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Edited Transcript of C31.SI earnings conference call or presentation 7-Aug-19 1:00am GMT

Half Year 2019 Capitaland Ltd Earnings Presentation

#30-01 Aug 14, 2019 (Thomson StreetEvents) -- Edited Transcript of CapitaLand Ltd earnings conference call or presentation Wednesday, August 7, 2019 at 1:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Chee Koon Lee

CapitaLand Limited - Group CEO & Executive Non Independent Director

* Cho Pin Lim

CapitaLand Limited - Group CFO

* Grace Chen

CapitaLand Limited - Head of IR & Capital Markets Compliance

* Jen Yuh Loh

CapitaLand China Holdings Pte Ltd. - CEO

* Juan Thong Leow

CapitaLand Limited - President of Singapore & International

* Neng Tong Yap

CLA Real Estate Holdings Pte. Ltd - CFO, CIO & Head of Real Estate Investment

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Conference Call Participants

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* Brandon I. Lee

Citigroup Inc, Research Division - Analyst

* David Lum

Daiwa Securities Co. Ltd., Research Division - Regional Head of Banking and Finance

* Derek Tan

DBS Bank Ltd., Research Division - VP

* Donald Chua

BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director

* Wai-Fai Kok

UBS Investment Bank, Research Division - Research Associate

* Cheryl Lin

* Goola Warden

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Presentation

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [1]

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Good morning, ladies and gentlemen. Thank you for making your way to Funan this morning before the shops open, and I think that's the whole plan because when the briefing ends it would be time for brunch and you can also consider doing some shopping before you get back to work. I'm sure Tony will be very happy with this arrangement. Right, Tony?

So Tony is the CEO of CapitaLand Mall Trust [our office is] in Funan is portfolio asset of and my name is Grace. In case you do not know me, I'm the Head of Investor Relations for CapitaLand Limited. And before we start program proper, I would like to ask all of you to join me in a round of applause to welcome some new members of our senior management team. And of course, I'm referring to members from Ascendas-Singbridge who have just joined us. Please give them a round of applause, please. Okay, thank you. We are officially one.

Out of curiosity, how many of you here in Funan for the first time? Put up your hand. Okay, not many. That's a very good sign. And who can remember how Funan used to look like before redevelopment? Okay, I think all -- many of us will remember Funan as the IT mall. And remember when I was dating and many years ago, and my husband would ask us, let's go Funan, and I would like, "no" because that to me is not something fun. I do want to spend 3 to 4 hours looking at computers and gadgets. And that is why I thought it would be interesting to share with you feedback from one of the fans of Funan, who also happened to be a shareholder of CapitaLand.

So Stephen Chen, he has kindly given us permission to share his Facebook posts and I'm going to read that to you. So Stephen says 3 years after the old Funan closed for redevelopment, the new Funan reopens and it looks great. The new mall still brings joy as I wander down the corridor checking out the latest IT gadgets and camera gear, but this time there is so much more than just IT, like the Tree of Life, which is right behind me, the Urban Farm, the rooftop garden, super high rock climbing walls and many other kinds of retail outlets and also spaces to simply stop and observe all that is happening all around me. And there are many more food choices than before. So great job, CapitaLand. So thank you, Stephen.

Funan was where I used to spend too much money and collect most of my Capital Star points. I guess it will soon be where I do so again if the wife permits. And I think Stephen's wife would be very approving of this. And I also like to mention that Funan is not just a mall, right? For people who haven't been here, it also comprises of 2 office blocks and CapitaLand's first co-living space, lyf. So on your way in, you would have received a promotion coupon, special discount rate, because we would like to welcome you as a first guest to lyf when it opens in September. So please utilize your coupon and make your bookings for lyf. And I guess, I can go on and on, but I think we need to come back to what we are here for, that is CapitaLand's First Half 2019 Financial Results.

And before I invite my group's CEO, Mr. Lee Chee Koon, up on the stage I would just like to say to our webcast audience. People who are tuning in, good morning to you. You can join us by just leaving your comments or your questions by clicking the Pose Question tab. And with that, I will invite Chee Koon up on stage.

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Chee Koon Lee, CapitaLand Limited - Group CEO & Executive Non Independent Director [2]

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Morning, everyone. I have no slides as usual. So just focus on me. When -- thank you first and foremost for joining us for this event. This is a break again from tradition. For those of you who have been following us on all results briefing is usually done in Capital Tower. So the first time we decided to do it outside of Capital Tower, we chose this place in Funan. It's in quite an open area. To be honest, there was a bit of concern because some of our colleagues are worried saying that are we going to get interference from shoppers, from retailers, from loading and unloading, trolleys and affecting the results briefing. Well, I think we decided to take the spirit you never try, you never know how can try something new. And it was in the same spirit that we took where we decided to redevelop Funan. Ms. Grace alluded to what it looked like previously, today it's very different.

In fact, when I first took over towards the end of last year in December, our committed occupancy was around 60-over-percent because it is something new, it was something new for us, it was something new for many of the retailers as well. And we needed to make sure that we carry the retailers along getting them to upgrade, to change their concept and be prepared to come along with us in this journey.

And -- well, the team worked extremely hard. I must congratulate Anthony -- is Augustine in here? Where are you? Congratulate to Augustine and all his team members for working very, very hard. The Funan opened really well. Not just the crowd, but if you have chance, spend some time, talk to the retailers, talk to the retail assistants. People are happy with the outcome, with the shopping that is actually taking place and that's what we believe in trying something new and that's even before the [high rise] has opened, before the new co-living concept has opened. I believe that once all these components are up, you're going to see a lot more excitement for this development.

So that's really the -- what I want to say about Funan. The reason why I took some time to set this backdrop is also to explain and to reassure you that CapitaLand is -- we're in the midst of undergoing our transformation. Many of you who go for results briefing hardly get to sit on stairs, I would say. It's going to be different for many people, including for us. The future -- the technology is changing many of the industries, it's going to make people uncomfortable. But as a company, you will see us changing. And it was in the same spirit that we decided to announce a merger early part of the year with Ascendas-Singbridge. And at a point in time, I said -- as you can announce, you can do all sorts of merger and acquisition transaction. The key success for a transaction of this nature is how successful you can integrate the teams together.

We focus -- our team focus very much on the organization structure and the people issues and we wanted to make sure that by the time that the deal was completed, which was at the end of June, everyone know who their bosses is, they know what their job is. So that when the day, the company turns operational with the combined entity, everybody will just focus on the work. And we demonstrated by announcing, I think, to the surprise of the market, the proposed combination between Ascendas Hospitality Trust and Ascott Residence Trust. I think everybody knew some kind of transaction was going to take place. Many people were just surprised by the speed. And that could not have been possible if the 2 entities were not well integrated. So we spent a large part of our first half of the year focusing on the transaction, on the merger. Of course, we spent a lot of time to make sure that we continue to run our business evident in the results that was reported.

I think resi sales continue to do well in China. In Malaysia, we did quite good job. Thanks to Ronald and his team, even for One Pearl Bank. Today, we have sold about 203 units, 204 -- 203 units. Not a bad number given the state of the entire environment. In terms of the -- all of you are familiar in terms of opening of Jewel, very well received, well done at Funan, of course. And we're also very focused in terms of capital recycling. Earlier in the year, I stressed that we wanted to make sure that we focus on divesting our noncore assets in cleaning our balance sheet. We managed to sell out our JV with Mubadala in Abu Dhabi. That took some time. We kept our -- we are very focused. We wanted to get it done. We also exited from StarHub. It was a business that we did not believe that we could scale it meaningfully for CapitaLand. It could work for other people, it just couldn't -- it just didn't make sense for CapitaLand. At the same time, we also divested our stakes in CCRE, which was a listed entity in Hong Kong. I mean we have been a cornerstone investor for many years, give us good returns, but we just felt that it wasn't the right use of capital in the longer term. We focused and we get it done at a price that was significantly higher than what the share price was traded at that point in time. So there was a lot of focus on capital recycling. And of course, apart from noncore assets, we focused on recycling our assets into the REITs, as you can see, into CCT, into CRCT, into injecting funds, injecting assets into our CAP I fund, which was our first discretionary fund and also setting up our debt fund in early part of the year.

So many things are happening. I mean the company is moving extremely fast, but of course, outlook is uncertain. U.S., China trade war. You know how China decided to weaken its currency. Many of these forces are beyond our control. What we need to do as a company is to make sure that we focus on the execution, sharpen our focus, continue to deliver products and services that the customers want, continue to push on the innovation side, continue to make sure that we sell our products, we drive rental growth and continue to make sure that we recycle. As compared to many of the competitors and other developers, we have more [offtake] vehicles, more REITs, more private equity funds than many of our competitors and that gives us, I would say, much greater optionality than many people in recycling stabilized assets.

So I believe as long as we focus on our key strengths, focus on where our competitive advantage is, continue to view our capabilities, attract good people, I believe that we should be able to ride through any types of crisis. And in fact, there was always a famous saying, "Should never waste a crisis, make sure that we are well prepared, strong team. Make sure that we recycle, make sure we have enough capital so that we are ready to take positions during a downturn."

So that's all I want to say for my opening. I leave Andrew, who has a lot more slides to share with you in terms of our first year results. Thank you.

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Cho Pin Lim, CapitaLand Limited - Group CFO [3]

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Good morning, ladies and gentlemen. Thank you for coming. Tony, thank you for lending us your mall for a few hours. I still see some ties in the audience. There is no tie policy at Funan, and you notice senior management has also taken their jackets off. So this is part of the transformation that we are undertaking. I'll take you through some of the key themes that we observed in the first half of the year as well as underlying financials and we want to save a lot of time for Q&A.

Okay. I think this was the slide we showed you where we first announced the transaction. The end result is as follows: we are now SGD 129 billion AUM company, 25% increase from CL 2.0. What I'd like to leave with you is, for our largest country, we are now down from 49% to 42%, namely China for a largest sector, we are down from 38%, down to 31%. So there is a theme of increased diversification that comes with this increase in skill. And in an era where uncertainty is high, unknowns are high, we believe that diversification through different core countries and core products gives us a sustainable competitive advantage, going through this high period of uncertainty.

Chee Koon talked a lot about our focus and our resolve coming with the capital recycling we wish to undertake. So I just -- again, a couple of key buckets here. The first bucket the assets, which are noncore to us. StorHub and CCRE being on top of that. This year, year-to-date, we've divested close to SGD 1 billion of noncore assets.

The second bucket are assets, which we like but we believe logically belong to our REITs and our funds. And here is a list of, again, very well-publicized assets that we have either announced or completed into our REITs and our funds. Our gross divestment value year-to-date is north of SGD 2 billion. And this is growth of funds under management. Our REITs themselves have been busy recycling their own capital, here are 2 good examples: Ascott Raffles Place, again exit yield of 2 cap reinvesting some of that into an EBITDA yield of 6-plus cap in Citadines Connect and CapitaMall Saihan through CRCT, flipping that through an asset swap in Yuquan Mall. These are good examples, again, of our own REITs following through on their plans to recycle capital [and] at an accretive level.

Our annual recycling target of SGD 3 billion, we are already past that as of the halfway mark.

The another key theme I would like to talk about is resilience. And resilience is something that people throw around, but one that I really believe we have. So if you look at our retail portfolio both in terms of NPI, in terms of same-store sales, in terms of occupancy rates, in both of our core retail markets of Singapore and China, we are seeing year-on-year growth. And I think that is a testament not only to the operating excellence, but also the location, the network effect of where our malls sit. And the one that you're sitting in today is a great example of that.

Residential core market in China, we are seeing good sell-through rates, north of 90% in the first half. So everything we've launched, we are more or less selling. In Malaysia, we are back in KL with the site park that has sold very well, north of 70% of the total units have already been sold. That's a top-up in 2023. And of course, One Pearl Bank, as Chee Koon mentioned, 203 out of 280 units launched to-date are sold. So good results out of our opportunistic focus on projects where we believe they are good locational attributes, good iconic attributes.

Lodging has been very busy. This is a global business. I think year-to-date, we have more than 40 properties announced, almost 8,000 new keys that we were putting into the system. Year-to-date, we opened 19 properties with more than 2,500 keys. Post combination, we are now north of 110,000 keys, including Ascendas Hospitality Trust, and we are well on our way to 160,000 keys by 2023. In fact, I wouldn't be surprised if that target gets raised soon. But again, this is about growing the global platform, signing new strategic alliances and investments, for example, with TAUZIA going into the rest of Southeast Asia and new brands and product offerings, lyf Funan, Singapore being a great example, opening in September 2019, hopefully in time for F1.

We talked a bit about merger of 2 of our hospitality trusts -- sorry I'm losing my voice. I did some media today. So this will create the largest hospitality trust in Asia Pacific, and this gives Ascott the ability, or rather CapitaLand Lodging the ability to recycle its -- our own assets into an offtake vehicle.

AUM, or rather we say, FAUM fund assets under management. We are now about SGD 75 billion, including our REITs and our funds. We launched 2 discretionary funds. These are our first 2: CREDO I China, USD 550 million as well as CAP I in first close of almost USD 400 million. CAP I is now deployed with 2 assets coming from the sponsor Pufa and Innov Tower.

ESG, a very, very important part of our business. Not only the E, but also the S and the G. In terms of the E, through Ascendas, we are going to install 6 solar farms on our -- on properties or rather solar farms on 6 of our properties that will generate over 10,000 megawatt hours. This is far in excess of the electricity that these assets needs. And what we would like to do is, we will buy that green energy back into the CapitaLand ecosystem to further decarbonize our footprint.

We've inked our second sustainability loan of SGD 300 million. We have SGD 600 million of sustainability loans with our banking partners and we will look to do more of the same. We launched a SGD 0.5 million CapitaLand U Care Resilience and Enablement Fund for our less fortunate stakeholders.

On the G side, we remain on the FTSE4Good for the sixth consecutive year, a testimony to our ongoing efforts on sustainability. And we won gold -- very proud to have won gold for the Best Managed Board at the recent corporate awards.

So from a thematic standpoint, our focus must be on leveraging the diversified portfolio that we have and capturing the full value chain of the capabilities in our core markets and our platforms. We have a deeply embedded NAV growth potential with ASB portfolio. For example, in 80s vintage assets such as Science Park I, we will look to focus on accelerating the ability to rejuvenate that portfolio.

Disciplined asset recycling. As you saw, we are north of SGD 3 billion on gross value recycle already to-date. We will continue to drive that going forward. There are additional assets in our system that we can recycle. And focus on very much on execution on project milestones. In September, we will open Raffles City Chongqing. We will launch an integrated development in Singapore in Sengkang and we will start construction of Phase 2 of ITP Gurgaon in India.

ESG will continue to remain a core part of everything that we do.

So those are some of the key operational and strategic themes that I think are important to focus on.

I'll now take you briefly through our financial highlights for 1H and 2Q.

So 2Q, we were down on a PATMI basis of slightly over 4%. Now looking past the number, the reason why principally we are down is that we decided to write-off -- we had to write-off a full amount of SGD 36 million, which are the acquisition-related expenses from the combination of ASB. If you strip out that SGD 36 million, we were up year-on-year on a quarter basis. We had higher operating income from our investment properties. We had higher portfolio gains from our capital recycling and we had higher operationally driven revaluation from our investment property portfolio. This was offset as I said, again, by the one-off expenses and by the timing effect of the residential handover from our properties in Vietnam and China.

So overall, for 2Q, we feel that we delivered a very credible set of results. We were quite heartened by the resilience of the portfolio in the face of what is a very uncertain geopolitical environment. The 1H story is broadly the same. Of course, we don't have the -- in 1Q, it was a residential timing issue, which I shared with you as well. A lot of this will catch up in the second half of the year where our handover for resi in China and Vietnam will come through.

So here again, you see comparative year-on-year for our 3 PATMI buckets. Portfolio gains at SGD 135 million for the year would have been SGD 171 million as you see if we had not written off the SGD 36 million in combination related expenses.

Revaluations, I will share with you in a bit, were higher year-on-year, but they are very operationally driven. And operating PATMI was lower as you see, again, because of the timing effect of the residential handover in China and Vietnam.

On the revaluations side, what we've decided to show you is that, off the SGD 380 million of unrealized reval, these were the top 10 assets that contributed to that. And the contribution of these top 10 assets are roughly about 60% of that amount, of the total SGD 379.

The average NPI yield on these top 10 assets increased year-on-year from 4.2% to 4.5%. So what we're trying to leave with you is whatever revaluation we are recognizing on the book is performance-driven. They are the result of higher NPI from a bulk of the properties that are being revalued. Of course, you do get market factors, there is some cap rate compression. There is also a fair bit of top-up revaluation, for example, with Funan. There is also some revaluation from the ongoing progress of our PUD, for example, CapitaSpring and Shanghai on the -- [underpinned] So I think, the key message here is, yes, revaluation is up, but let's not forget, our overall IP is larger and at the same time it is underpinned by performance-driven factors.

The next 2 slides I want to talk a little bit about capital recycling and the quality of the recycling and where it is going. So this is our divestments today. So SGD 3.4 billion gross divestment value year-to-date. Effective divestment value is a new number we are sharing with you. So CapitaLand's net benefit from this is SGD 2.5 billion year-to-date. Now the assets in blue are the assets that are coming off balance sheet. So this is the full effect of our cleaning up noncore assets. And ideally, bringing them into our REITs and our funds. So you see, some of these are noncore, some of these have come through our REITs and our funds. Of the SGD 3.4 billion announced year-to-date, SGD 1.2 billion has been completed as of the first half. So the key message here is that there is embedded net proceeds coming back to CL in the second half, which means that there is an embedded net deleveraging effect that is coming back to CL in the second half.

The other side of the coin is our investments. So where is the capital going? Again, gross investment value of SGD 3.3 billion, our effective investment value is SGD 1.3 billion. So on a net basis, we have put in SGD 1.3 billion at the group level, which means on the right-hand side the capital release to CapitaLand is SGD 1.3 billion. Okay. So this has 2 effects, again, there is a deleveraging effect depending on the capital structure, but also means that there is capital coming back to us, which we can use for deployment opportunistically, should the right opportunity arise. Chee Koon talked about earlier, crisis is also a time of opportunity. And we want to remain agile and be ready to deploy if the right opportunity comes up.

The second thing I would like to leave with you is that -- again, if you look at the assets in blue, these are the assets that have been acquired by our REITs and our funds. So we're doing exactly what we said we wanted to do. We want to take the assets and push them down into the logical owners, i.e., our REITs and our funds. In the process, we grew fund AUM by SGD 1.7 billion. This is recurring fee income for CFL, CapitaLand Financial.

On a balance sheet basis, the net debt to equity is a well-publicized number 0.73. Our pro forma number when we announced [Xi'an] was 0.72. So I apologize, we came in slightly higher. But I think it's a number we are comfortable with. As you saw from the activity levels that we talked about, we are looking and working very hard to get that deleveraging down, We are confident we will get to our target by the end of next year.

Net debt to -- sorry, fixed rate debt at 64%, average debt maturity at 3.4 years, are all numbers that we are quite comfortable with, especially the ICR, which remains healthy at 7.3x.

Some color on our look-through, which some of you are very focused on. If you look at our off-balance sheet funding structures, they are actually more conservative than our on-balance sheet funding structures. So please take comfort that our off-balance sheet funding remains very conservative. Debt towers are nice and even. We will look to further term-out the debt as and when the right opportunity arises. As well we have ample cash and committed facilities on hand to service the debt that remains on our balance sheet. Average interest rate is at 3.2 have remained very steady now for 3 years. And in the current interest rate environment, we see the ability to perhaps even bring that down lower or keep the cost steady, but we term-out loan maturity.

So again just to finish up. Financial takeaways. Cash PATMI levels are healthy 57% versus 61% a year ago. We believe that the quality of the PATMI is strong. We have high portfolio gains, we have stronger operating income coming from our investment properties and our unrealized revaluation is underpinned by performance-driven factors. We continue to be very focused on unlocking capital through recycling and wherever we feel we can, we recycle into our REITs and our funds because at the same time we grow fee income, which is very, very recurring in nature, very, very equity accretive in nature. We are very focused on bringing deleveraging -- or rather deleveraging remains a key focus for us. Not withstanding where we are today, we retain ample debt headroom to be opportunistic if the right opportunity comes along.

Okay. With that, I hope that answers most of your questions, but I'm sure you have many more. And we -- the CMC will be more than happy to take your questions. Thank you very much.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [4]

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Okay. Thank you, Andrew. And may I invite the key members of our senior management team up on stage for the Q&A. They need no introduction, but I will still do so. So firstly, we have Mr. Jason Leow, he's President of Singapore and International; Mr. Lucas Loh, President China; and we have our Group CEO, Chee Koon; Group CFO, Andrew; and last, but not least -- I told him I will do that. Last, but not least, we have the newest member to our CMC, our senior management team, Mr. Jonathan Yap, who has just joined us from Ascendas. Jonathan Yap holds the position of President of Managing CapitaLand Financial.

And just before we start, just a reminder to our webcast audience, you can send us your questions via the Pose Question tab, and we will respond to that.

And with that, I would like to open the floor for the first question.

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Questions and Answers

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [1]

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David Lum from Daiwa -- sorry. So we have David first and then we will have Derek. And just a reminder that just if you could state your name and your company for the benefit of our webcast audience and just raise your hands if you have a question and our ushers will pass you the mic. So I'll have David Lum from Daiwa for the first question.

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David Lum, Daiwa Securities Co. Ltd., Research Division - Regional Head of Banking and Finance [2]

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With regard to Andrew's comment on divestments, given that you've done so much in the first half, do you have any guidance for the second half of the year? And it seems also like you've managed to divest a lot of noncore assets from the CapitaLand portfolio. Are there any underperforming assets left to divest? And should we expect most of the divestments going forward from the ASB portfolio?

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Chee Koon Lee, CapitaLand Limited - Group CEO & Executive Non Independent Director [3]

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We will continue to look at divestment. I mean with the combined portfolio between Ascendas-Singbridge and CapitaLand, it gives us a greater optionality. We look at divestment, we look at -- I would say that I use 3 buckets to look at how we manage our recycling. First bucket really noncore. So those that were mentioned in the StorHub, CCRE, Mubadala, there are probably a handful of others. That is something that we are working hard. Just to be clear, CapitaLand, we are not desperate sellers. There is no need to sell when if you cannot get a good price. So we continue to look at doing deals in a manner that it will be meaningful to CapitaLand.

I mean if you look at the way CCRE is structured, I mean it's done at a price that's above the traded price. So that took time to negotiate. And the second bucket in terms of the divestment will be assets that already stabilized. There is no need to sit on CL's balance sheet and we think that right vehicles to hold these assets will be in REITs, and that is something that you will see us very focused, looking at some -- continue to look at the recycling opportunities because what we want to do is to make sure that we meaningfully deploy CapitaLand's balance sheet to achieve the level of returns, to keep that returns requirement for CL shareholders.

The third bucket of assets will be those that are still in the ramp-up stage, that just an operational, that we just bought and there is still a lot of asset enhancement work to be done. And you will see us doing a lot to unlock value on this area here and to move them into bucket 2, ready for divestments. So that's what I want to highlight.

If you take a step back, if you look at the whole portfolio, whether it's China, Singapore, India, Vietnam and around the world, there are many opportunities. Singapore, especially, the interesting portfolio where we can do a lot of rejuvenation as Singapore government is looking to rejuvenate the whole country. And it's important to have dialogue -- I mean, Funan OMA we had the dialogue with the government, managed to intensify the GFA [accretive] product and you will see us looking at suitable opportunities to unlocking value in our existing portfolio as well.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [4]

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And I think Derek from DBS, the next question, please.

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Derek Tan, DBS Bank Ltd., Research Division - VP [5]

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If I may just follow up on David's question. Just wondering based on your divestments pace, do you think you will hit your target of 0.64 debt-to-equity earlier than the end of 2020 based on your pace?

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Cho Pin Lim, CapitaLand Limited - Group CFO [6]

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We'd love to. The pace is higher. So we are actually ahead of plan in terms of where we are today. If we can continue this pace, I think we have a good shot at getting there ahead of schedule, but I don't want to jump the gun. Obviously, it's going to be very dependent on finding the right buyer. As Chee Koon mentioned, we are not incentive -- we are not distressed sellers by any means. So we will only divest when we find the right exit price. As you can see from the portfolio gains we have registered as of first half, these are higher than we were [with them when we were] registered on a dollar basis year-on-year. So it has to be the right time to divest, but we remain very incentivized to accelerate as quickly as possible.

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Derek Tan, DBS Bank Ltd., Research Division - VP [7]

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If I can ask just a couple of more questions. Previously, you provided some form of pro forma for us to understand how you can potentially hit 10% based on what you're seeing and the latest numbers that you just see on ASB. Are you on track to meet or beat that?

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Cho Pin Lim, CapitaLand Limited - Group CFO [8]

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We are on track to deliver a return above our cost of equity. Derek, the annualized ROE for first half is going to be a function of just the CL P&L, right? So remember that the second half is where we get to enjoy the combination benefits on the P&L side. But on the equity side, remember we have issued SGD 3 billion of new equity, half of which is counted towards the equity base. So if you will, the ROE number today, I would say is conservative because we don't get the P&L, we get the second half P&L, but equity base already showing half of that impact from the additional equity we issued to Temasek. So we remain confident overall that we will get to a number that is in keeping with our target.

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Derek Tan, DBS Bank Ltd., Research Division - VP [9]

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Okay. And the last question, I mean, the group has been very decisive in terms of combination of Ascott and Ascendas. Just wondering whether -- should we think out-of-the-box or discuss whatever you have currently in the list of platforms?

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Chee Koon Lee, CapitaLand Limited - Group CEO & Executive Non Independent Director [10]

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Yes. I think you should continue to take that mindset. There are no sacred cows we can have -- I mean, we are open to innovative ideas. The important thing, whatever actions that we are exploring is to build long-term capabilities and competitiveness for the company. That's what we will be focusing on.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [11]

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Donald from [BAML]. Oh, sorry. Wai-Fai.

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Wai-Fai Kok, UBS Investment Bank, Research Division - Research Associate [12]

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Wai-Fai from UBS. I have a few questions pertaining to your retail portfolio. Maybe the first one, can you provide some color for your China retail sales, the growth slowed quite meaningfully and was negative in Tier 1 cities. CRCT portfolio, I think it was positive. So what was dragging it down? That was my first question. Second question on rent reversion in China. I think you provided a number of office. Can you provide a number for retail as well? And for Jewel Changi, are you able to share the reval gain for the mall as in the gain on top of your development cost?

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Cho Pin Lim, CapitaLand Limited - Group CFO [13]

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Let Lucas take the first question on China and Jason to talk about Jewel.

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Jen Yuh Loh, CapitaLand China Holdings Pte Ltd. - CEO [14]

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I think the -- for the retail in China, I think overall the portfolio you're still seeing the growth as you can see from Andrew's number earlier on, in terms of tenant sales, in terms of traffic growth, even in terms of rental reversion for the first half, we are seeing a growth. [To segue to] the Tier 1 city, I think the growth is affected by 1 or 2 of the malls, and particularly the Raffles City Shanghai. Raffles City Shanghai actually all along has been enjoying a very high tenant sales, but because of the recent -- some of the repositioning and all that has affected -- but I don’t think you should read too much to that slight negative number that is showing now. I think it's -- there is still a long queue with no other retailer trying to come into Raffles City Shanghai. So we're not too overly concerned at all.

For whole of the portfolio, I think, we are still seeing a positive rental reversion in the first half of 2019, and we should continue to see the outlook as very positive, at least for the rest of the year. Of course, for the big event coming out will be the opening of the Raffles City Chongqing Retail Mall, is expected to be opened in early part of September. So we have announced recently we have already committed, 95% occupancy. [Early update], it increased another [1.0%]. So I think we are positive on that mall as it opens. So there it will be the third major opening of a shopping mall with our CapitaLand portfolio after Jewel and Funan. That will be the bigger one.

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Juan Thong Leow, CapitaLand Limited - President of Singapore & International [15]

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Just on Jewel, we opened actually in April this year and we have been very encouraged by the reception that we got from both the local and the international travelers. Everybody who has been there actually [in awe] by what they saw. On revaluation, I think, we have just only opened for 4 months. We have kept it to the costs that we incurred -- I think it's early days. But having said that, revaluation is supported by the NPI that we are achieving today, so we have not done any valuation uplift on the property.

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Chee Koon Lee, CapitaLand Limited - Group CEO & Executive Non Independent Director [16]

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And just to add on this, I will share a bit more perspective on the retail scene in China. China's economy is quite different from the rest of the world, more than a billion population, very entrepreneurial. In fact, when Alibaba started the e-commerce platform, it created this whole platform for many people who wanted to set up shops. They can -- they don't have the ability to go and rent a shop in the shopping malls. They set up shops online. And after they have become successful, many of them seek to move their successful business from the online into the shopping malls. And we -- being one of the early entrants into the shopping mall business in China, we are seeing -- we're actually benefiting from a lot of them coming to our malls. There are innovative concepts from bookstores to -- I mean, different types of products from high -- [main] really from online to off-line and we are seeing that in China, I mean -- I think that's a very, very different type of retail scene in China as compared to the rest of the world.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [17]

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I think that's Donald from BAML.

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Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [18]

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This is Donald from BAML. I have a couple of questions. First one is on your fund fees. I'm looking at the EBIT from your CL financials, you've been at about 51% EBIT margin for the last 2 quarters. This is considerably lower than the last year, which were running at 63%, 64%? So I'm wondering given as your FUM rises, why are these fund fees coming down for 2 consecutive quarters? That is my first question. The second question is also on recycling as you deleverage faster than expected. Should we be expecting more reinvestments in the second half than divestment? And where are we looking at in terms of buying into? Is it more IP or [DP]? And then which areas are we looking at? The last question is on Liang Court. Any guidance on what's the plan for this acquisition or this purchase recently?

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Cho Pin Lim, CapitaLand Limited - Group CFO [19]

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I'll take the first question on FAUM fees. So there are 2 effects here, One is our FAUM is larger, okay, as of today, but we haven't earned the fees yet. The fees are going to come in the second half of the year as they are in the portfolio. So the first half reported fee income does not include the Ascendas REITs and funds. But we are reporting as of today the balance sheet of AUM or FAUM of SGD 75 billion. So you will that see that it may on a percentage basis look smaller. Then on a transactional level, even though the recycling has come up, a lot of them have not yet closed. So our REIT managers have not yet recorded the acquisitions or divestment fees. They will show up when these transactions close. A lot of the SGD 3.5 billion are announced divestments, announced acquisitions. They hadn't yet closed as when we booked the fees. So my guidance is probably, look -- ask this question at the second half of the year, at the end of the year and let's have a good look and see what it looks like once we have the Ascendas REITs and funds into the portfolio.

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Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [20]

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(inaudible)

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Cho Pin Lim, CapitaLand Limited - Group CFO [21]

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Margins, I think again are a function of the one-offs as well because we include the one-off acquisition divestment fees. The base fee shouldn't change. In fact, you're right, as AUM goes up, if my base fee is the same, then all things being equal, we should be recording higher fees. There is no reason for lower fees.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [22]

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Okay. I will take a question from -- one more question.

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Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [23]

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Actually, I had three questions.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [24]

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Sorry, sorry, sorry. Here's Jason.

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Juan Thong Leow, CapitaLand Limited - President of Singapore & International [25]

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[This is Juan Leow.] We have recently completed the acquisition of the mall together with CDL. This is a 50-50 acquisition. I think the immediate focus is really to initiate the -- operate -- the retailers continue to trade well. I think as to -- with any redevelopment plan, I think, if you look at the whole Liang Court, it's an integrated development comprising of Novotel which is owned by CDL Hospitality Trust and Somerset Liang Court which is owned by [us]. So if there's any redevelopment opportunity is to be done together with the other 2 trusts. So I think it's too early to talk about that one?

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Chee Koon Lee, CapitaLand Limited - Group CEO & Executive Non Independent Director [26]

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In terms of investments I mentioned earlier, we always look deals that will be accretive, that can build long-term profits and growth drivers for the company. So if we, for instance -- I mean, we want to continue to deploy capital in India logistics business -- I mean, if we can -- the issue is whether we can find good land, if we can find good land then something we want to do. So we'll continue to look for interesting development opportunity, but land cost is extremely important because it's important that we get the land cost at good price so that we can really make sure that we build a long-term earnings proper for the company. In terms of investment properties, we will continue to look at it. That is not so easy because things are extremely expensive, that's not for lack of trying. So we will -- of course, we hope to be able to invest as quickly as we can, but -- well, it depends on the opportunities at the end of the day.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [27]

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Okay. I think before I take the questions from our webcast audience, I will give an opportunity to our media, our friends from the media. If you have any questions from this side? Pass the mic to Ms. Goola, please.

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Goola Warden, [28]

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Goola from The Edge. I just wondered of the divestments, how much have you reported in your first half and how much is left to be reported? Just wondering on the gearing level, whether you -- whether it will drop in the second half?

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Cho Pin Lim, CapitaLand Limited - Group CFO [29]

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I think the gross value on the first half basis of divestments was somewhere around SGD 2.5 billion, out of the SGD 3.4 billion year-to-date, Goola. Out of that, I think we've completed SGD 1.2 billion year-to-date. That's again on a gross value basis. So there is embedded proceeds to come, which should mean that there is embedded deleveraging to come. Does that answer your question? Thank you.

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Goola Warden, [30]

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One more question. And were there any gains from the divestments? Because I do realize your CCRE had quite a good gain. I wonder if you could give some color on that. And also the Middle East, Mubadana (sic) [Mubadala] I think. And did you also divest Rihan? Is that still on your books or is that also gone?

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Unidentified Company Representative, [31]

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Rihan is gone. Rihan is part of the Mubadala trade sale. Both CCRE and Mubadala were divested, not at a loss but also not at a substantial gain, either. So those were more focus points to get off noncore assets and recycle that capital into more productive uses. In terms of the overall gains, that is reflected in the one half portfolio gain number, which, I believe, was SGD 135 million, SGD 171 million if you take out SGD 36 million.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [32]

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Question from gentleman.

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Unidentified Participant, [33]

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I'm [Kevin] from Nikkei. 2 questions. You talk about diversification in a period of uncertainty. That being the case, are there like plans to perhaps lower your reliance on China and Singapore going forward? And secondly, can you just give a broad comment on how you see developments in China given the worsening trade war and slowing -- slowdown in economic growth?

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Jen Yuh Loh, CapitaLand China Holdings Pte Ltd. - CEO [34]

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I think China -- in China second quarter still growing at 6.2%. So being the second largest economy in the world, growing at 6.2%, I think it's a quite a reasonable growth rate. Of course, it's lower than original expected and other things. I think the trade war, we can see it in a different perspective. One is that, of course, the export industry that -- heavy trade in the war and the -- some of the financial market currency are not yet affected. But I think in terms of the domestic demand, whether it is the demand for residential or demand from consumer in terms of consumption.

In China itself, I think the retail number has shown that it's still on a positive outlook side. I think let us not [secure] ourselves, say the retail scene in China it's very, very different compared to another major economy in the U.S., where you see a lot of the big store retailer who are shutting down and all that. But I suppose for China, in view of the population, in view of the density of city living and all that, the fact that the homeowner is [comfortable,] our U.S. counterpart where each of them live in a very luxurious, bigger home, so people need to get out of their house, need to have a place socialize and all that. I think there has been driving the retail scene -- of course, there's part of the trade war or trade tension and all that -- their policy was also to pump prime the economy or the demand, within China itself.

So as a result, we still see that perhaps in terms of the domestic consumption, the domestic economy within China itself, being a big continent economy, we still continue to do well. Even if there's a slowdown to probably 6% or even 5-plus percent going forward, if that's the case, we would still expect that there will be certain level impact. But as a whole our business in China will still continue to grow. As far as the residential, the key thing is that there is still a lot of upgrade demand as well as the real first-time demand that has not been fully met. So despite there's been uncertainty as a result of the economic situation, we're still seeing good demand from the launches that we have launched, we have a sell-through rate.

For those that we launched in the first half of the year, sell-through is slightly more than 80%. As a whole for those that we have already launched, our sales rate is 94%. So actually to me -- actually I have not enough stock to sell, not so much unsold stock or in view of the lower demand and all those kind of things. I think the other thing to give comfort to all is that there is still some policy in terms of price control in some of the cities that we are in, in terms of the residential selling price.

I would say that based on all these current price controls, selling price now, almost all of our project in the money. Like I said, whether I can raise the selling price more to make a better profit margin for us. Otherwise, you choose to sell it at today's control prices, we are still in the money. So there will be the comfort there, [give more] in terms of our residential portfolio now in China.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [35]

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I think we have one more question from this side.

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Chee Koon Lee, CapitaLand Limited - Group CEO & Executive Non Independent Director [36]

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On the other question on China and Singapore, when we announced the merger with Ascendas-Singbridge, we stressed that the idea of the transaction is really to create a more geographically diversified portfolio across different markets and different asset classes. I also mentioned that 4 key markets where we are fully integrated will be Singapore, China, Vietnam and India. So this will be the 4 core markets that we will be vertically integrated.

China will continue to be very important in CapitaLand's business, and it is the single largest market for us and there are a lot of opportunities that we can do, but we don't need to use all of -- I mean, there are many other capital partners that we can work with to continue to grow our business in China. On Singapore, I have mentioned earlier in the past, CapitaLand only used to do residential, retail and office, and now we are putting together Ascendas-Singbridge portfolio where you have industrial logistics and business parks. And development in Singapore, development REITs in Singapore is something that I think we can handle and we have good takeoff vehicles for all the different asset classes. I think Singapore will be quite interesting in terms of a rejuvenation play in the next few years for our portfolio. So that's something that hope to be able to share with you when we are more ready.

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Unidentified Analyst, [37]

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[Khong Wei] from (inaudible) here. Quick 2 questions on China and Singapore. I'm just wondering what the short-term impact of the yuan depreciation on your China portfolio? And also on the Singapore market, what's your current reading now since a year after the cooling measures were implemented?

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Cho Pin Lim, CapitaLand Limited - Group CFO [38]

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Sorry, what was your second question?

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Unidentified Analyst, [39]

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What's the current reading for the local authority market after the cooling measures were implemented.

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Cho Pin Lim, CapitaLand Limited - Group CFO [40]

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So I'll talk a little bit about the yuan. The yuan has passed 7 to the U.S. dollars since -- first time since 2008, I believe. I think we've already seen some of the retracing coming back. The Chinese government has come out to say that it is not part of a wider strategy to weaken the yuan. So that is helping the markets and this is all very sentiment driven. In terms of where we are as a business, so there our fundamental philosophies are as follows: we always naturally hedge our foreign currency exposure as much as possible by taking out local currency loans. For the equity that we have to put in, which is Sing dollar based, we obviously would have an exposure to that. Now that exposure is limited, again, because we try to naturally hedge as much as possible and to the extent that it stays on the balance sheet, it does not come back to the P&L. So we've done some analysis and for every 1% depreciation of the RMB, the P&L only takes about 0.6% hit based on translation of RMB coming back to the Sing dollar. On the balance sheet basis, 1% depreciation RMB currently impacts our equity by about 0.3%. So there is a very strong natural mitigant based on the natural hedge that we have put in place. I hope that answers your question.

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Juan Thong Leow, CapitaLand Limited - President of Singapore & International [41]

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I think on the residential side, we remain very cautious and disciplined in the way we look at residential in Singapore. If you recall in the last few years, we have been derisking our residential portfolio. So if you look at the whole portfolio today we only have 1 unit left in the entire -- that was before One Pearl Bank was launched. So we're also very encouraged by One Pearl Bank. I think it's got a lot of unit selling point. Besides the location, we also have a very good design, functional product that we think is very well received by the market. So we remain very cautious, by the same time we want to be able to be quite opportunistic about this residential sector in Singapore.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [42]

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I think -- so we have time for 2 questions. I just need to go to my webcast audience and I will come back to you. So Xuan Tan, CLSA. Her question is, can you share what the net gearing be once all the remaining divestment proceeds come in? Is 0.64 a moving net gearing target? What she is asking is, if there are more acquisition opportunities in crisis, will you look to either divest more or to potentially change near-term gearing target? Question for Andrew?

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Cho Pin Lim, CapitaLand Limited - Group CFO [43]

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Okay. It's a difficult question to answer. The answer in short is, yes. If we had a very good acquisition opportunity, obviously things are dynamic, things are fluid. We may look to -- if it's a very substantial acquisition, we may look to finance some of that with additional divestments of assets that perhaps were not immediately on the horizon. So you have to allow for this fluidity and the ability for management to react in real time to take place. As it stands today, we remain focused on getting that deleveraging in place. We think we will get there by end of next year. As I said earlier, we are ahead of plan as we speak, based on the proceeds that we have already raised to-date. And we are focused on continuing on that momentum. So I see no reason why all things being equal, we don't get there ahead of time. And if we get there ahead of time, then it means we have more headroom to allow us to evaluate interesting opportunities that may come up.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [44]

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And I have a colleague over here.

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Cheryl Lin, [45]

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Cheryl from CN Asia. I just wanted to ask about the Singapore property market, specifically. So apart from One Pearl Bank and the site at Sengkang central. So how's your current land bank looking? Is it like you said, you're kind of just holding out for good opportunities? Or is there a sort of bigger sense of urgency right now? Any concerns as well that the global uncertainty will weigh on that?

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Juan Thong Leow, CapitaLand Limited - President of Singapore & International [46]

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I think the -- like Chee Koon mentioned, now with the ASB combination, we actually have quite a big exposure in Singapore. The last count I did was, we have 156 properties in Singapore, big and small, 4.4 million square meter of GFA. And this is a combination of both the industrial properties, logistics, residential, offices and others. So I think there are a lot of things that we can look at in Singapore across asset classes. So like for example, we have a quite of lot of exposure in the Jurong Precinct. We have quite a lot of exposure in the one-north area where we can actually relook at the portfolio composition and see what we can do with all this precinct. So I think beyond residential, I think there are actually quite a lot of development opportunities within the portfolio now.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [47]

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Okay. Brandon?

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Brandon I. Lee, Citigroup Inc, Research Division - Analyst [48]

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Brandon from Citi. Just 2 questions from my end. First one is with regards to divestments. Let's say, if you manage to hit past your targeted amount, how open are you to looking at, say a share buyback? Or let's say, higher dividend payout? That's my first question. Second question would be, where would you put a CMMT Korean office and Japan retail within your bucket, the 3 buckets that you mentioned?

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Cho Pin Lim, CapitaLand Limited - Group CFO [49]

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Question #1 is dividend and buybacks, they remain in our toolkit, Brandon. We always -- again, our 2 rules of thumb for buybacks, excess cash and a belief that our shares are undervalued. The second is definitely true. Currently, I would say that, maybe excess cash is perhaps not so prevalent right now. And if I had excess cash, then the right thing to do, really is to pay down debt. So to take that away, the priority right now is less on share buybacks, but on getting the deleveraging in place as net debt to equity number, so that includes cash as well. So if we can get there, then I think we have visibility to think about share buybacks, assuming the stock market doesn't fully buy into what we are trying to accomplish. That's question #1.

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Chee Koon Lee, CapitaLand Limited - Group CEO & Executive Non Independent Director [50]

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Your specific questions on Japan, Korea and CMMT. I think the way to look at it is we look at asset or country. We ask ourselves whether any specific asset class in the country, whether we can build scale, whether we can be competitive, whether we can grow the portfolio significantly that can contribute -- make interesting contributions to CapitaLand's bottom line. If not, then we need to review. So I think that's my answer to you because, I mean, going through the specifics, there are always complexities. So I hope that should guide you in terms of how we take -- I mean, it's a very disciplined approach that we take, regardless of markets, regardless of asset class.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [51]

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Okay. As we can see the shops are opening and coffee machines are starting, so we're going to take 2 more questions. But before that, can I ask if anyone has questions for our newest member Jonathan Yap? I thought we should get Jonathan to provide us with some broad thoughts on what he thinks about CFL. Jon?

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Neng Tong Yap, CLA Real Estate Holdings Pte. Ltd - CFO, CIO & Head of Real Estate Investment [52]

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Thank you, Grace. You never let me go, right? Looks like I earn my keep for the morning. I heard some of the earlier questions whether it was from Don or Derek around fund management, fee income and so on. Can totally understand where this is coming from. I just want to reiterate what Andrew just said. If not Andrew I would discuss whether to rush through this quarter to give you more visibility on the ASB side of things as well as other plans on the funds front. But the truth is, until the quarter ended, ASB information is not publicly available. So therefore, we do have some restriction in terms of how far we can share them.

But we also want to make sure that we want to put forth information in a matter that is clear enough and consistent over time to allow you to build your models so you don't have to kind of keep figure out what we are doing. So hold you thought, I believe in 3Q you get more information, I'm sure. So at that point in time, you probably have even more specific questions, we'll be happy to address them. But if I may just say, clearly coming to this job is exciting for me. At the same time the question I ask when Chee Koon asked me whether I would take the job, it's obviously, is there something we believe we can do with this platform.

As you see today, we now have SGD 129.1 billion worth of real estate assets under management. Fund AUM is round about SGD 70-over billion, so essentially a very big platform. So now it allow us to have scale, allow us to have hopefully visibility and accessibility to more capital. It will also allow us to more efficiently use our listed trusts as engine of growth. We'll do more of debt, and not only from assets that we recycle from our balance sheet, but also potentially use those vehicles to basically compete for good assets.

At the same time, we will have to remain disciplined because ultimately our unitholders in the REITs invest for profitability, so we look at good balance between long-term and short-term consideration there. Secondly, in terms of private fund, I think there's a universe that we are probably a little bit underrepresented, vis-à-vis where the global scale in that business. That's something we will be spending more time to work out other things we could do. James Lim, who runs our discretionary fund CAP I, also CREDO is there, so that's something we will do more.

And third, I'll just end by saying that the question people always ask is how do we differentiate ourselves vis-à-vis our peers. I believe there are many ways of differentiating, obviously finding the right strategy is one. Sometimes it's also about how well we can execute. I think this way, we want to make sure that we not only are a good real estate manager, but also a good fund manager, effectively managing the capital and how well we can integrate that one -- all those [various skill sets] under one roof in the most integrated and competitive manner. And I do think that's somewhere where we can do well, not only because we are established fund manager, we also have real estate property management experience, but also real estate development experience. It is great to have that combination under one roof and that's clearly an area where we leverage a lot on. And Grace, thank you.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [53]

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Thank you, Jon. Thank you. I would like to take the last question from [Rela]. He's joining us from Hong Kong through webcast. Rela just shared with me they had a tear gas below his flat just 2 days ago. So I'm going to take his question and I think it's a very good way to end. So Rela asked, CapitaLand traditionally do not have any exposure to the logistics sector. So with the ASB acquisition, now you have some logistics, how much resources will you commit to grow your logistics exposure in the next 5 years? Is this part of your asset to become more diversified and more resilient to global uncertainties? Chee Koon will take the last question.

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Chee Koon Lee, CapitaLand Limited - Group CEO & Executive Non Independent Director [54]

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Yes, clearly -- I guess, in Andrew's presentation earlier you saw how, with the combination we have diversified beyond our traditional classes of retail and residential. Logistics clearly is something that we want to do more and not just because of diversification, but also the synergistic benefits that we see logistics across the other sector that we are in. So we do have customers for instance, are in business parks and office they do have logistics requirement. And more importantly either for our retail customers, they also have logistics requirement.

So clearly from our perspective, not only because the macro are in the right direction, but we do believe the synergistic benefits in growing that segment. And clearly we have tried to do quite a few things in Singapore, we have some logistics presence, in India we have entered logistics both in terms of computer assets as well as income producing and clearly is a sector we certainly want to do more and leverage more on the synergistic benefits that the whole entire combination of the (inaudible) and it goes way beyond just diversification.

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Grace Chen, CapitaLand Limited - Head of IR & Capital Markets Compliance [55]

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Okay. Thank you, Jon. And with that, I think, we will end this briefing. Thank you all for making way of -- here to Funan sitting on the stairs, our first fireside chat and we hope to have more of these going forward. And we will be around -- the management will be around. If you have more questions, then please stay around for mingling and perhaps some shopping later. Thank you. Have a good day.