Robinsons Land Corporation (RLC) Earnings Call Transcript & Summary

Welcome to Robinsons Land Corporation's investors briefing for the full calendar year 2021. Joining us today from RLC are Mr. Frederick D. Go, our President, and the rest of the IR team. RLC will give you a presentation on the company's audited results for the full year of 2021. At the end of the presentation, there will be a question-and-answer session. We will now proceed with the presentation.

Ladies and gentlemen, thank you for joining Robinsons Land Corporation's earnings call. Kindly allow us to take you through our audited financial results for the full year ending December 2021, further discuss operational highlights, including our CapEx spending, provide updates on our initial initiatives, our growth plans and future strategies, update you on our ESG journey and conclude with an announcement of our cash dividend payout. As we look back on the past year, we remain inspired by the dedication and resilience of the entire RLC organization in its pursuit of several growth initiatives, such that RLC closed 2021 with a diversified business portfolio consisting of 82 residential buildings, 53 lifestyle centers, 39 housing subdivisions, 28 office developments, 21 hotels, 20 mixed-use developments, 7 industrial facilities and 5 work.able centers. Moreover, RLC's competitive position was further amplified with a landmark listing in the Philippine Stock Exchange of its flagship real estate investment trust, RL Commercial REIT, Inc., or RCR. At listing, RCR is the Philippines' largest REIT in terms of market capitalization, portfolio valuation and asset size. It also has the widest geographical coverage and longest average land lease tenure. Amid broad uncertainties, RCR attracted strong institutional and retail interest and drew gross inflows of PHP 23.4 billion. This represents a huge vote of confidence in RLC's solid track record, branded excellence in managing and operating its projects and in producing strong returns for its shareholders. We are also excited to share that current to RLC's commitment to fully support RCR's sustainable long-term profitable growth, RLC's Board has approved yesterday the sale of Cybergate Bacolod 2 and infusion of Cyberscape Gamma via property-for-share swap into RL Commercial REIT, Inc. in the first half of 2022, subject to pertinent regulatory approvals. This transaction has also been approved by RCR's Board per recommendation of its fund managers and endorsed by the related party transactions committee in compliance with the REIT's IRR. These 2 dividend accretive investments will bolster our sales portfolio by PHP 6.6 billion to over PHP 80 billion, increase its asset size by 13% to more than 480,000 square meters of leasable space and further expand its nationwide presence to 10 locations. Pivoting now to our financial performance. In 2021, the investment portfolio accounted for 45% of revenues, 2/3 of EBITDA, 43% of EBIT and 47% of net income. The balance was from the development portfolio, which we shall provide more details on our key performance drivers in the succeeding slides. Reflecting on the success of our strategic initiatives and successful REIT IPO, RLC's financial position is as strong as it has ever been. Total assets posted at over PHP 200 billion, while shareholders' equity expanded to PHP 130.3 billion. Shareholders' equity is net of treasury stock of PHP 438 million, resulting from the buyback program that we launched in November, and it includes equity reserve of PHP 17.7 billion, representing the difference between the net IPO proceeds and the book value of the shares sold to the public. It also includes noncontrolling interest of PHP 4.3 billion, representing the share of minority shareholders in the equity of RCR. The IPO likewise improved the book value of Robinsons Land from PHP 19.61 per share as of December 2020 to PHP 24.37 per share as of end of 2021. Meanwhile, earnings per share for 2021 at PHP 1.55 per share is trending back towards profitability, exceeding last year's PHP 1.01 per share full year EPS and accounts for more than 90% of pre-COVID or 2019 EPS. On the other hand, outstanding debt declined to PHP 47 billion, which resulted to a net gearing ratio at a record low of 23%. RLC saw a growing sense of optimism from its customers, partners and stakeholders on the back of the waning number of COVID-19 cases in the country and easing of lockdown restrictions. In the view of this, RLC inches closer to pre-pandemic levels and reported a 62% surge in consolidated net income to PHP 8.5 billion in 2021. Net income attributable to equity holders of the parent entity closed at PHP 8.01 billion. Excluding earnings recognized this year from the Chengdu project and sale of parcels of lot in Bridgetowne East and after removing high base effect of the change in revenue recognition of residential sales in 2020, the bottom line still accelerated by 66% to PHP 6.7 billion. Meanwhile, consolidated revenues grew 30% to end at PHP 36.5 billion, EBITDA jumped 9% to PHP 15 billion, while EBIT leaped 14% to PHP 9.7 billion. In the fourth quarter alone, consolidated revenues reached PHP 5.7 billion for a quarter-on-quarter growth of 15%, while net income doubled to PHP 2.06 billion. Moving on to the performance of each of our business units, starting with the malls division. With the increased mobility and customer activity, Robinsons Malls is well positioned to recapture growth and take advantage of the improved business environment. Last year, mall revenues reached PHP 8.3 billion for a decline of now only 3%. In 2020, it was down by 48% versus 2019. Recall as well that in 2020, RLC still had 2.5 months of regular operations. Meanwhile, EBITDA is lower by only 6% to PHP 3.9 billion, while EBIT dropped 53% to PHP 191 million on account of additional depreciation from new mall openings. The upward trend we saw in the fourth quarter exhibits the fundamental strength of our mall portfolio that is very much consumption-driven. Operational GLA proved to 74%, number of operational tenants to 87% and footfall to 65% compared to pre-COVID levels. We are optimistic that this fourth quarter rebound will be sustained as the government eases mobility restrictions as the consumer confidence is fully restored and with upcoming elections. Encouraged by the improving COVID situation in the country, Robinsons Malls opened Robinsons Place La Union, its 53rd lifestyle center and the biggest mall in the province to date. It has also strengthened its geographical presence in North Luzon. In addition, the expansion of Robinsons Dumaguete was completed, and Phase 2 of Robinsons Place Tacloban has reopened to the public after it went rehabilitation. With these new openings, Robinsons Malls capped the year with 53 malls nationwide, spanning across 1.6 million square meters for a gross leasable space of 1.6 million and at 91% system-wide lease percentage. Robinsons Offices sustained its stable top line results with a 9% growth from a year ago to PHP 6.5 billion. The stable growth in revenues is primarily driven by the strength of its portfolio, which consists of quality assets in strategic locations with a wide geographic dispersion and strong cliental base. EBITDA and EBIT improved by 11% and 13% year-on-year to end at PHP 5.7 billion and PHP 4.7 billion, respectively. We are pleased to report that despite of the logistical challenges we faced the past couple of years, we were able to successfully deliver 3 office developments in 2021; namely, Cyber Omega located in Ortigas CBD, Bridgetowne East Campus One located in our Bridgetowne Destination Estate and Cybergate Iloilo. Cyber Omega and Cybergate Iloilo are both PEZA-registered. Furthermore, we were able to close a deal with the Philippines' largest data agnostic center for the lease out of the entire Bridgetowne East Campus One. With this new office developments, it boosted the portfolio to 28 offices, spanning 688,000 square meters of net leasable space with an industry superior systemwide lease percentage of 93%. Underpinned by the easing of travel and tourism restrictions and the revitalization of tourism activities, Robinsons Hotels and Resorts, or RHR, surpassed its 2020 performance and generated an 11% revenue growth to PHP 1.2 billion. Meanwhile, EBITDA accelerated by 60% to PHP 246 million on the back of operational efficiencies while depreciation from hotels opened in 2019 and in 2021 dragged EBIT to a loss of PHP 173 million. As the worse effects of the global pandemic ebb, the company unveiled its maiden property under its newest homegrown upscale brand, Grand Summit Hotels, where it continued the construction of premium hotels in Cebu. Located in the tuna capital of the Philippines in South Cotabato, Grand Summit Hotel General Santos was formally opened to the public last December 2021. With this, RHR ended the year with over 3,200 rooms across 21 hotel properties. Net presales for RLC projects grew 48% to PHP 10.8 billion, driven by the strong performance of Sierra Valley Gardens 1 and 2 in Cainta and the Sapphire Bloc South Tower in the Ortigas CBD as well as the launch of new projects, which we will show in the next slide. Meanwhile, net sales take-up from joint venture projects with Hong Kong Land, Shangri-La and DMCI dropped 23% to PHP 5.7 billion. A significant portion of the inventory have already been sold in the previous years. On the other hand, realized revenues reached PHP 6.3 billion, while EBITDA and EBIT posted at PHP 2.3 billion and PHP 2.1 billion, respectively. The decline recorded in 2021 was mainly attributable to the high base effect of the additional revenue booked in 2020 arising from the change in equity threshold. Without effect of the change in equity threshold, realized revenues would have declined by only 22%, while EBITDA and EBIT would have dropped by only 5% and 7%, respectively. We are pleased to share that we have successfully launched 3 residential projects in 2021 with a total estimated sales value of PHP 9.4 billion. In the first half of the year, we launched our very first premium horizontal development in Batangas named Forbes Estates Lipa and our condominium project in Pasig City named Sync Y-Tower. In the second half, we launched the first building of our 8-building midrise residential project in Merville, Parañaque, Woodsville Crest. Fanned by the growing e-commerce market and the consequent steady demand for logistics and warehousing facilities, Robinsons logistics and industrial facilities achieved a 50% increase in revenues to PHP 354 million versus a year ago from its industrial facilities located in Muntinlupa, Cainta, Pampanga and Laguna. As a high-margin business unit, growth velocity of EBITDA and EBIT was faster at 76% and 89%, respectively. Capitalizing on the emerging market opportunities in the logistics real estate sector, RLC added over 73,000 square meters of GLA in Pampanga and in Muntinlupa to its industrial leasing portfolio. Our logistics and industrial facilities now boasts 167,000 square meters of gross leasable space today. RLC's Integrated Developments division crystallized the value of its land bank in Bridgetowne Estate, with the recognition of the revenue from the sale of land to Shang Robinsons Properties, Inc., or SRPI, and RHK Land Corporation, or RHK, totaling PHP 2.6 billion. SRPI and RHK acquired from RLC a total of over 2.6 hectares of land inside the 31-hectare master plan Bridgetowne Destination Estate. Meanwhile, EBITDA posted at PHP 1.6 billion, while EBIT ended at PHP 1.5 billion. The investment from two of the most respected and recognized real asset names in Asia, during this time of economic uncertainty, exemplifies a vote of confidence in the estate's future growth prospects. Overseas, we are glad to report that have realized revenues of PHP 10.9 billion in 2021. EBITDA and EBIT ended at PHP 1 billion each. Furthermore, the project is already 95% sold and Phase 2 is almost complete at 97%. In addition, we have recovered 89% of our invested capital, with a repatriation of USD 200 million today. As seen in this slide, sales take-up totaled CNY 3.3 billion or more than PHP 26 billion. Remaining inventory consists of just the shop houses and car parks amounting to CNY 150 million or about PHP 1.3 billion. CapEx spending picked up momentum in the second half, fueled by the proceeds received from RCR's IPO. Last year, we spent PHP 24.8 billion, exceeding our 2021 CapEx budget of about PHP 20 billion, which we earmarked at the beginning of the year, and this CapEx spending was driven by our investments in our malls, offices, hotels, industrial facilities, Destination Estates, residential projects and land bank in the Philippines. In 2022, we target to sustain this momentum and have earmarked PHP 25.5 billion for capital expenditures. As an update, out of the PHP 22.8 billion of net proceeds from RCR's IPO, RLC has already reinvested about 25% as of December 2021 in accordance with its reinvestment plan. To support our expansive growth plans, RLC's land bank now spans across more than 800 hectares. With the crystallization of land bank values in our Bridgetowne Destination Estate following the recent land sale, our land bank value is estimated at about PHP 128 billion as of 2021, 6% to 7% of which is attributable to the land bank of our Destination Estates. We continue to build sustainable communities that espouse the live, work, play, inspire lifestyle. Currently, our Destination Estate portfolio is composed of the 31-hectare Bridgetowne spanning the border of Quezon City and Pasig City; 18-hectare Sierra Valley located in Cainta, Rizal; and the 200-hectare Montclair located in Porac, Pampanga. Moving on, we are positioning ourselves for the future by expanding our digital footprint and investing in various initiatives. With the new normal, Robinsons Malls' main objective is to be recognized as the leader in providing excellent customer experience as well as innovative mall features and attractions. It also aims to meet customer preference by pursuing full integration of improved off-line experience and online experience, as shown in this slide. For RLC Residences, we have been staging online housing fairs in partnership with online property listing sites. We have also seen increased lease generation through our strong online presence, and we have engaged top-tier social media influencers for brand-building affinity. For Robinsons Hotels and Resorts, we have set up our social media response team to attend promptly to concerns of guests or potential guests. We have added digital-building platforms and payment options, and there is an ongoing development of our website and mobile app. IHG also launched virtual focused selling events and its e-commerce platform for food and beverage via crowneplazamanila.com. Now for the path forward. Robinsons Malls reached 1.58 million square meters in gross leasable space with the opening of the Dumaguete expansion and Robinsons Place La Union, together with the reopening of Robinsons Place Tacloban. In 2022, we plan to expand our Antipolo mall and open Robinsons Place Gapan in Central Luzon, which will raise gross leasable area to 1.63 million square meters. With the completion of Cybergate or Cyber Omega, Cybergate Iloilo 1 and Bridgetowne East Campus One, Robinsons Offices grew its leasable space to 688,000 square meters in 2021. This year, we have a robust pipeline consisting of GBF 1 building located in our Bridgetowne Estate, Cybergate Bacolod 2, Cybergate Galleria Cebu and Cybergate Iloilo 2. Our Logistics and Industrial Facilities division delivered 107,000 square meters of industrial space in 2021 with the completion of RLX Sucat 2, RLX San Fernando and RLX Mexico. This year, we target to complete another industrial facility in Calamba, which will propel GLA to about 199,000 square meters. Our Residential division successfully launched PHP 9.4 billion worth of projects in 2021 and yielded PHP 10.8 billion of sales. It is gearing up to launch more projects this year, depending on market conditions and product readiness. Lastly, Robinsons Hotels and Resorts ended with over 3,200 keys last year with the opening of Summit GenSan. Slated to open this year are Summit Naga, Go Hotels Naga, Go Hotels Tuguegarao and Fili Urban Resort Cebu to drive number of keys to over 3,600. Next, our ESG scorecard and initiatives. RLC demonstrated its continuing commitment to transparency in ESG reporting and improved performance by participating in the 2021 Real Estate Assessment of the Global Real Estate Sustainability Benchmark, or GRESB. In the latest assessment of GRESB released last October, we are pleased to report that RLC received high marks of 84%, which is a grading of A for participation in public disclosure. It's a huge improvement since 2018 and higher than the global average of C. Furthermore, last September, RLC's commitment to critical issues such as corporate governance, climate action and human resource was acknowledged by Morgan Stanley Capital International, or MSCI, receiving a rating of B. RLC scored higher than average in the social category, particularly in product safety and quality. We continue to make significant strides in our various environmental and social initiatives. We're a leading proponent of green office buildings, and we have made investments in several of our office developments, namely Giga Tower, which is the company's PEZA-registered prime office building in Bridgetowne. It is now also 100% powered by renewable energy sourced from a hydroelectric power plant. In addition to its significant environmental benefits, this initiative generated energy savings of PHP 0.24 per kilowatt hour, thereby resulting to reduced operating costs for tenants. As a testament to its continued efforts, RLC landed a spot in the 2022 Bloomberg Gender-Equality Index, marking its second time the company has earned the prestigious recognition from Bloomberg. This distinction supports RLC's commitment and progress in championing diversity, equity and inclusion to created sustainable workplace that empowers all employees to succeed, irrespective of gender. Moving on, we are honored and humbled to share that RLC has garnered several awards from several award-giving bodies, including the coveted Developer of the Year award. We are also pleased to share that our President, Mr. Frederick Go, was named the Property Man of the Year by the prestigious International Real Estate Federation, or FIABCI. This award is one of the most coveted honors of the 2021 Property & Real Estate Excellence Awards and a recognition of Mr. Frederick's and RLC's unfaltering commitment to deliver a high level of value and service to the industry. For RL Commercial REIT, Inc., we are honored to share that RCR was awarded as the best REIT in the Philippines by the triple asset or by The Asset Triple A Sustainable Capital Markets Country & Regional Awards for 2021. RCR was also recognized as the largest Philippine REIT to date. Furthermore, RCR became a constituent of the FTSE Global Equity Index Series for small-cap securities. Last, but not the least, we are pleased to announce that the Board of Directors of Robinsons Land has approved in its meeting held yesterday the declaration of regular cash dividends of PHP 0.50 per share to all shareholders of record as of April 19, 2022, with a target payment date on May 13. This translates to a 32% dividend payout in line with RLC's dividend policy and a dividend yield of 2.62%. This ends our presentation. We now open the floor for questions. Thank you very much.

Our first question comes from the line of Mr. German de la Paz.

Can you hear me?

Yes, we can hear you, German. Please go ahead.

Just 3 questions from me. First, I just want to ask if there was any revenue reversals for residential in Q4 because I saw a huge drop in the quarter -- the year-on-year and quarter-on-quarter. And then second, I just want to ask for malls foot traffic since March, since NCR reverted to alert level 1. And then third, how do we explain the strong bottom line growth for Q4 on a year-on-year and quarter-on-quarter basis -- sorry, on a year-on-year basis because I saw net income doubled year-on-year, but total revenues only expanded by 5%. Just want to ask where the growth came from.

Yes. Thank you, German. I think I'll leave it to the team to answer the questions individually. Yes, go ahead.

German, thank you for your questions. With regard your first question regarding cancellations. For 2021, we have canceled the total of about of PHP 2.8 billion in terms of realized revenues.

Okay. May I ask how much of this was booked in Q4?

Yes. Most of it, German, because if you'll remember, because of the Bayanihan Act, real estate companies, and I think even banks, were prohibited from canceling accounts during the start of the COVID pandemic, right? There was this Bayanihan Act that waived interest, waived collections for a certain period with penalties. So we had to wait for that 1 year -- or so called 1-year period to expire, right? So hence, there were almost no cancellations, I guess, at the earlier part of the pandemic. So all of them are at the tail end.

Okay. Sir Frederick, may I ask the split between Q3 and Q4 because I understand Q3 also saw some reversals from our last briefing?

Okay. Maybe Cat.

Sorry, can you repeat your question?

No, he was just asking how much was in 4Q, Cat?

The canceled, yes, yes.

Approximately, sir, in 4Q, we recorded close to about PHP 1 billion in cancellations.

PHP 1 billion in Q4, so the bulk is in Q3 actually. PHP 1.8 billion in Q3. Is that correct?

Yes. That is correct, German.

All right. Okay. Fine. Mall traffic?

Yes, for the mall foot traffic, for the fourth quarter of 2021, it was 65%. Then this March, when we moved to level 1, we're seeing it trending to about 71% in the first week. So it went up.

Kerwin or Cat, the third question.

Yes, Mr. Frederick. German, with regard to your third question as to the driver for the Q4 performance. Actually, all of our business units performed well in the fourth quarter, especially the malls. The only business unit that didn't perform as well is the Residential division. But our malls, offices, hotels, logistics, facilities, they have all performed well, and they have all contributed to the consolidated increase in net income of about 108%.

Yes, I saw that. But actually, as in -- total revenues only grew by 5% year-on-year in Q4. So I'm just wondering why the over -- why the much greater expansion in net income? Or were there any onetime gain or tax benefits?

It's basically the tax. It's basically the tax benefit, German, because of the listing of RCR. Obviously, with RCR REIT, the main benefit is it's income tax-free, right? So after we split a lot of our assets or spun off a lot of our assets into RCR, there were certain tax liabilities that had to be reversed.

Okay. Is there a figure in Q4, Sir Frederick?

I think if you drill down to the number, you'll see there under the provision for income tax. You'll see it's -- you'll see the number right there. That's really, I think, the big difference in the NIAT, which is I think your question, why is NIAT quite large. I think for most of the corporates who benefited from CREATE, you really saw a huge jump in the corporate's NIAT, right, from the banks to the real estate companies, et cetera, et cetera. But I guess for us, it is more pronounced because of the listing of RCR.

Our next question comes from the line of Mr. Carl Sy.

Let me just check if you can hear me.

Yes.

Yes, Carl.

So I guess some of my -- I have a number of questions, and some of them are kind of related to what German already asked. But let's see, going back to the residential cancellations or residential revenue cancellations. So about PHP 1.8 billion was canceled in 3Q, about PHP 1 billion was canceled or reversed in 4Q. That would mean 3Q, if I add back those numbers, should have -- you should have shown PHP 2.8 billion in revenue and then just PHP 1.5 billion in residential revenue in the fourth quarter. I was wondering why there would be such a large drop. Is it just a blip? Is there -- yes, what might the reason be?

Yes. The exact accounting numbers, I'm not answering that, Carl. Maybe [indiscernible] give you separately. But as I was explaining earlier, during the pandemic, theoretically, we could not cancel accounts, right? So we had to wait for the lapse of all those Bayanihan period. So obviously, after the lapse of the Bayanihan period, that's when we can start to move on the accounts, right? And again, I think it's part of our job to try to salvage accounts, right? We don't immediately just say -- I guess, you don't just cut them off right away, right? So part of our accounts management department's responsibility, apart from collecting past dues, is also to try to understand the customer's predicament and try to see how they can restructure, just like any other bank perhaps who has outstanding corporate loans or customer loans. So it's just a matter of us trying to do the balancing act of canceling outright or trying to salvage an account. So it doesn't all just happen in, I guess, in 1 quarter.

Okay. Yes. Okay. I guess moving on, could I get just the unsold inventory number for the stand-alone residential projects?

Yes, Carl, it's about 200...

I'm sorry, can you repeat that?

It's about PHP 20 billion in value, Carl.

Got it. On the mall business this time. So the foot traffic went from 40% to 65%. I realize those are rounded off numbers probably, right? So -- but let's say, an improvement of nearly 50%, but the mall revenue only improved 20-plus percent quarter-on-quarter and year-on-year. So is it a case of the added foot traffic did not translate to the same level of revenue because maybe the first 40% of the people coming in, that was really the very -- the people who are really committed to buy? They really went to the mall looking to buy something. That was their goal. And then the next 25 percentage points of people, really, that they were, to an extent, let's say, hanging around, but not exactly -- that's not exactly what the case I realized. But is that what's going on? Or do you feel like the 65% foot traffic, that really should translate to much better revenue gains from here?

Faraday?

Yes, that's one of the causes, right, that the previous traffic that was coming in were all shoppers. They were there for a purpose or buying essentials or what they needed to buy. While this group has -- are accompanied by kid, children and other buyers. The other source is that the foot traffic is the real-time December traffic. While the effect on the sales, the percentage sales portion, will actually appear in the January numbers because the sales of December, the rent would actually be charged in January. So some of them would fall to January on the first quarter.

Okay. Okay. That's quite helpful. And let's say, as of December, what were the rental concessions you were granting and what rental concessions are you granting now?

Okay. Rental concessions are market-based, right? So based on what the market is. But basically, it's dependent on the performance of the mall and the tenant. So for the strong -- we base it on a percentage of the previous period's performance. So some malls would have a lesser rental concession while some would have more. And for this quarter, the concessions have been decreased further. So it ranges from 50% of the basic -- roughly the 50% to 70%, depending with the quarantine condition at that period.

So let me clarify that. So when you say the 70%, that means the tenant is paying 30% of pre-COVID or 70% of pre-COVID?

That's right. That's right. 70% discount. Yes, that's right. Yes.

30% pre-COVID. Sure. And then for office, this time, I'll ask -- can you go back to the office slides? Okay. Anyway, discussing the office slides. From the December 2021, it looks like it's completed 2 buildings. And it looks like they add up to 55,000 square meters. But it says here that you only -- going back to the previous slide, you only -- the office -- the entire office portfolio went from 650,000 to 688,000 square meters. Is there some sort of technicality here? Like you're only counting some floors from one of the buildings?

Yes, that's right, Carl. If you will remember, in third quarter, we only disclosed 18,000 out of the 40,000-plus square meters for Omega. And then this fourth quarter, we disclosed the completion of Iloilo Tower 1. Hence, the additional GLA for 4Q.

Okay. I understand that.

Carl is right. In general, we only disclose -- or we only add square meterage that is actually available for lease, yes.

Understand. And for the -- you'll add approximately 85,000 square meters this year. Could I ask how much of that is pre-leased?

Carl, for Iloilo Tower 2, this is a 20,000 square meter GLA building. It is already 24% leased. And then for GBF 1, Cybergate Bacolod 2 and Galleria Cebu, we are aggressively marketing this to potential tenants.

Got it. And yes, just as a reminder for me, the lot sales that you completed in 2021, they amount about -- at the net profit level, about PHP 1.5 billion, would that be right?

It's about PHP 1.6 billion, Carl.

Our next question comes from Richard Laneda. What is the reason for the low residential revenues in fourth quarter 2021? Was it due to canceled sales? If so, how much was the value of canceled sales?

Yes. I think the answer to that, Richard, is yes. And I think we answered the question earlier through German's question. Maybe your question just came in after he had asked. But yes, it's due to the cancellations that we discussed earlier. Thank you.

Our next question from [ Maru Salvador ]. How much revenues and EBIT do you expect to recognize from China Phase 2?

Kerwin, are we answering that question?

Yes, it's approximately the same. But numbers have yet to be finalized.

Yes, the size of Phase 1 and the size of Phase 2 are almost equal. I think that's basically what our answer is. So the revenue and income contribution from Phase 1 and Phase 2 should be relatively the same -- or similar, sorry. Thank you.

The next question from [ Maru Salvador ] is after the completion of Chengdu project, are there any other plans for further expansion in China?

Thank you. The answer is no. No more plans. Our plan is to wind down the Chinese company and to repatriate all the capital and all the dividends as soon as possible. And in fact, we've already repatriated $200 million out of the $225 million that we invested. So we're -- or as you can see, we're practically -- wound down already the company almost.

Our next question comes from Jelline Gaza.

Congratulations with the awards. I have a follow-up on the residential revenue cancellation, but I'd like to focus my questions more on the outlook. How do you see this trending for this year? Can you finally say that whatever backlog and cancellations due to the Bayanihan law has been reflected in the past year and 2022 should be incrementally better? Is that -- is this is a fair assumption?

That's a good question. Let me see. I think -- well, first of all, the outlook, the outlook for resis, we think, is quite good. If we -- every time the alert levels are dropped, we see a spike in sales. And we have quite a few projects to be launched this year. So we're really quite hopeful that our presales levels will spike in the coming quarters. So we hope that, that should make up for what I think will continue to be cancellations. I think cancellations have always been a part of our business. We've been doing this for maybe 25 years already. And historically, cancellations have always been about 10%, 15%, 20%, 25% and probably at its peak 30% of presales. But obviously, the cancellations, the period from which they come from and the period when which they are actually canceled are 2 different things. So what you usually see as our revenues will be a reflection of current sales activities minus cancellations from prior years or from prior periods. So the timing is not exactly the same all the time. But I'm pretty sure cancellations are a mainstay, and we will continue to have cancellations from prior years. It's not going to go away.

Yes. But, sir, just to further that. For this year, are you still seeing some extra normal or above normal cancellations at least in the few months that already passed for 2022?

I don't have the exact number, but I'm sure that there are still some accounts from prior years that will be canceled this year. So it's not -- yes, it's not over for sure. It's not over.

Okay, understand. I have another question, but it's more of a clarification on the below EBIT items. May I know how much joint venture earnings you recognized for the year from the resi JV? And then secondly, are there any incremental gains from CREATE that were recognized in the quarter apart from PHP 800 million, PHP 900 million that you recognized in 1Q?

Yes. Thank you, Jelline. Kerwin, could you please?

Yes. For the JV, just for verification. The JV's net income are realized at the revenue level on the residential portion. That's about PHP 424 million in revenues. So that's basically the net income of the JVs.

So to clarify, the JVs are recognized as a percentage of ownership within the residential segment?

That is correct. Percentage of ownership then recognized at the residential segment.

Got it. How about for CREATE?

CREATE is about PHP 829 million, Jelline.

Okay. So nothing in the fourth quarter. Can we assume that ex CREATE, this will be the new normal effective tax rate for RLC?

We cannot assume because, as mentioned, there was due to some base effects as we listed RCR this year, there were some reversals also.

Okay. And then I think lastly, on the cancellations on resi, were you able to recognize some other income from those [ backouts ]?

Yes, we were able to realize forfeitures about PHP 500 million.

Next question comes from [ Mr. Thomas Earl Wang ].

I just wanted to ask on Cybergate Bacolod and Cyberscape Gamma. If possible, could you provide us the current occupancy rates and more or less the average rental rate per SQM for the two?

Yes. For Cybergate Bacolod -- yes, go ahead. Please go ahead, Kerwin.

The current occupancy of Cybergate Bacolod is at 89% as of December 2021.

And Gamma?

And for Gamma -- Gamma, on the other hand, is at 92% leased or occupied.

Would it be possible to get the -- more or less the blended average rental rate you should expect per SQM?

Thomas, we will -- okay.

Yes, for Bacolod, it's about PHP 400 per square meter. And then for Cybergate Gamma, it's between PHP 750 to PHP 800 per square meter.

Our next questions come from [ Kimberly Ann Hui ]. What is the residential project launch target for this year? And when do you expect malls to revert to pre-pandemic levels?

Yes. Somebody want to go to the resi slide for projects, it's there. But generally, if I can just answer from a top point of view, [ Kimberly ]. We have so many projects that are in the pipeline, right? And a lot of them are what we call push button projects, meaning, as soon as we feel the market is ready or as soon as we want to launch them, we can launch them. As you know, most of our projects are actually multi-tower projects such as Sync. So Sync, there's an S tower, Y tower, M tower and C tower. We're now on the Y tower. So we just launched the Y tower. We can launch the N tower and the C tower if the market -- if we feel the market wants it. And also for Woodsville Crest, we're still on building 1. There's still a building 2, 3, 4, I think, up to building, I think, 9 or 10. But anyway, it's all multi0building project. So the level of inventory we put out into the market is dependent on our sales velocity and how we view the market demand, yes. For malls, Faraday, would you like to answer the malls?

Yes. Well, we see that the foot traffic is going up quickly and probably by the latter part of this year, for third, fourth quarter, we should see that the traffic would normalize. But then the revenues would probably pick up more in 20 -- would be normalized next year, 2023, when it should be able to go back to the pre-pandemic levels next year probably. Not this year, yes. But the foot traffic is going up and will -- is expected to be about pre-pandemic before -- within this year -- later this year.

Our next question from the Q&A portion from Mr. Carl Sy. Is the PHP 500 million income from forfeitures for the full year -- for the full year or for the fourth quarter of 2021?

For the full year.

Our next question from Ms. Cristina Ulang. Will higher inflation affect pricing and margin and in what way? And how are we -- how are you strategizing?

Yes. Higher inflation will always affect costing, which almost has, of course, an effect on margins. But also selling prices have been going up and continue to go up. So it is our hope that the increase in cost can be matched or even surpassed by the increases in selling prices, thereby not affecting margins or maybe in a best case scenario, in fact, even continuing improving margins. But of course, if on the demand side, sales are weak, then it would have an effect on -- a negative effect on margins. But I think the question is really more theoretical at this point. But of course, as I said, in theory, when inflation goes up, costs go up, particularly, say, steel and wires and cables. Those are the most affected items. Thank you.

[Operator Instructions] You have a question again from Ms. Cristina Ulan. Department stores look weak for the entire industry given e-commerce alternative. Is there a business shift model to address this?

Well, I think we generally have not been very big on the department store business for a long, long time now. I think if you've been following us long enough, you'll know that department store doesn't take up too much space in our malls, and this has nothing to do with e-commerce. This is probably from 10, 20 years ago already. So I guess that's my answer to your question. But as far as how much, really, space we allocate to the department store, a lot of it is really driven by the space demand from our retail anchor, Robinsons Retail Holdings, Incorporated. So they generally are the ones guiding us on how they forecast demand or how they forecast the need for a department store, particularly in the provinces. But in a lot of our, shall we say, NCR malls and the like, we actually have not really been expanding the department store format. Thank you.

Our next question is from anonymous. Were there any specific projects that saw most of the cancellations in resi?

No, not that I can single out. I don't want to sound insensitive, but the truth is if somebody bought a unit from us 4 years ago and lets go of the unit today, we can probably resell the unit at a 70%, 80% premium, especially if it's a hot unit, right? It's a hot condominium or in a location where prices have gone up significantly. But as I said, I don't want to sound insensitive and say that we're in a rush to cancel a unit that has gone up 50%, 60% in value over the last few years. But I just want to temper also how the conversation is going today. Cancellation is not everything bad for us. As a matter of fact, it's actually a very good thing for the company if you really think about it. If you could go back into time and a property you sold 4 years ago was regifted to you with just a simple refund, I think you'd grab it. Thank you.

Our last question from anonymous. What is your plan for navigating through increasing steel prices? What are your cost passing mechanisms? Or will you be able to pass the cost to buyers? Finally, what are the agreements with contractors regarding who bears the cost?

Yes. I think the first question I already answered earlier. But to the second question, the cost is definitely borne by us, if we have not ordered the product. But if we've already ordered the product, then, of course, the contractor is expected to respect the procurement agreement, right? So if you bought steel at, for example, PHP 40 per kilogram, you expect the supplier to deliver at the contracted cost, right? But if -- for quantities that you have not ordered, if it has gone up to PHP 42, then, of course, the developer has to shoulder that difference. Thank you.

I will now hand over to Mr. Frederick D. Go to give his closing remarks.

Yes. Thank you again, everyone, for joining us today. I think you can see that the results of the company are actually very positive. We probably came off a very unique year whereby we were affected by the pandemic just like everybody else, but it was actually also a record year for us because we were able to list our subsidiary, RCR, and successfully list it as largest REIT company in the Philippines. And it also performed quite well after in the aftermarket. So I think it really was a very good year for us in 2021. And with that war chest of PHP 23.5 billion that we raised from the IPO, we are able now to deploy it to so many productive assets and so many productive projects that I am just so hopeful and confident about the prospects of Robinsons Land. Thus, we also embarked on a stock share buyback program last year, as we felt that the company was extremely, extremely undervalued. So we continue to buy shares in the open market on a daily basis. And for those of you who have really been following us, you'll see that it's not an empty share buyback program. We have been buying back shares every single day because we truly believe it's the best investment actually for us at this point, owing to the very undervalued price per share of Robinsons Land. So going forward, we've discussed extensively all our businesses, but if you'd like to know more, please feel free to get in touch with any of our -- any member of our IR team and we'd be glad to answer your questions in more detail. And please watch out for our future expansions and our future announcements this year. We do have some very exciting developments, we think, for 2022 for RLC. And for RCR, just to touch on it quite quickly, we also promised during the IPO that we would inject assets in the first 18 months. And as you already know, we've already announced the infusion of 2 assets in only 6 months. So it's just our intention to, I guess, outperform or to deliver more than what we promised. Hence, we took a lot of effort to be able to inject the 2 assets into RCR at a sooner than later time table. And I hope that, that is appreciated by the market. It seems like it already is this morning, at in the -- based on the share price, okay? So with that, I know we're past the time of 2:00. So thank you again very much, everyone, and have a great day.