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Edited Transcript of RLC.PS earnings conference call or presentation 2-Mar-20 2:00am GMT

Q4 2019 Robinsons Land Corp Earnings Call

Pasig Mar 24, 2020 (Thomson StreetEvents) -- Edited Transcript of Robinsons Land Corp earnings conference call or presentation Monday, March 2, 2020 at 2:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Faraday D. Go

Robinsons Land Corporation - Executive VP & Business Unit GM

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Conference Call Participants

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* Carl Sy

Deutsche Bank AG, Research Division - Research Analyst

* Danielo Picache

Crédit Suisse AG, Research Division - Research Analyst

* Jason Yeo

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Jason T. Escartin

PAPA Securities Corporation, Research Division - Equity Investment Analyst

* Jelline E. Gaza

JP Morgan Chase & Co, Research Division - Analyst

* Wilson W. Ng

Morgan Stanley, Research Division - VP

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Presentation

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Operator [1]

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Welcome to RLC's CY 2019 Earnings Call. Joining us today from RLC are Mr. Frederick Go, President; and the rest of the RLC Investor Relations team. (Operator Instructions)

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Unidentified Company Representative, [2]

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Good morning. Thank you for joining Robinsons Land Corporation's earnings call. Allow us to take you through our unaudited financial results for the full year 2019 ending December, further discuss the performance of each of our business units and conclude by updating you on our growth plans and future strategies.

We continue to strengthen our business portfolio and expand our product offerings that are anchored in the new drivers of the Philippine economy. We ended 2019 with 52 lifestyle centers across the country, offering the widest range of experiences for mall goers; 23 office developments in central business districts and strategic locations; 78 residential buildings and 38 housing subdivisions catering to the housing demand from various segments of the market; 20 hotel properties against the backdrop of a booming tourism industry; and lastly, we continue to build communities within our 19 mixed-use developments.

Driven by the performance of our investments and development portfolios, we continue to execute on our revenue stream diversification strategy. Our investment portfolio generates high-quality recurring revenue stream from our malls, offices, hotels and warehousing business, which accounted for 69% of revenues, 82% of EBITDA, 75% of EBIT and 70% of net income. The balance was from the performance of the development portfolio consisting of the 4 residential brands and the property sales arm of the Industrial and Integrated Developments Division or IID. Our financial position remains healthy with total assets at PHP 189.7 billion, and shareholders' equity at PHP 100.1 billion as of December 2019 earnings per share grew to PHP 1.57 per share, while net debt-to-equity ratio declined to 36%, mainly due to sales proceeds from our China projects.

Now let us go over to the financial highlights. In 2019, consolidated revenues registered at PHP 30.58 billion, up by 3% versus 2018. In terms of revenue contribution, the mall division continued to take up the lion's share at 43%; followed by the Residential Division at 30%; the Office Buildings Division at 17%; the Hotels and Resorts Division at 8%; and IID at 2%. As far as revenue growth, our malls business delivered a solid 11% increase in revenues to PHP 13.25 billion, from stable growth of existing malls, contribution of new malls and cinema ticket sales. Revenues from the Office Buildings Division accelerated by 24% to PHP 5.32 billion owing to a combination of rental escalation and higher renewal rates in existing offices as well as the contribution of new offices. The hotels business generated PHP 2.43 billion in revenues, which was 23% higher than previous year due to the strong performance of some of the existing hotels as well as the contribution of new hotels. The Residential Division posted a 5% spike in revenues to PHP 9.13 billion. Lastly, under IID, we have recorded a portion of the gain on sale of land to JV companies as well as with these revenues. We would like to announce as well that we are deferring the recognition of revenue from our China project, which was initially reported in the third quarter of 2018. We shall provide more detail on this in the succeeding slide.

Without revenues from our China project, EBITDA still grew by 5% to PHP 17.25 billion and EBIT by 3% to PHP 12.28 billion. Net income, on the other hand, posted a meaningful 6% growth to end at PHP 8.69 billion in 2019. With the revenue from our China project, revenues would have soared by 33% to PHP 39.32 billion and net income by 17% to PHP 9.62 billion.

Let us turn to our business segments starting with the malls division. Mall revenues increased by 11% to end 2019 at PHP 13.25 billion accounting for 43% of total company revenues. Full year rental contributions from 4 new malls we opened in Ormoc, Iloilo, Tuguegarao and Bukidnon in 2018 fueled 2019 growth, and this is on top of same-mall rental revenue growth of 7% and an uptick of 9% in cinema revenue. This resulted to a significant increase in EBITDA of 15% to PHP 8.82 billion pushing EBIT up to 22% to PHP 5.17 billion.

In 2019, we opened Robinsons Galleria South, our third lifestyle center under the premium Galleria brand. It is the first world-class full service mall in San Pedro, Laguna, featuring modern interiors and beautiful artwork designs. Testament to the mall's successful opening, occupancy rates posted at 91%. With this latest addition, we now have a total of 52 malls across the country. We also opened the new expansion wing in Robinsons Magnolia, our upscale mall in Quezon City. It features a refreshed open-air plaza, additional lifestyle stores and dining options, cinemas, a family amusement center and a chapel. This brought total gross floor area of 3 million square meters and total mall usable space to 1.57 million square meters with over 9,000 retailers for a system-wide occupancy rate of 94%.

It was another banner year for our Office Buildings Division as it posted the highest revenue growth among all of our businesses and contributed 17% to consolidated revenue. Growth momentum was sustained with a 24% hike in revenues to PHP 5.32 billion year-on-year. This notable increase was mainly driven by a combination of rental escalation and higher renewal rates in existing offices as well as our successful leasing activities in new buildings, namely Cyber Sigma in Taguig, Exxa and Zeta Towers in Quezon City and Cyberscape Gamma in Pasig City.

EBITDA and EBIT likewise exhibited significant growth at 21% each to PHP 4.56 billion and PHP 3.73 billion, respectively.

We are happy to share that last year, we have successfully added 3 new sites to our office portfolio: Cybergate Magnolia sits atop the new wing of Robinsons Magnolia mall, and it is also PEZA-registered. This will drive synergy within our Magnolia complex, enabling a steady footfall in our Magnolia mall and a potential market for our residential projects, the Magnolia Residences.

Giga Tower is a PEZA-registered prime office tower located within Bridgetowne. It is our fourth office tower within the destination estate, and we are pleased to announce that it is almost fully leased out. Lastly, our second build-to-suit office development in Luisita in the province of Tarlac is now online and it is now home to a major BPO company. With the completion of 3 offices, the Office Business Division capped 2019 with 23 operational sites in 6 strategic locations, for a total net leasable area of 592,000 square meters, a 13% increase from its 2018 record of 523,000 square meters.

Moving on to the Hotels and Resorts Division. This division rallied in the second half effectively reversing the declines recorded in the first 2 quarters. Contributing 8% to total company revenues, total revenues soared by 23% to PHP 2.43 billion from PHP 1.98 billion the previous year through higher occupancy rates of company-owned brands, Go Hotels and Summit Hotels, and buoyed the increased average room rates for international hotel brands. In addition, it turned around the decline in last year's EBITDA performance with a 4% increase year-on-year to end 2019 at PHP 702 million. In addition, depreciation from new hotels caused a 19% drag in EBIT, which ended at PHP 343 million from PHP 425 million in the previous year.

In the first quarter of last year, we have successfully launched Dusit Thani Mactan Cebu Resort, our first foray into the luxury resort niche. We are pleased to share that out of the 55 hotels in the Mactan Island, it has been voted top 2 in TripAdvisor in less than a year from the opening, a true testament to the hotel's success.

Last September, we have officially opened our sixth hotel under the Summit brand. It is conveniently nestled in San Juan City and easily accessible by business and leisure travelers in the metro. The hotel boasts of 100 well-appointed rooms equipped with premium amenities. It also features its own casual dining restaurant, Cafe Summit, which is also open to non-hotel guests and it also features a fitness center, a heated indoor pool with a quaint view of the city skyline. With operational efficiency and sustainability at the core geared towards improving customer experience, we have invested in a technology that allowed guests to self check-in. We have also shifted away from single-use plastic water bottles and toiletries as part of our sustainability efforts. With the addition of Dusit and Summit Greenhills, we now have 20 hotel properties with 3,129 rooms and with a system-wide occupancy rate of 63%.

Next is the Residential Division. Driven by successful project launches fueled by strong demand from local and foreign buyers, our net presales pickup posted a significant 31% increase in 2019 to a record high of PHP 20 billion, mainly attributable to the launch of foreign new residential projects namely The Sapphire Bloc East Tower, Galleria Residences Cebu Tower 3, Cirrus and SYNC S as well as sales of existing inventory. The combined sales value of these new launches is estimated at PHP 15.3 billion.

Realized revenues last year was up by 5% to PHP 9.13 billion, while EBITDA and EBIT surged by 32% to PHP 2.97 billion and 33% to PHP 2.88 billion, respectively, mainly on the back of sales from high-margin projects.

For our Residential Division, we are currently recognizing revenue based on a biased equity threshold of 15%. In our continuous effort to make our financial statements more reflective of the actual performance, effective this year, we are recognizing revenue based on a biased equity threshold of 10%.

Slides 13 to 15 show the projects we launched in the second and third quarters of last year. We are pleased to announce that sales pickup across all of the 4 new projects that we launched last year are quite remarkable, providing us a good indicator of a robust demand for residential projects. As we were able to move a big chunk of our inventory last year, this places us in a healthy position to beef up our launches this year in order to serve the market demand better and deliver unparalleled value to our buyers.

Moving on to Slide 16. We would like to share with you updates on the projects we have with other joint venture partners. Last year, we launched Aurelia Residences which is our iconic luxury residential condominium in BGC, Taguig, under our partnership with Shang Robinsons Properties, Inc. We are pleased as well to share that we have soft-launched Velaris Residences, our premium condominium project in partnership with Hong Kong Land. Velaris is a 3-tower development located in Bridgetowne that is expected to redefine Manila's skyline with its distinctive concrete and glass look with a rose gold facade. The first tower has an estimated sales value of about PHP 8.9 billion with 494 units comprising of bi-level penthouse units, and 1- to 3-bedroom units.

Lastly, for our projects with DMCI, we have soft-launched Sonora Residences -- or Sonora Garden Residences located in Las Piñas City. It is a modern contemporary residential development consisting of 800 units, with a total estimated sales value of PHP 5.3 billion.

Moving on to our last business unit, the Industrial and Integrated Developments Division. Under its investment portfolio arm, operational warehouse facilities registered lease revenues of PHP 138 million last year, while EBITDA and EBIT ended at PHP 35 million and PHP 8.8 million, respectively. As of December 2019, total warehouse leasable space has reached 77,000 square meters with locations in Sucat, Muntinlupa and Calamba, Laguna. Developmental revenues of IID on the other hand registered an 87% drop to PHP 321 million in 2019 from PHP 2.55 billion in 2018, following the partial recognition last year of the gain and sale of land to Shang Robinsons Properties, Inc. Revenues in 2019 mainly came from the gain on sale of land located in Las Piñas to Robinsons DMCI Property Ventures, Inc. which yielded additional EBIT and EBITDA of PHP 203 million, respectively.

Last September, we have officially unveiled our first destination estate, Bridgetowne. Kicking things off is the inauguration of a 200-meter landmark bridge that connects Pasig City and Quezon City. This sprawling estate will be home to residential developments that will cater to a wide range of property owners including BPO and grade A office buildings, a lifestyle center and a 5-star hotel. It would also have a central park, multiple pocket parks, a school, a hospital and transport terminal. More than linking 2 cities, the 30-hectare estate is envisioned to become a self-sustainable community where everything is within reach.

As an update on our destination estates, our other destination estate, Sierra Valley, Starbucks has already opened. Other potential developments are in the planning stage.

Next, our China project. We have residential projects located in the Philippines and in China that are accounted for differently. For our Philippine residential projects, we recognize revenues over time using the percentage of completion method in accordance with the Philippine financial reporting standards. On the other hand, for our project in China, based on the evaluation of our external auditor, revenues will be recognized at a point in time upon construction completion and turnover to buyers. 2019 marks the completion of Phase 1 of our Chengdu project in China as well as the successful sellout of the residential high-rise apartment in the earlier part of the year.

In the third quarter, based on our assessment, and as agreed with our external auditors, we reported revenues amounting to PHP 8.84 billion yielding net income of about PHP 1 billion from the sale of high-rise residential apartment units in Phase 1 after 100% construction completion and 100% collection of the purchase price. In the fourth quarter, however, upon further analysis of our auditors, they have interpreted that revenue recognition should be in line with the Chinese accounting standards wherein revenue recognition shall be deferred until turnover of the unit to the buyers and not just upon construction completion and full collection of the sales price. Hence, the reversal of the revenue at year-end. In lieu of the deferment, we are hoping a significant boost in our earnings in the second half of 2020 as we turn over the units to the buyers. In addition, we are also hoping to secure the license to sell for the rest of the components of phases 1 and 2 within the year.

We have spent PHP 25.4 billion of our CapEx budget for our Philippine operations, more than 42% of which was spent on the investment portfolio for the construction and development of malls, offices, hotels and warehouse properties; about 36% of which was spent on development of our build and sell properties; and the balance was for various land acquisitions.

On the other hand, our existing land bank in the Philippines now totals 786 hectares, including land under joint venture agreements with total estimated market value of about PHP 45.1 billion. We continue to scout for land bank opportunities nationwide.

Moving on to our future plans and strategies for each business unit. For the malls division, we shall continue to strengthen our position as a premium mall brand with the widest geographical reach. This year, we plan to increase our mall gross leasable area by 3% to 1.62 million square meters, with the opening of a mall in La Union and the expansion of Robinsons Place Antipolo and Robinsons Place Dumaguete. We shall also be undertaking the redevelopment of Robinsons Place Ermita, our biggest Metro Manila mall. Next year, we plan to expand our footprint in Metro Manila by opening a premium mall within Bridgetowne in addition to 3 new malls we plan to open in the provinces of Gapan in Nueva Ecija, Balanga in Bataan and Balayan in Batangas. These 4 new malls will add 9% of leasable space boosting our mall portfolio to 1.77 million square meters.

On the back of our rosy outlook over toward the office sector, we plan to complete this year the development of Cyberscape Omega in Ortigas CBD, Cybergate Galleria in Cebu, Luisita 3 in Tarlac and Delta Tower Two in Davao. These new offices will translate to a 14% growth in net leasable area, raising it to approximately 677,000 square meters by the end of this year. We have a robust pipeline comprising of 5 new office developments that will come online next year namely Cybergate Magnolia, Cybergate Malolos, GBF Center 1, Sierra Plaza 1 and Cybergate General Trias. These new offices will grow in net leasable space by 15% to 781,000 square meters.

For our Hotels and Resorts Division, we plan to open Summit Hotel Naga this year together with Westin Hotel as well as Go Hotels Naga and Go Hotels Tuguegarao. These new hotels will increase hotel room count by 16% to 3,626 operational rooms. We are also doing a major renovation of the guest rooms, grand ballroom and amenities at Crowne Plaza and Holiday Inn to update the look and feel of the hotels and to provide the best possible guest experience. In 2021, we intend to add 12% more keys to end with 4,045 rooms with the opening of Summit Gen San and Go Hotels San Nicolas in Ilocos Norte.

For our Residential Division, with the success of our new projects, we plan to launch about PHP 20 billion worth of fresh inventory in 2020 to take advantage of the strong demand from domestic end buyers and foreign investors.

For IID, we are fortifying our foothold in Muntinlupa and Calamba by building 2 more warehouse facilities in the area which should bring our warehouse portfolio to 101,000 square meters. [Eventually near] we shall tap new territories and complete a couple of warehouses in Pampanga, boosting our portfolio by 64% to 166,000 square meters. On top of this, we will continue to engage in strategic acquisition of vast tracts of land that are optimally located within the government's infrastructure projects to add to our growing number of township estate. To further strengthen our revenue streams, we shall continue to explore innovative and sustainable real estate formats through business ventures and strategic business partnerships.

This concludes our presentation. Operator, we are now ready to take some questions. Thank you very much.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

Your first question comes from the line of Carl Sy from Regis Partners.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [2]

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I actually have a lot of questions. Perhaps, let's start with the Office Division. You plan to complete 85,000 square meters this year, how much of that has been pre-leased?

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Unidentified Company Representative, [3]

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Carlo, so Cybergate Luisita 3 -- I think the Luisita office is 100%. We are currently aggressively marketing Omega. Delta Tower is about 24% leased out. And for Cybergate Galleria Cebu, we are also aggressively marketing this.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [4]

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I understand. Sorry. And I'm afraid I don't know the sizes of each of the buildings offhand. Could you tell me, is it 10,000 or 20,000 square meters already out of 85,000 or...

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Unidentified Company Representative, [5]

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So Luisita is about 6,000 square meters. And then Omega is 44,000 square meters and Cybergate Galleria in Cebu is about 20,000 square meters. Delta 2 is about 15,400 square meters.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [6]

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I understand. And is Omega PEZA-accredited already?

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Unidentified Company Representative, [7]

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Yes, it is already a PEZA-registered building.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [8]

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Understand. On the Residential business this time, first, could you tell me what was the unsold inventory value as of end last year?

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Unidentified Company Representative, [9]

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Unsold inventory value is about PHP 13 billion.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [10]

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PHP 13 billion. And of your net take up last year, how much were to foreigners? And how much were to Chinese specifically?

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Unidentified Company Representative, [11]

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Last year?

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [12]

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Yes, last year.

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Unidentified Company Representative, [13]

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So for -- yes, foreign buyers accounts for 43% and 57% domestic.

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Unidentified Company Representative, [14]

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Chinese.

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Unidentified Company Representative, [15]

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Chinese accounts for 28% of the 43% foreign.

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Unidentified Company Representative, [16]

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28% of 100%.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [17]

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Sorry, let me clarify. 20% of 100%? Or 28% of 43%?

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Unidentified Company Representative, [18]

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Yes. 28% of 100%.

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Unidentified Company Representative, [19]

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28% of 100%.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [20]

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I understand. And regarding the China project again, just to clarify, can buyers still back out or no they can't? Or -- yes.

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Unidentified Company Representative, [21]

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Theoretically, no. They cannot without paying penalty.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [22]

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Understand. But you -- anyway, you've received the cash as well? As you said, for 100% of the...

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Unidentified Company Representative, [23]

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That's right, all the cash is with us.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [24]

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Oh, okay. Well, on the malls business and maybe the Hotel Division this time, can you provide some information on your experience in January so far in light of COVID-19?

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Unidentified Company Representative, [25]

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Yes. Sorry. Okay. We'll try to answer that in -- so far, we -- there are probably 2 businesses that this question is relevant. One would be the malls, and the other one would be the Hotels. I'll let Faraday Go answer the malls.

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Faraday D. Go, Robinsons Land Corporation - Executive VP & Business Unit GM [26]

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Okay. For the malls, we monitored our sales from January 16 to Feb 15. That period, we did not note any decline in the sales, except for Dumaguete where there were some fake news -- moving around it, which we were able to manage again, which we've sent out advisories on. So aside from that, we have not noticed any decline in sales during that period. But we continue to monitor the sales now.

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Unidentified Company Representative, [27]

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Occupancy rates?

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Unidentified Company Representative, [28]

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So for our hotels business, generally, we are [updated] (inaudible)...

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Unidentified Company Representative, [29]

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For Hotels business, we felt a decline in terms of occupancy or impact by about 4% only.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [30]

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Oh, okay. Sorry, that's 4% on average, right, across the board, on average?

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Unidentified Company Representative, [31]

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Yes, on average.

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Unidentified Company Representative, [32]

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That's only for the month of...

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Unidentified Company Representative, [33]

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Yes, that's January.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [34]

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Sorry, that's January only or that's Jan 16 to Feb 15 as well?

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Unidentified Company Representative, [35]

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That's the leases as of January end.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [36]

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End January.

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Unidentified Company Representative, [37]

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Yes. I think, Carl, I think the other way we are looking at it is for February, which the month just ended. But basically, for February, March and April, our international Hotels business is definitely affected. But for our Go Hotels and Summit Hotels, we're not really feeling the crunch on this. So it's really international travel that is affected. So that would, for us, be Dusit, Crowne Plaza and Holiday Inn more than the Go Hotels and Summit Hotels. But I think we probably would need more time to give you more complete numbers. But right now what we're really seeing is that it's more of a forward-looking cancellations. But for February itself, it's not too bad.

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Operator [38]

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Your next question comes from the line of Jason Yeo from Goldman Sachs.

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Jason Yeo, Goldman Sachs Group Inc., Research Division - Equity Analyst [39]

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Can I ask why there is such a long gap between the completion of construction and the handover of units in China? And what is the net income impact of the reversal of the China earnings?

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Unidentified Company Representative, [40]

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Yes. The impact on the reversal is about PHP 1 billion on our net income. And the long gap is because in China, the turnover to buyers is subjected to a lot of government certification and checking. There is a -- what is known as a 5-party check process. And then after that, you still have to secure the legal documentary process, which is essentially the titling of the unit, which is again another process. It's just the way it is in China that the documentary and legal process is quite tedious.

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Jason Yeo, Goldman Sachs Group Inc., Research Division - Equity Analyst [41]

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Okay. Just one more question on the POGO situation. Are you seeing any impact on your Office and Residential business?

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Unidentified Company Representative, [42]

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So far, we have no impact on both businesses. But of course, to be very candid about it, if the POGO industry collapses, it will have very serious repercussions on the entire industry, of course. But to answer your question directly, we do not have any impact on our business so far.

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Operator [43]

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Your next question comes from the line of Wilson Ng from Morgan Stanley.

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Wilson W. Ng, Morgan Stanley, Research Division - VP [44]

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Just have a couple of questions on the Residential business as well as the potential for a REIT. So maybe on the Residential business first, could you share a little bit on like how much pre-sales was generated at the JV level? So like, for example, for the 3 projects, Aurelia, Velaris and Sonora Garden. And secondly, for Residential, the presales growth at the consolidated level, I noticed that in the fourth quarter, I think it's about flat year-on-year. Do you see -- how do you looking -- how are you looking at the residential demand right now? And what is your outlook for this year?

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Unidentified Company Representative, [45]

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Yes, I'll just answer your last question first. Fourth quarter generally for us is roughly quite a flattish period every year simply because at year-end, that we always do a lot of cleanup. So for the company, traditionally, the fourth quarter residential sales have usually been not very robust if you compare it to the previous quarters. And second to that is because of the timing of launches. A lot of our sales basically jumps or drops depending on launches. And we didn't launch projects in the fourth quarter of this year. So most of the launches were in the second and third quarter. So hence, the large spike in sales.

For reservations for Aurelia, it's roughly about 48% reserved. For our Velaris project, which is our joint venture with Hong Kong Land, it's about roughly 10% sold. And then for DMCI -- sorry. Can you just kindly help us out here because all our partners are listed companies, and we cannot -- we're not supposed to jump the gun on them because all -- each of them, Hong Kong Land, Shang Properties and DMCI Properties are all listed. So we just want to be careful that we can't jump the gun on them. But our DMCI project, for the first tower, it's also selling extremely well. It's -- based on reservations, it's roughly about over 50% of the first tower is already reserved. But can you help us out here, guys, we can't jump the gun on all our listed partners. I hope that answered your question.

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Wilson W. Ng, Morgan Stanley, Research Division - VP [46]

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Got it. Yes. Before I go, just one last question on the potential for launching a REIT. What are your thoughts there?

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Unidentified Company Representative, [47]

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We're very seriously studying it. It's one of the top priorities now of the group on a corporate finance basis. We're studying whether some of our malls and some of our office buildings are REIT-able. It's become very interesting to us, so we're carefully studying that right now and talking to all the international bankers. We've had the pitches from all the largest domestic and largest international bankers for a potential REIT IPO. We will probably have more news on that front over the next 2 to 3 months.

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Operator [48]

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Your next question comes from the line of Jelline Gaza from JPMorgan.

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Jelline E. Gaza, JP Morgan Chase & Co, Research Division - Analyst [49]

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I have 2 questions. One relates to your new launches for Residential segment this year. Could you give us an idea on the mix? How much of this will be related or situated in Metro Manila? How much for your Communities versus Residences brand? And then my second question relates to your property dividend, what's the update on that in terms of timing? That's all.

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Unidentified Company Representative, [50]

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[Claude] here, I'll answer your first question. So in terms of new launches for this year, Metro Manila will be accounting for 64%. And then for the provinces, it will be 36%. So that will be a mix of both Communities and Residences.

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Unidentified Company Representative, [51]

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For the property dividend, we have submitted all the requirements to our regulators. It's currently at their level for approval.

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Jelline E. Gaza, JP Morgan Chase & Co, Research Division - Analyst [52]

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Any timing on the expected listing? I remember -- if I remember correctly, it used to be 1Q 2020. Does that still stand based on the current progress of regulatory requirements?

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Unidentified Company Representative, [53]

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I think based on the regulatory approval process, it will take about, I think, more than 30 days. So we expect it about -- in the first half of the year.

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Operator [54]

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(Operator Instructions) Your next question comes from the line of Jason Escartin from PAPA Securities.

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Jason T. Escartin, PAPA Securities Corporation, Research Division - Equity Investment Analyst [55]

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Just to clarify a few items you might haven't yet. Did I hear that correctly, you plan the renovation of certain hotels throughout the year? Will you be able to provide more details on that? And would there be -- or should we expect some sort of shutdown of a hotel that's being renovated? And also, is there a similar plan for select malls? And for number three, I might have missed the number. Do you have any number for target residential launches for this year?

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Unidentified Company Representative, [56]

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Yes, I'll just answer the easy question first. Our target launches for Residential is about PHP 20 billion for this year. Second question, which malls are under -- will undergo renovation, primarily Robinsons Place Manila will undergo a major renovation. For the hotels, I'll have...

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Unidentified Company Representative, [57]

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For the renovation of the hotels, we don't plan to shut down the entire hotel, we'll do it by phases. So we'll be renovating 3 hotels this year. And the blended operational rooms should be at 70% across the year.

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Jason T. Escartin, PAPA Securities Corporation, Research Division - Equity Investment Analyst [58]

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Would you be able to provide dates for the renovation of the mall and the hotels, please?

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Unidentified Company Representative, [59]

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For the mall, it's currently undergoing already as we speak. We have already ordered, for example, all the major equipment, like the chillers and the air handling units. So they're already in process for Robinsons Place Manila. For hotels, we are renovating Crowne Plaza and Holiday Inn. So they're also starting. As a general rule, we just renovate 2 floors at a time in the hotel. So again, it should not affect business because the hotels generally operate in a 70% occupancy. So shutting, say, 2 floors at a time should not affect business revenues. And we also are renovating 2 Go Hotels. So that's also under process. But in the Hotel business, it's par for the course. You just -- you constantly are renovating older properties.

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Operator [60]

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Next question comes from the line of Danielo Picache from Crédit Suisse.

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Danielo Picache, Crédit Suisse AG, Research Division - Research Analyst [61]

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A couple of quick questions on Chengdu. I believe that in your press release, you mentioned that it's been fully sold, payments have been fully collected, construction is 100% completed. And then you're expecting for the handover to come through second half of this year. Does that mean that we can already assume that your PHP 8.84 billion will be reflected in your numbers for this year? Or is there some risk that it may not be done for FY 2020?

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Unidentified Company Representative, [62]

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Yes. First of all, when we say it has -- it is fully sold, and construction is completed and fully collected, we are referring to the Phase 1 residential condominium portion. So to clarify, Phase 1 residential condominiums are fully sold, fully collected and fully completed. As to your second question, whether it will be turned over within the year, and is there a risk that it won't be, I must admit that there's always risk whenever you're dealing with regulatory approvals. It's kind of not totally in our control. So while it is in our control to complete construction and to collect all payments from buyers, that we have done, the rest of the way is really dealing with government entities and quasi-government entities. So it's -- there will always be that risk. But our target, of the team is, of course, to turn it over to the buyers within the year.

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Danielo Picache, Crédit Suisse AG, Research Division - Research Analyst [63]

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Okay. Got it. And at least for Phase 2, if I'm not mistaken, that you have already tried applying for licenses to sell. It's just that you may have been holding out for better ASPs or margins. What's the outlook for, say, launching it this year? I can imagine that it will be a bit difficult, given the situation there in light of COVID-19. Is it sort of safe to assume that it won't be launched for 2020?

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Unidentified Company Representative, [64]

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No. I think -- personally, I think we will still launch it in 2020. If you ask me, definitely, we will sell it this year. But when we get the license to sell, it's a little trickier because of the COVID-19. As you know, most offices in China are not exactly working at full strength right now and they have other priorities to handle. So I don't see us getting the license to sell anytime soon while this COVID-19 is a serious issue. But as soon as it tapers off, I expect to get the license to sell almost immediately after. So we still intend to sell it this year.

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Operator [65]

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Your next question comes from the line of Jelline Gaza from JPMorgan.

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Jelline E. Gaza, JP Morgan Chase & Co, Research Division - Analyst [66]

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I have 3 additional questions. One is a follow-up on the expected renovation of Robinsons Place Manila. May I know the duration of the renovation? And what percentage of total GLA will undergo the renovation? And then second, did you -- could you provide a guidance? Like if we implement the 10% collection threshold to revenues this 2019, what will be the recognized revenues, for example? And then third and last, could you give us an idea about the nature of the office revenue restatement for 2019 -- or for 2018, rather?

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Unidentified Company Representative, [67]

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Yes. First, regarding Robinsons Place Manila, I think this will be a 2-year program because we tend to do our renovations slowly and in phases so as not to affect business or try to have a minimal effect on business and traffic. It does take a long time for us to renovate, so it will probably take about 2 years.

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Unidentified Company Representative, [68]

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The guidance for the change in our buyers' equity, the approximate is at least PHP 1 billion in net income.

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Unidentified Company Representative, [69]

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And then on your third question, Jelline, I would just like to clarify, we didn't have any restatement in office revenues in 2018.

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Operator [70]

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There's no more question at this time. (Operator Instructions)

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Unidentified Company Representative, [71]

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If there are no questions, we would like to thank everybody for joining this call. Good morning.

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Operator [72]

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Ladies and gentlemen, this concludes today's conference.

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Unidentified Company Representative, [73]

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Operator?

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Operator [74]

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Yes, there's no more question at this time. Okay, presenters. You may continue.

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Unidentified Company Representative, [75]

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Okay. Yes. Ladies and gentlemen, again, thank you for joining us today. We apologize for the not too good news on the -- on our auditor's conclusion of handling our China business. But I guess, this means that our income potentially in 2020 will spike because of this event. But again, thank you for all your support and confidence and until our next call. Good morning, everyone.

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Operator [76]

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Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.