.

And Sharon, just to tack on. This track that we are on this quarter is not new. Nothing is new -- we are just emphasizing that we are focusing on this now, and this is our parity.

Yes. So I think that a lot of people -- we have got a bit of feedback saying that our balance sheet, our gear really is high. I think we have always said that we are not that concerned with our gearing at 40-point something, okay? Number one, liquidity or refinancing is there. Second, valuation is not stretched to the point where it will break and not being able to withstand any major shape. So if you look at VivoCity in terms of its growth over a period of time and how the valuation has grown over the period of time. You know that we have not -- the values are not stretched VivoCity valuation. A release of a couple of millions to bring down the gearing, I think that is -- can be done, okay? It's -- our gearing is at this level, we are comfortable. But I hear people saying that, hey I prefer you to show a 3 handle as opposed to a 4 handle. We take notice of that. And we will -- we'll maybe do something about it.

And first off, you did mention Festival Walk, so I wanted to ask on the valuation for Festival Walk. I see that actually it remains actually very, very resilient, but on the back of these negative reversions, is there a risk that valuations could dip further. And could you share a little bit more on the -- like how -- the extent of negative reversions this year and the lease renewal for Taste K Supermarkets. Are they giving up space and to what extent of [indiscernible] inversion should we expect from that.

Okay. Okay. Valuation for Festival Walk has been pretty much stable. I think the effect is majority FX issue translation. The other thing is other revenue has gone up quite significantly. The valuers do their typical things, which is taking all the committed and not leases, okay? So those are typical whatever that we signed and values they get in other revenues, they see growth, they put it in, okay? So I think there's nothing surprising about how the valuation has come about, but the cap rate has remained the same, okay. So I think if you're alluding to why [indiscernible] has not changed, I think across Hong Kong, this certainly has not changed. The valuation of our assets are very similar to those that is of similar class, so the next thing is you're asking about Taste K supermarket is key to us. The basement. We are more than happy if we can realign them to rejig the space a bit. But definitely, we are very comfortable in the sizing okay? There is some space constraint at basement, okay, in a way where if you say you want to make them 2x, no, we are not a hypermarket. Just remember that Festival Walk positioning is slightly one not higher than VivoCity. The difference is 600,000 mall versus a 1 million square feet net lettable area. So the relevance of a supermarket value over 1,000 versus the requirement for a higher one and the hypermarket is different because of the size and because of our positioning. So what we have in Festival Walk is definitely very relevant, no need to downsize them. You downsize them, it will not be effective as a supermarket. What I meant was maybe just re-lay out the position of where they are in the basement a little bit better, that could be considered over the next renewal.

Makes sense. And these short-term leases, should we be concerned on the short-term leases and on reversion, how should we look at reversion for Festival Walk this year?

Reversions itself, I think you seeing narrowing from 30 over to 30 over to minus 10%, now it's what, minus single digit. And I think we are entering to close the gap as much as possible. Even all these indicators that when you see that negative -- if you look at the NPI, you look at NPI quarter-to-quarter, the reversion is not all the year. That's one. The NPI is it a combination of other things. And if you seriously look at MDI, yes, it has not decelerated as bad as what people are envisaged to be. Okay. There is a lot of noise around Hong Kong is going away to Shenzhen. Then a lot of noise about whether that will be the end of Hong Kong retail. I think we remain a little bit more optimistic than that. I think our mall is actually in a way servicing the locals. The other thing is it could be a potential of a novelty effect and also a foreign effect. If there is no parity that we use travel just to buy something. We'll do travel to spend a night, unlikely, okay? So back to this year. Festival Walk, reversion for over the years, minus 30%, minus 20%, minus 10%, now single digit, we are hoping to close the gap. If you take a good stare at NPI over the period, it is not the same magnitude because other revenues have ramped up. Yes.

Thank you, Karen. Next we have Rachel from DBS.

Congratulations that you have kept the asset value is very stable and giving I didn't do it.

I didn't do it, you know. The value -- only articulate and evaluate the numbers.

Maybe just a quick question from me. I think -- would you able to give us an update on your Unilever and Google Pac? And what the reversion that you're expecting with the tax relief? And is BNP taking up the Unilever or the Google space?

So Rachel, of course, Unilever is taking currently about 40-ish to close to 50% up. We are in negotiations with a few other guys who most likely should be able to start their leases within the next half year. So the comparison again Unilever release reversions are actually quite okay because it delivers -- these were the expired rentals are actually sub-$6. So there's one reversion for any tender that comes into the retail spaces there. Those things is currently goes to market in the space. Like I mentioned earlier, there is actually a lack of a large space -- tenants wanting to take large spaces. So we are still working on 1 or -- 1 or 2 prospects, but I think it is still some time away before we get any solid commitments. Google's lease was at market. So any leases that we signed on that site, we'll probably see it at flat rental revision. Okay?

The next question is on Festival Walk. I think some NPI has been very stable, but tenant sales in fourth quarter seems the trend down a little bit. I'm just wondering, is it one-off quarter? Or do you expect this kind of tenant sales level moving forward?

No, no, no. I think -- I hope to believe that it's a one-off quarter. As you can see from quarter 1 versus quarter 3, it's actually very positive. It's -- what is a little bit of putting us off track was 4Q total sales number. I think that is a general number that is also reflection of other malls in Hong Kong. So -- the 4Q was a little bit unexpected, okay? But in terms of Q1, Q2, Q3, I think they started the year well, then you do the right at the end of the quarter. So I think this Shenzhen/Hong Kong phenomenon, I think it's time to see how it settles, okay? It's definitely a trend that we have to deal with, but whether the magnitude of the impact of it having on Hong Kong retail sales today is a long stayer and has the same impact or could be no trend. I'd like to believe that there's a little bit of novelty. There's also a little bit of ForEx. The ForEx plays a very big role in this trend.

Could you give us the sense of the GTO percentage for Festival Walk?

GTO rent, you mean?

Yes, rent, right.

Can you just give me a second and I'll come back to Correct.

Yes. And then also adding on to -- adding on to the earlier question on whether the fourth quarter was a one-off, right? I think if you also look at the shopper traffic, I think in the fourth quarter, there was -- normally, there was a big drop. I think the team they've also been monitoring these shopper traffic beat on a weekly basis. So I think so far, it seems to be okay, right? So it's something that I can share with you to be a good comfort right? So I think on the GTO rental, right, should be.

GTO is about -- for the -- for this current financial year, it's about 2% of Festival Walk. And if you translate that into MPACT core portfolio, including BCD is less than 2%.

Okay. So your question is about 2% of Festival Walk's revenue. Yes. So all our leases are predominantly with fixed and variable rent. The variable rent is actually not a very huge component, but it's always an indication of the sales system at the shop so that we have a better sense of the trending in the individual shop. But in terms of the percentage here it's nothing big. I think even for Vivo, it's always been in the single digits, maybe about 3%, 4% for the longest time yes.

Just one last question on interest rates, what you expected for FY 2024. And in terms of with the delay in interest rate cuts, right, are you seeing buying -- interest buying assets in the link or you are still able to find values out there.

Okay. I think we have to segregate in terms of countries, right? Does that mean interest level, foreign interest level or any interest level in China is a little bit useless today. I think I've been saying it for maybe a quarter or 2. In terms of the foreign markets we're in, I think if you talk about Hong Kong and -- our Hong Kong asset is because it's one big ticket item. The item is relatively heavy as a single asset. So the investor interest, I think they will be a little bit more limited, okay? Now let's look at the more positive ones. Korea, parts of Japan and that in Singapore. So like I said that the -- if the interest level remains elevated, definitely, there will be a total return concern of potential buyers. But if the investors are looking at the combination of reversion potential, even look at the currency, that's how they typically make sense in terms of whether they buy an asset in a certain country, okay? So yes, would it have a more negative impact, yes. But I don't think that our -- -- certain of our office in Singapore is definitely still will be -- still people looking at it.

Okay. And so if you're asking for guidance for the interest rate for this FY '24, '25, the rates have been very, very volatile, but may be based on today's rate in maybe another 50 bps higher than what we have now? Because there's still legacy interest rate swap and unfortunately, Japanese yen -- Japanese interest rate is going up, and we do have 100 [indiscernible] due for refinancing this year?

I don't think any of the REITs have gotten out the rut of the elevated interest. It will be maybe prodding along for at least another year or 2 before we -- if there is a reprieve at the end of the year, then you will see bit by bit the interest rate line improving over time. Right now, I think we have good hedges. We also -- in between the interest rate hike also added into so-called written today, but we will still have the back sales, although that is dropping off, okay? So I think we remain optimistic that today's interest rate environment is already at a very elevated level, okay? We are not saying that it will go back to the good old times, but I think there should be some decrease closer to the end of the year, is what most of the accountants are saying.

Thank you, Rachel. Next, we have Brandon Lee from Citigroup.

Can you hear me?

Yes, loud and clear.

Okay. Great. I just want to have a question on your China cap rates where I noticed that you changed from gross to net. So can you give us a year-on-year change on a net basis?

So Brandon, that's not really an easy number to talk about, simply because of the changed value of last year to this year. So I think the message we want to bring across is that these communicated values are on their cap rate trends. The understanding is that they, over the years, they haven't moved the cap rates.

Okay. Okay. But just on a forward basis, based on what you're seeing on the ground, do you think that this 1% to 3% decline for FY '24 is sufficient.

So this decline has already taken in the operational performance of the assets so any reductions in rentals as well as a slightly elevated of different -- any elevated vacancy number. I think the key things driving the valuation for the China assets actually is the stability at Gateway Plaza. Bear in mind, Gateway Plaza is 2/3 of our -- slightly more than 2/3 of our China portfolio, and half of that is really anchored by BMW on a very long lease at very reasonable rentals. So that helps to provide stability to the -- that helps to provide stability to the operating numbers as well as the valuations.

Got it. Got it. Okay. Just going back to Korea, right? Given that your sponsor owns 50% of the asset, do you need their approval to divest now?

Noi, no, no. I think the issue if they moved, the asset is not like a [indiscernible]. So if any buyers were to come, why would they want to buy 50%? I think we are aligned in terms of our investment goals and also investment time horizon. And for us, we -- to answer the question straight is no, we don't need their approval, but reality is we either go out at a marketable 50% of assets at $200 million -- $200 million on one share. And it's not logical for any buyers to look at 50%. Yes.

Okay. Okay. Just one last question, right. I know your gearing is still at 40.5%, but what's the optimal. What's the optimal level now? And would you be open to just -- sort of just do a bit of share buyback to show the market how undervalued our shares are?

Okay. I think 2 things. Let me reiterate again. I don't think there should be any nervousness around our gearing. I've always remained comfortable with our gearing, it's just that your keep asking me, you're saying you're not comfortable. I hear you, okay? But if you just -- like I mentioned before, just look at our valuation, just take our biggest asset -- just take our VivoCity and you'll see that -- how much is it per square foot and running you at 5%, is there any more room for valuation increases, I will tell you confidently there is that, okay? But I mean, I'm asking the valuation, if you look at this and this and this, it doesn't make sense, okay? But anyway, for us, we are not a company that we look at stretching the valuations and a pure NAV team. I think we're more focused on the DPU. So that one aside. Share buyback. Share buyback is not a strategy. I mean if we have a lot -- if we have the capacity and the cash, why not? Why not buy that stock in the short term. Okay? But it's not a long-term strategy, okay? It is always just -- to me, long term is always looking at real estate, building the bottom line, complementary real estate as opposed to mucking around with your own stock, okay? I think that is the message. But are we willing to do it? I would say that if we have the capacity, why not? On a short-term. Our stock is never a long term -- or would I even call it a strategy.

Okay. So is it -- maybe is it correct to say that you may include it as part of your resolution for the upcoming AGM?

Yes. I think it's just -- yes, why not? Why not? It's good to have there, no issue.

Thank you, Brandon. Xuan Tan from Goldman.

My first question is on going into FY '25, looking at the lease expiries, can you give some sense on portfolio reversion and also occupancy?

Sorry, if I may, repeat your question. So you're asking about looking forward to the upcoming FY, how are we thinking about the occupancy and reversion levels, right?

Yes. Yes.

Okay. Maybe I'll give you a very, very broad stroke, okay? Occupancy in different markets is absolutely key, like China. So our internal aim is at least to beat occupancy in our comparable properties. We have done so today, although the number is -- although occupancy is at -- one is 90%, one is 80% plus. It is still a very respectable number when compared to neighboring properties of similar quality, okay? So for that market, it's very clear. Maintain your occupancy. You lose one tenant, your downtime to replace will cost you more as opposed to having hanging on to your tenants, okay? Then let's go to the next one, Singapore. Singapore, I think is, whether it's a retail -- I think retail, we are still driving it again. Year-on-year sales is good. There's still a few, we are pushing the boundaries in terms of doing more asset enhancement that may not show any reversion. That will show up at the ROI, okay? So what you see, we move today plus 14. It is -- this is just renewals. Over on top of that, we also have done as an enhancer, we do not mix the 2 and double count. So that is why VivoCity has actually more -- is an additional prong, which is more the asset enhancement over the year that we have done conversion to improve -- pass rent to the current incremental -- with incremental revenues, okay? Then it comes to what is our focus. The entire market is not the best-looking market, okay? But I would say that our assets have been relatively stable, okay, for the whole entire year. When we look seriously into our FY, Singapore, yes, done better. It more than offset the utility. Utilities eat up $10 million, okay? But even though that the $10 million got eaten away by utilities alone, the asset was able to cover. All things being equal, the higher revenue of Singapore has more than offset the down revenue period in China or the little bit that you'll hear in Festival Walk -- Festival is pretty much flattish for the year. Okay. So in terms of NPI, I think we're relatively stable. So are we out of the woods? I would say China will take a bit of time. So forecast has always been on occupancy, and I think the team has done tremendously well in comparison to the markets, especially with the renewal of BMW. I think BMW is very, very key, and our BMW lease has derisked the asset by a tremendous -- like I would say 80%. So occupancy for troubled markets push all the way for rentals up and on for the rest of the markets.

Got it. Can I ask a bit more about Festival Walk, right? Looking at your FY '24 reversions, what's the split between pre protest leases and post protest leases that will renew in terms of reversions?

Yes. So if we actually -- I think what we probably can share with you is that if we exclude the pre-COVID interest, right, the remaining reversion per share is positive point, right? It's about a single-digit positive in terms of reversion. And then I think, of course, we see a varying range of reversion. Some of the F&B, we see a bit of a double-digit reversion and then of the rest, we see a bit smaller, right? So -- but to remind you again that actually the change we need for the leases that are expiring for the year. But it's not for the entire mall. So probably I hope that gives you some confidence in us. So if you exclude the pre-COVID, remaining rental reversion is a positive single-digit number.

Got it. And do you expect Festival Walk reversions are positive mix this financial year?

So I mentioned, there are still about 6% to 8% of the leases that's pre-COVID, right? So they were happening in -- will be starting in the next year. So we have to monitor I presume. Definitely, the gap will narrow. We also hope that should be positive, but we also will have to wait and see, yes. Because it's now actually the -- it's only the beginning of the year. So a lot of the leases are there are still in good condition. So it's fair and that's the comment right now.

Question from Joy.

I just have one question. Just in terms of retail sales in Singapore, we've had quite a bit of incoming visitors sort of in first quarter. Do you see your sort of tourism sales trending up? And can we get something.

Actually, we have way surpassed -- surpassed COVID levels year-on-year, quarter-on-quarter, I do not pay attention that much anymore. Year-on-year, quarter-on-quarter it's still flying. Tourism has -- anything that has got a tourism element -- if you say that -- any positive from tourism, VivoCity tends to a little bit enjoy it. But virtual is being RWS and those are using it, yes. There is -- I can't -- I won't be able to prove to you the amount, but it's -- when we look at our sales trending is quite typical for over the last few years, it's been tracking the inbound trending of the tourists.

Yes, maybe, I can also give another perspective is if you look at the fourth quarter, right, some of the key contributors to the sales rate, actually largely contributed from the F&B, right? And then this is a condition of same-store increase and some new tenants increase. If you recall, right, I think we have a lot of new F&B in the so-called TANG cluster. And then we also have more F&B at these [indiscernible] clusters. So all this new F&B customer has actually proven that this deliberate strategy, right, of improving the F&B has been a good position, right? So on a same-store basis, we're also seeing that existing F&B are recording very high increases as well. So I think in short, I think F&B is one of the key contributors in the fourth quarter sales increase. And then, of course, if you -- I hope that will give you some insight.

I think back to your question on whether we are linked to tourism, yes, definitely a little bit, but the majority is still local, given the trending in terms of sales to inbound tourism.

Right. And just on tourism, do you notice any change in shopping patterns meaning more F&B, entertainment focus rather than sort of just purchase of commodities.

I think what we noticed is there's a lot more interest in the Chinese players trying to come into Singapore market. But you talk about taste-wise. If you look at all our F&B, I think now we have even a deeper mix of variety of these, the Japanese or the Chinese okay? So over time, I think Singapore loves Japanese food, okay? Now it's a little bit two. It's a little bit of it expanding towards Chinese food. Okay. You are talking about the malas, you're talking about the [indiscernible] and whatever you're eating, okay, it's a little bit expanding towards that direction. And on the leasing front, definitely, there's more interest from Chinese players trying to come in more into the Singapore market.

Do they pay a high rent?

They do pay a higher rent [indiscernible]. So but anyway, they are not coming in for -- they know Singapore is definitely not a cheap market. They know what is the -- what are typical market rents. A lot of more F&Bs are trying to come into Singapore. Also the fashion lines, not the high end, we're talking about the medium end fashion lines are also trying to come in to Singapore. So F&B is a little bit more than what we have experienced a couple -- let's say, about 2 years or 3 years ago, definitely more.

Yes. Maybe adding on to that, right? You look at some of the most recent additions, right, like [indiscernible] These foreign F&B right chose people to be at our first talk in Singapore, right? So you also shares your -- how they view the city and as you probably can guess at what kind of rent they are willing to pay for their first one in Singapore.

So I think people have done over the years, organically, and also on the real estate side, which is the asset enhancement year-on-year. We will continue to do something. We're planning for, and I think by the end of the year, we should start another piece, okay? I think if you noticed, we have touched corner A, corner B, corner C so whichever corner you that we have not touched, we will continue to do so, and we will restart the cycle of business ones. So I think that we have been very actively extracting value, but we are not just purely screening tenants for the rental. We will actually be adding space, subdividing space, 3D configuring the space and not just squeezing tenants rental. We are actually adding more space and rationalizing that they use that because that's all. We changed some [indiscernible] then we got the GFA from the [indiscernible] and shop it to retail GFA. I think those are the tenants that we have done well over the years. So is the music going to stop for Vivo, I doubt it. Okay. I think in our horizon for the next well, next 3 to 5 years, actually, we have planned already for 5 years. For VivoCity, there will be asset enhancement also, okay? There will not be one day of reading in, of stopping on their assets. We find that we have to continuously build the gap and to widen the gap to competition. okay? So I think we have done well, so we'll continue to do what we have done.

Thank you, Joy. We still have a few questions and the next one on the list is Derek from DBS?

Sorry, just 2 questions. I just wanted to circle back to Festival Work, right? I mean now that the operating environment has changed, not only for Hong Kong, but also there's also competition, right? So just wondering whether should we think about a bigger kind of remix, tenant remix at Festival or is there in the plans or what your talks are?

Okay. The current competition is something that we can compete with. Even down to -- I think even though what I see in terms of today, I think it's something that we can take on. The positioning of the newest mall -- the new mall they've built is more to urban, definitely a very different cup, okay? That, I think we are confident to be able to take on. Now do we need to reposition? Retail is perpetually every 2 or 3 years, you switch a bit here, you switch a bit there. It's never constantly at a standstill moment. Remember how we first dealt with fashion, then came at leisure, then came a little bit more entertainment, then came big on F&B. And if I take you 20 years ago, it will be big on department store for stability and big chunks of spaces and stable rent . All that's changed. So I'm saying that we cannot stay put for retail. You always have to change. Specific to, Festival Walk, very clear. There are very similar trends profiling in terms of Vivo and Festival except Festival Walk is about half to a lot higher in terms of the brand positioning. They have [indiscernible], we don't have, okay? Just to give you an example [indiscernible], we don't have, okay? So what I'm trying to say is they are same thing, but totally different. They have to one notch higher in terms of positioning. Now over the last few years, what has been trending that we -- any mall will have to deal with, number one, fascinating question, what's not yet have to deal with. Fast-moving fashion was definitely taken away by a lot more of the online non brands by intro-type of goods as well not to be dilutive, but I mean not luxury, okay? Second, came at leisure, which was a very, very good trend that everybody wore. We bought on it about maybe 4 to 5 years ago, we started going big on it because people wear exercise wear at home, casual and sometimes half of their office update is actually exercise wear. Sneakers, you never knew that sneakers was allowed in the office. You take office just 10 years ago, were you able to wear sneakers at the office. I think your boss would kick you out of the room. But right now, it seems to be quite an okay thing, yes. So what I'm trying to say is it's not less casual was bought for the day. Everybody's got to adapt. Even food. The food -- the type of food, the quantum of health consciousness, what goes in, how much input is provided to the consumer is also changing, okay? So I think it's not just a Festival Walk issue, it's a typical business of running retail. You just have to change every time. You don't change the whole mall. I think more is relevant. I'm talking about pockets here, pockets there that you improve over time as opposed to changing big chunks -- maybe the big chunks that you have to think about is always the anchor spaces, whether the hypermarket makes sense, okay, whether a big cinema makes sense today. okay? Those are -- this will be most significant. And whether a department store makes sense. So I think we have gone through a department store phase in the retail scene, okay? We have different stores decide still now, for it to make sense to take expensive real estate at GPS and consignment out, okay? So that trend, I think the landlords have handled it well. You can see that department stores are taking big spaces in the mall still rather go direct to the tenant and the tenant has an old shop outfit in the mall as opposed to having a low rental, big space with a landlord and with the department store and the department store sublets, okay? So back to your question, [indiscernible] what I like is I think F&B seems for the last few years, why people go to a mall is a little bit more ingrained. They like to be entertained, they eat and by the way they shop. okay? So I think the placement of the motivation of going to the mall has shifted over the last 30 years. We're past time they say let's go shopping, no such thing as let's go shopping. It's all let's go have a meal or let's meet up someday then by the way, it must be conducive enough for you to be able to extract money out of the wallet, okay? So food must be a draw. A couple of their key anchors must be a draw and entertainment or entertainment-related experiential definitely will be a draw, okay? Quite clearly, you see like our ice cream. Ice cream is from day 1 I would -- is ice cream in Hong Kong really sustainable? Is it justifying it's space as a retail unit on a prospective basis on land use. We thought too, we calculated and recalculated and calculated, we said yes. It's a repeat visit, people like the experience, it's the differentiator. So our ice cream is one of the, I think, top 2 as opposed to they have food competitions and all. So birthday is -- you need a combination of people, preferred and motivation to draw families out over and over again game, okay? And it changes over time and it means that our business is not easy to run. Like I said, my life is very difficult. My team said it's not easy running a mall. Every year, they have to come up and think of something. But this year, you just look at the amount of Marcom event and the pipe of Marcom events that Festival Walk has thrown out. This year, versus the last 10 years -- it's a world of difference, okay? It may be muted by the general market metal sentiment, but the effort and the focus and the thinking behind the way the mall is marketed and the activities that they bring in, the intensity is at least 5x okay. We were very clear that the market is rough. There's only 2 things they can do, okay, bringing the people in. So that's where the [indiscernible] really a positive in terms of bringing up the assets.

Okay. Got it. So just a quick follow-up, right? So I am just curious about in Singapore, right? I mean, VivoCity is doing so well. How about Holland Center have you started any construction? I don't know your plan. Anything to respond to?

Okay. I think we -- it remains a possibility, but it doesn't mean that we haven't had serious conversations. I think that is still some time away. We see the ferry terminal to the right? You see the building still there, right? I don't think anybody wants to listen to me right now. Okay. Okay.

Next, Yew Kiang from CLSA..

I just want to follow up on 2 questions, I think which has been asked but I just want more details. For your Korea asset, when I looked at the square foot versus some of your peers assets, it seems much lower. So if your peer -- I think yours on a per square foot basis is lower. So if there are market transactions at much higher than yours, would it incentivize you to focus on divestment in this market, right, in Korea -- for your Korea exposure? Is that a fair statement?

Ours is about 38,000 [ Nonhyeon-dong ]. [indiscernible] Okay. I think we -- if you say are we undervalued or overvalued? I think it's the market, yes. It depends on which assets you're comparing the asset to -- do you want to take this answer?

So maybe let me add I think there are -- there were a few recent transactions in Ghana, which I see 40 million for [indiscernible], right? But those -- if you look at the net, those are actually along the main canal street, which are a good frontage, right? So 1 of those 2 things in terms of location, right? They are slightly better than our location, right? So I think our valuation today is a fair valuation.

Yes. Okay. Okay. Okay. And then my second question is on Festival Walk, the 33,000 square feet expiry for this [ 45 ] that the entire amount is the 6% to 8% of leases signed in pre-COVID. Is that fair? So which means after '25, the -- assuming the market stabilizes, you should see positive reversions for Festival Walk?

Yes. So sorry, I didn't quite get a question, but let me try a -- if I get a question wrong, so actually [indiscernible]

I can rephrase again. 6% to 8% of leases, right, were signed and still has the remaining 68% of our leases signed in pre-COVID is likely to be flushed out entirely in FY '24/'25. So that is going beyond that, right, it should be positive reversions really? Is that a fair statement? Because you've also mentioned that right now, the 8.7% negative reversals for those leases that are signed -- not -- excluding the pre-COVID releases, you are still doing single digit, right?

I think anything beyond the year because of some noises in terms of we see the 4Q in Hong Kong, I think we will be less possible to make a statement. Because when a tenant 2 years later, the reversion and whether people renew will be very highly dependent on this year's sales.

Okay. Okay. But you're [indiscernible]

Yes, yes, every shop we go. Never say that. I think we have been there before. We are fighting in our corner. The heavy -- we are experiencing not a Festival Walk issue, it's a Hong Kong issue. I think that's on Hong Kong's regulated format in retail, yes, I'm not talking about other forms of retail. So why I'm not so committed to talk about in 2 to 3 years' time, it means if I do tax book, I will tell you, definitely, we'll try to get there, right? But that's the reality is whether -- how would the settlement and the sales pan out this year is more important in determining what the rental reversion will look like the year after, okay? But if everything continues steady is, it will not be as big, okay? Yes.

Okay. That's it from my part to the rest yes.

Thank you, Yew Kiang. Jonathan.

Yes, encouraging to see year-on-year increase in DPU. 2 short questions. Just on -- firstly, on Korea. Retention is low at 17%, but you have very strong rental reversion at 39%. Agree that it's a strong market. Could you give us some color on why this unique mix of numbers? And then secondly, on the leverage of 40%, you're comfortable with that. Would you consider scrip dividend to gradually lower the leverage? And how do you see it and am I right, you have not used scrip dividend before? Opened. Yes. Okay. So do you find -- how are you open to using scrip dividend? Or is there some disadvantage that you -- that stops you from doing that?

I think if you look at how much is our DI per quarter and all -- I mean if you can gradually -- like, I think fundamentally, we're not uncomfortable where our gearing are. The second part is they don't have too much impact, right? Then if you look at how much is our total debt versus how much is our quarterly distribution, it's a bit slower now. It's a bit slower.

I would say we do not go out, but we do not have the intention to enrollment yes.

Okay. So a bit cautious about the dilution.

No, I think that if you want to -- it's not a matter of cautious of dilution, how much is your distribution for the quarter, okay? Versus our debt, how many percentage points can you move? 0 points, I don't know I think it's nominal.

We own about 50-odd percent of us. It really depends on the takeup rate. It's not the cost, it's the fixed cost, but the take-up rate is uncertain. Yes, yes.

Then the dividend -- if you are talking about ERP, I think long ago, MPACT, we already took the CRP for the reasons. When we look at the take up rate, okay, when we look at the cost of doing so, it's easier that I go to a banker and say, hey, basis for me cheaper, I remember doing the analysis myself. Called a banker if I need money, $50 million is for me. It will be cheaper than me doing the DRV.

Understand, understand. Okay.

So on the question on the TPG right? So I think this retention rate, right, if you look at it together with occupancy rate -- so what happened last year was there was 2 tenants who left us for various reasons. I think one particular tenant, they rented the space because of a specific project, which the project had ended. So they no longer need the space, and that's why they moved out. The other tenant moved out because the rental was simply too high for them. As you know that the reverse -- because of right now what we are facing in Ghana, right, is a serious shortage of space and then a strong demand, right? So another tenant moved out because they can't afford the high rent. So -- but if you look at it together with our current occupancy, right, today, TPG is at 99.1%, which is pretty high, right? So I think we should look at both numbers together, but we showed you the details on why we have a low retention rate. One because the project had ended. The other was because they can't afford the rent to the decided to move out.

The rental reversion is 39% looks extremely high.

Like I said, it's not mentioned. Nobody is talking about this. There's a lack of supply, great interest, but I think we are coming to the top-ish part of it already.

Thank you, Jonathan. Just to round out the final question is from Gary. Gary from Morgan Stanley, please. Before we proceed on to the last question that has been raised by the online participants, Gary?

All right. Perfect. I'll just keep my questions brief. First question is on the divestment strategy. Sharon, you mentioned it's hard for Hong Kong and China, but what about Japan where CRE transaction volumes have been at record highs and is still pretty robust. So we see, I guess, the first divestment coming from Japan? And could it happen sometime this year?

Japan is 10% of our portfolio, yes. So it's literally all or nothing. Even if that ticks 1 or 2, it's not going to achieve anything. So I think what we intend to do is -- Japan, the issue more is to do with our Makuhari asset, okay? But just to sell one or 2 also doesn't change the needle. Absolutely, in asset takes 9%, 10% because there's no impact on whatever that we do. So if you ask me, Hong Kong, China, I believe that should be on the top of the list, but that has to wait. I think it will come back. It's just, when?

I mean, Japan is not particularly small, a $1 billion is also -- that could move the needle on the portfolio as a whole proactively.

Why do you get move out of Japan. And I think in Japan long haul, we still want to stay.

Understood.

You know what I am saying. If you're talking about our needing to deploy everything out of Japan means I don't need Japan. I don't think we are comfortable to exit Japan today.

Right. So more divestment.

Sorry, [indiscernible] rotate it, rejig some of the assets where we can, okay? Japan will long term be a small piece in our entire portfolio in whichever form, okay? But it will not be a very big portion of our portfolio. So if you ask me because of the -- some of the project managers that we are dealing in Japan for this specific cluster of assets that we have, it will be an all-or-nothing issue. But long term, I still want to be in Japan for a small portion, so it will be a stake.

Understood. And just my last question is on occupancy costs at Festival Walk and VivoCity. Could you give us some color on that.

Plus minus, of minus 20 years.

Still 20%. Okay got it.

Plus minus, yes. One is plus, one is minus until we get [indiscernible]

Just quickly moving on to one question that has been raised by a Jamie from Randall investments online. Jamie's question is, what is the occupancy cost of Festival Walk, which I believe we have just answered. The next question from Jamie is actually when should we expect the effect of prepandemic leases to ease in the mall, maybe Wee Leong can just recap.

Sorry, again, the...

When should we expect the effect of prepandemic leases to ease.

Yes. So as I mentioned earlier, right? So today, we talk about 6% to 8% pre-COVID lease this year. So hopefully, next year where we actually renew that, I think this minus 8% active lease you see today, right? So hopefully, we'll be narrowing that as we move towards the next year.

I think we have approached the end of our full year results. Thank you so much for your questions and active participation today. Again, for further -- if you have further questions, please feel free to reach out with the Investor Relations team here. We always at your service. Thank you again for your support and the time today. We wish you a great day ahead. Goodbye. Thank you.