MAPGF (MAPGF) Q2 2027 Earnings Report, Transcript and Summary

Hi, good evening. Welcome to MLT's results presentation for the quarter ended 30th September 2026. To kick off the session, Charmaine will take us through the key highlight.

Hi, everyone. Thank you for joining the call. So for first Q -- sorry, for second Q year-on-year, our gross revenue and NPI are higher by 1.4% and 1% year-on-year, respectively, mainly driven by contribution from our Singapore AEI, contribution from the India acquisition that we completed end of last financial year as well as organic growth, offset by absence of contribution from divestments. DPU is at $0.01816, slightly higher than last year. Operating metrics-wise, our portfolio occupancy is at 96.4%. Portfolio rental reversion a positive 2.1%, and WALE is stable at 2.5 years. On the capital management front, our aggregate leverage is at 37.5%, lower than 1Q, mainly because we have temporary parked down our borrowings with our perps proceeds we raised in August. When we redraw back the -- we will be drawing back the loans to repay and redeem our existing tranche in early November. If we remove the effect of this temporary repayment, our gearing would have been 40.4%. Debt hedged into fixed rate about 90% and our average cost of debt is at 2.7%. 74% of our income for the next 12 months has been hedged into Sing dollars. Okay. So on the capital management front, we have 2 initiatives that we did in 2Q. One would be the $400 million perps raised in August. That is at a coupon of 3.5%. The intention is to use this to redeem the $400 million that's coming due in November, which had a coupon of 3.725%. We also had our maiden CNY 500 million offshore renminbi bond issued at a coupon of 2.1%. In terms of portfolio rejuvenation, we will be embarking on our AEI in Changi South. We have also executed $243 million of divestments at a 2.1% premium above valuation, and also deferred our sponsors call option at 201 Keppel Road, which is the premier property within the portfolio. Moving on to Slide 6. Gross revenue, as mentioned earlier, is higher by 1.4%, mainly due to contribution from our Joo Koon AEI India acquisition as well as organic growth in Singapore and currency appreciation of the renminbi and Aussie dollar, partly offset by absence of revenue contribution from divestments. Property expenses increased mainly due to higher property taxes. Consequently, NPI is higher by 1%. Borrowing costs increased due to the interest incurred on incremental borrowings to fund our India acquisition, CapEx and land premium in Singapore as well as higher rates for JPY loans and replacement hedges. Partially offset by lower base rate on unhedged sing dollar loans as well as interest savings from the temporary repayment of loans with perps proceeds. Our amount due to distributed coupon to perps securities holders is higher, mainly due to the overlap of the early raise, and consequently our DI to unitholders is at $93.3 million versus $92.5 million last year, and our DPU is slightly higher, $0.01816 versus $0.01815. The reasons behind our first half this year versus first half last year results are largely the same as 2Q year-on-year. Gross revenue higher by 1.1% and NPI higher by 1.5%. Consequently, borrowing costs decreased slightly by 0.9%, mainly due to base rates on unhedged dollar borrowings, interest savings from temporary repayment of loans with proceeds offset by interest incurred on incremental borrowings to fund India acquisition, CapEx and land premium. After taking into account the higher perps distribution and the enlarged unit base, our distribution DPU for the first half is $0.03632 versus $0.03627. Moving on to quarter-on-quarter results. Gross revenue increased by 0.6%, mainly due to organic growth from our existing portfolio, mainly in Singapore as well as appreciation of renminbi and Korean won. Property expenses increased mainly due to higher property taxes and absence of one-time adjustment to utilities expenses in 1Q. This resulted in lower NPI, $155 million versus $156 million in 1Q. Borrowing costs increased mainly due to interest incurred on incremental borrowings to fund capital expenditure as well as higher base rate for Sing dollar unhedged loans and JPY loans. This is partly offset by the interest savings from the temporary repayment of loans with perp proceeds. After accounting for higher perps distribution, other adjustments and the enlarged unit base, DPU is the same as last quarter at $0.01816. Moving on to the balance sheet. Our NAV is at $1.27, this is slightly higher than the $1.26 last quarter. Leverage 37.5%. If we exclude the impact of the perps -- temporary repayment of proceeds set at 40.4% comparable to last quarter. Borrowing cost 2.7% versus 2.6% last quarter. Our debt maturity profile remains well staggered. We have about $90 million or 2% of loan at expiry in this financial year. We have about $1.15 billion of available committed credit facilities on hand, which is more than sufficient to refinance our debt due this year. And moving on to our interest rate as well as FX hedging. About 90% of our total debt has been hedged into fixed rate. If we exclude the impact of the lower borrowings due to the temporary repayment of loans, the percentage hedge would have been about closer to 83%. If you look at our unhedged -- the currencies that remain unhedged, we would -- our unhedged currencies are mainly denominated in Sing dollars and JPY, which are of the lower cost as compared to the other currencies. I think where we are looking at is we will continue to be impacted by higher borrowing costs. It's now currently at 2.7%. We expect this to increase to about 2.8% by the end of the financial year. On the income hedge portion, about 74% of our DI has been hedged into Sing dollars. I'll pass the mic over now to James.

Good evening, everyone. James here. I'll update our operational performance. So this slide shows that 70% of our MLT's portfolio by AUM and revenue is anchored by developed markets and providing a stable earnings foundation and maintaining exposure also to faster-growing emerging markets. Our diversified tenant base of 900 over customers are mainly engaged in handling consumer-related goods. So around 85% of our revenue is derived from tenants serving domestic distribution, with the balance 15% catering to exports. Our occupancy in 2Q remained healthy. High occupancy rate of 96.4% in 2Q, reflecting healthy demand across our portfolio. China occupancy improved to 94.4% in 2Q amid continued challenging market conditions. India occupancy decreased due to transitional downtime with occupancy expected to backfill in the next quarter. Next. In terms of our portfolio rental reversions, we registered 2.1% positive reversion in 2Q as compared to 0.9% in the last quarter. Excluding China, the portfolio reversion improved 4.2% in second quarter. Going by countries, Singapore -- in the second quarter, Singapore's rent reversion improved against first quarter is 5.3%. Going down the least, Hong Kong, 0.5%; China, minus 1.7%, which is a slight improvement from first quarter's reversion of negative 1.8%. Japan, 1.8%; Korea, 6.3%, much stronger than the first quarter. Malaysia, 2.8%; Vietnam higher compared to first quarter at 5.3%; India, 3.3%. We continue to have a diversified tenant base supporting our income resilience. Our low tenant concentration and a well-staggered lease expiry profile provided visibility of income and reduced renewal risk. In FY '27, we have 34% of our leases due for expiry. This increase came mainly from the shorter 1-year leases coming from China. Our average WALE is 2.5 years by NLA, 19.9% of our total gross revenue contributed by our top 10 tenants. So more than 900 over tenants are serving our consumer-related sectors, giving us a stable tenant demand base. Next. Changi South redevelopment is our ongoing redevelopment project. It will give us MLT Singapore's growth -- will drive Singapore's growth and portfolio rejuvenation strategy. It is -- sorry, it transforms 2 mature assets into a 5-story ramp-up logistics facility, increasing our GFA by 34% to 0.5 million square feet. It's designed for sustainability and resilience. It is going to be earmarked for Green Mark Super Low Energy certification. The TDC is estimated to be about $141 million. Construction is expected to commence in 1Q '27 and complete in 2Q '29. I will now hand over to Mun Leong to share the divestments year-to-date.

Thanks, Jim. Hi, this is Mun Leong. So for the financial year FY 2027, we have executed divestments about $243 million and at an average 3.1% premium to valuation, right? As a recap, early on, we have actually sold 2 Wuxi assets to our sponsors first Renminbi fund. And then during the quarter, we have also completed 39 Changi South and also Derrimut in Australia. So these assets are older assets we have upgraded specs. And recently, we have also announced that we have sold to a third party another asset in China, Mapletree Northwest Logistics Park. Also to add is that we have also managed to sell 2 strata units in Grandtech Centre in Hong Kong in this FY as well. With this, I hand over to our CEO, Jean to wrap up discussion.

Thank you, Mun Leong. This is Jean here. Hi, good evening, everyone. Okay. So for second quarter, it has been a busy quarter for us. As you have heard from our team in terms of the few corporate activities that the team has presented earlier on. So just let me quickly recap the key highlights. So MLT has delivered a resilient performance, very much supported by a healthy leasing demand and discipline. We continue to be very disciplined in our asset and prudent capital management. These set of results reflect the underlying strength of our diversified portfolio anchored by Singapore, our largest core market. And we continue to rejuvenate the portfolio through disciplined capital recycling. Like what Mun Leong has mentioned, year-to-date, we have done around $240 million average premium to valuation 3%. And the deferment of the sponsor call auction at 201 Keppel Road of Prima also preserve our ability to unlock further value from the asset over time. And these transactions demonstrate our ability to unlock capital from mature assets, giving us greater capacity to pursue attractive investment opportunities when they arise. The sponsor continues to lend and provide strong support for MLT. The sponsor-led renminbi fund has given us an additional revenue to unlock value from 2 mature assets in Wuxi, while enhancing our financial flexibility. So we will continue to explore similar opportunities with the sponsor going forward. More broadly, the sponsor established logistics platform gives MLT the visibility over a potential pipeline across the emerging growth markets such as India, Vietnam and Malaysia. Any acquisition will remain subject to our investment criteria, due diligence and must create value for our unitholders. Singapore remains our largest core market and key anchor for MLT. Through acquisitions and redevelopments, we have grown our presence significant over the years. No doubt over $300 million of divestments have been done, establishing MLT as the largest logistics space provider in Singapore. We continue to see opportunities to strengthen and rejuvenate our Singapore portfolio. The new Changi South redevelopment is the latest example of this and our fifth project in Singapore, and this will further reinforce our market-leading position. To wrap up, looking ahead, the operating environment remains uncertain with geopolitical tension, inflation, currency volatility and elevated borrowing costs will continue to present headwinds. Our priorities are to sustain healthy occupancy and rental stability, maintain prudent capital management. At the same time, we will continue our portfolio rejuvenation, strengthen our presence in Singapore and leverage sponsor regional platform where it can create value for MLT. So with a strong Singapore base, a diversified regional portfolio and the support of an established sponsor, MLT remains well-positioned to navigate the near-term challenges and deliver long-term value for unitholders. With that, I wrap up my remarks.

Okay. I think, okay, now we would like to open the floor to questions. Derek, DBS, would you like to start?

Congrats on a very resilient set of results. My 2 questions. So first one is on Singapore, right? Could you give us a sense on the return on investments for Changi South? And also for Prima, right, it's a significant opportunity of value locking for the group. Just wondering whether is it going to be more near-term or you are going to wait for 2028 before we can look at you unveiling this Christmas present. I'm just wondering. And my second question is on -- I think you have done a lot of developments. I think that I felt to be something, I mean, unique to MLT, you get a lot of additional return apart from buying income. Are you going to extend this redevelopment expertise to your other markets? And if any, which markets? Yes, that's all.

Okay. You have about 3 questions from me, Derek. Okay. So firstly, on the AEI returns, like what we have achieved in the past, just like our 5A Joo Koon, we are -- we have achieved about around close to 6.5%. So similarly, we are expecting similar 6% to 6.5% returns for this Changi project. Then as to the Christmas present, it's going to be more a medium-term because firstly, it depends on the Prima expiry. So we have mentioned it's 2028. And at the same time, the sponsor is also looking at some redevelopment opportunities in the Southern Waterfront region. And that will take some time because it involve various planning scenarios as well as taking into consideration the conservation guidelines as required. So more likely medium-term, closer towards 2028 or 2029, where we will have a more clearer visibility in terms of the pricing. Okay? And the AEI expertise extending beyond Singapore, if you recall, we have done one in Ouluo, China a few years back. We have announced the Malaysia one. The Malaysia one is progressing on track, but very slowly. But I think in terms of the amalgamation process, it should be probably next year, and then we could look at commencing the project. As to the other countries, there are also potential opportunities. So we are also reviewing existing assets in Australia and Japan. There are some pockets of assets where we are either able to do an extension to create an additional uplift in the GFA, or we could actually do some phased development over time. So there are still some assets where we are able to unlock value from our existing portfolio.

Okay. Sounds good. Sorry, Prima, you will sell with the new type of development, right, not the current value, right? Just to be very clear.

Yes. So for Prima, under the call option, it is to sell based on the change of use to commercial or residential development. So that's in the terms of the call option. Based on the core parameters. Yes. By URA. Yes.

Okay. Next, we have Rachel.

Yes, congrats on the very stable set of results. Just maybe if you didn't have the timing issue with the perps, potentially your DPU would have been higher, right?

Yes, of course.

Yes. Okay. Okay. Then my first question is, yes, I'm quite excited on the Changi redevelopment. But just to understand a little bit further, how much does it contribute to GRI now? Would we see any earnings drag with the redevelopment?

Okay. I think in terms of the -- if you look at from the occupancy perspective, right now, these 2 assets are not fully occupied because it is under planning over time. And over time, we have also tried to transit our tenants to other assets within our portfolio as much as possible. So right now, in terms of the occupancy, one of them is less than 50%. The other one is around [ 70% ]. So the impact -- the NPI impact to the portfolio is not significant.

Okay. Probably less than 1%?

Less than 1%. Yes, correct. In terms of NPI, you said much less. Yes.

Rachel, maybe I just want to add on, on the question that you had earlier on like whether our DPU has been higher. The coupon on the perps is at 3.5%. We are paring down -- temporary paring down unhedged loans about below 2%. So there is that negative carry for that 2.5 months. But I think on a longer-term basis, it is -- we are replacing 3.725% perps with 3.5%. So there will be longer-term benefit.

Sounds good. Okay. Then maybe just my second question is on the divestments. I know you have worked very hard. Congrats hitting $243 million of divestments. Your target was $200 million to $300 million. You are almost there. So I guess the next question is what's next? And is it time for you to look at acquisition already or no, you still want to do some more divestments?

It will be a combination of both. So based on what we have on hand so far, definitely we are looking to redeploy this recycled proceeds to growth opportunities. So right now, the markets where we are looking at, we are evaluating deals in Singapore. And similarly, in the emerging growth markets like Vietnam, India. So for the immediate term, these are the -- as well as Japan. So these are the markets that we are having more focus in terms of our capital allocation. And divestment will continue because we still have some more that we have identified that we would still want to roll out. And in terms of getting prospective tenants, we have some traction. So that will continue. But in the meantime, with this $240 million of recycled capital, we will look to redeploy as well.

Okay. And the remaining divestments, are they mostly coming from Hong Kong, China?

Okay. I think for China, we are more or less there, probably 1 or 2 more. Hong Kong, we have some strata units. So as you see, we sold 2 units, and it's something that we will want to continue selling because the strata units have no strategic value. So as and when there are interest, we will want to continue our divestment pace in this strata unit. Ideally, we would want to sell on an en bloc, but I think realistically, the buyers out there are more the -- some of the existing tenants, some are the -- more on the owner occupiers. So that will continue. So in terms of the other remaining pipeline, we still have a handful coming out from Singapore, Australia and Japan. So I think that will be the other pipeline that we are still working on.

Okay. So if I say I add everything together, it could be more than the $300 million now, right?

More or less.

If everything is successful. Yes.

Yes. Correct. That means I am now working on next year because it will take some time for us to generate leads for rent negotiation and looking about next year.

Okay. Next we have Mervin.

Jean and team, congrats on the very strong reversions. Can we get some commentary on China? Are we expecting low single-digit negative rental reversions over the next few quarters, or are we getting closer to hopefully 0 soon? Any guidance also in terms of reversions for the portfolio outside China? And then finally, cost of debt, do you have a guidance for next year, FY '27, '28?

Mervin, James here. For China, yes, the rate of decline in the negative reversion has slowed down. So that's a good sign. So in terms of how fast we can keep flat, I think we still are watching very closely to the market situation because there are certain spots of China in terms of region dynamic, whereby the -- some of the reversions are bottoming out. So for example, West side of China, the reversions have bottomed out. So that's a good sign. But in terms of other regions, right, we see East China stabilizing because there's less supply coming upstream in the next 1, 2 years. So demand has outstripped supply, and there's a positive net demand absorption in the East China region at the moment for the last few months. So that's a good sign, but the reversion hasn't turned positive yet, right? North is the rate of decline in terms of reversion are showing signs of bottoming out. So that's a good thing. But in South, the supply is still quite -- there's still excess supply in the South. So the rents are expected to decline further, right? Vacancy rates are expected to increase. But for MLT, our exposure in the South is still very limited. So that's for China. So I think...

So net, what? Minus 1%, minus 1.6% next few quarters or how should we think about it?

We're still trending around this range, I believe.

Similar range like that.

Then next year, any chance of 0 or it's still like minus 1%?

It's still early to say at this juncture because our lead duration in China is pretty short, about a year. So the visibility right now is quite limited. So perhaps maybe closer to the end of the financial year, we have better visibility to give that indication.

If you can just run through the rest of the countries.

Okay. Run through the rest of the countries. James? I'll leave it to James.

All right. So for Singapore, the market continues to be strong in terms of demand, and that's driven by the strong economy, export growth and also the -- I mean, export growth is driven by the manufacturing activity. So overall, we expect the reversions to be still very healthy in the range of 3% to 5%. Hong Kong, we experienced a positive net absorption, right, in the market. Market vacancy has dropped slightly to 9.5%. And rent declines are expected to moderate in the latter half of this year. China I already spoke about. In Japan, leasing demand continued to be strong in core markets like Greater Tokyo and Osaka. And the vacancy rates have declined also in these 2 core markets, Tokyo and Osaka. But however, the leasing activity in Greater Mongolia is still muted because of excess supplier situation. South Korea is experiencing, I would say, a recovery, right? There's less supply coming on stream. So leasing demand -- and leasing demand has remained robust. So there will be expectations of rental growth and stabilizing vacancy. Australia is still fairly resilient even though economic situation is uncertain. Why I say that is rising inflation is dampening the -- a bit of a demand, all right? So the demand for large spaces of warehouse, I would say, in terms of more than 10,000 square meters and above at the moment is fairly muted. But overall, the underlying demand is still stable in Australia. For Malaysia, Vietnam and India, they are still going through -- these are emerging markets for us. Consumption demand is definitely outstripping supply, and we will see positive reversions between 3% to 5% going forward in these 3 markets. So that's all for my update.

Over the next few quarters, is there like some monster reversion that we're expecting from the leases that signed like 10 years ago? That could be a positive surprise.

I wish there will be. But unfortunately, at this stage, Mervin, I don't think so.

Okay. All right. Yes, I think anyway, can we move on to the cost of debt for next year?

On the cost of debt, we're looking at 2.9% to 3%.

Okay. Brandon, please go ahead.

Can you talk a bit about your Hong Kong divestment of the 9 assets, right, that you have right now? How many are strata title, and for Grandtech itself, how much more of its NOI can you further divest?

Our strata assets besides Grandtech Centre, we have the Shatin 1 also strata unit. But it is not -- in terms of the unit size, the Shatin 1 per unit size are a little bit larger. The Grandtech ones are really the very smallish kind of unit configuration. In terms of the number of strata units, we have about 140 units. So that -- and that is the extent that we have for the strata unit in Grandtech, and that is close to about half of that building area for that project. And the other stratas, like I mentioned, is the Shatin 1 where it's -- in terms of the strata ownership, it is not -- it doesn't cut those. It is a bit larger unit sizes. Brandon, did that answer your question? I hope that answers the question.

Okay. So when you say the Shatin 1, right, is it 2, 3, 4 -- they are 2, 3, 4, 5? They are all strata, is it?

Yes, correct. It's more 1, 2, 4. Not 3.

1, 2, 4. Oh, is there a 1? I thought it was only 2, 3, 4, 5. There's a 1. Okay. Okay. And I thought it's just 1, 2, 4. Okay. And just going back to the China reversion, right? So if I look at it on a quarter-on-quarter basis, is it correct to say that the outlook has worsened?

which one, sorry, I didn't get the point.

China reversions. I mean, just judging from the guidance that you gave Mervin earlier and compared to what you said 3 months ago, does it -- is it telling us that the outlook is kind of like worsened because now it seems that you are less certain about giving us guidance until maybe 6 months later?

No, not that on the ground conditions, it has worsened. To me, from what we are seeing on the ground, it remains the same. It's just that I think in terms of when we will turn neutral, we think it is more prudent to actually give a view later. But if you look at some of the tenant retention rate, the occupancy, in fact, occupancy for this quarter in China, it has improved. Tenant retention has also consistently remained high. So it's more of a -- we are just conservative at this point, but it doesn't mean that the leasing ground conditions have worsened. To me, it is still about the same as about the 6 months or 3 months ago kind of market conditions.

Okay. And just one last question about your acquisitions, right? Is it likely to come from the pipeline on your deck?

The sponsor pipeline?

Yes. Correct.

Okay. In the sponsor pipeline, there are a few countries. But I think in terms of the opportunities, we would be more focusing on the emerging growth markets, Vietnam, India for completed projects. Australia right now, I think where the interest rate outlook is versus the cap rates, I think the yield spread is not there. So that's not something we are looking at in the current -- as a current focus. So more on Vietnam, India from the IPT. And third party, we are also exploring opportunities other than Singapore. We are also exploring Japan as well as India third party as well. Brandon, sorry to clarify, I think the team just told me in terms of the strata units other than GTC is Shatin 2 and 4.

Okay. So there is no 1, right? Okay.

Yes. So not this, James. Yes, it's 2 and 4.

Okay. I thought it is the Shatin 1, number one or something.

Okay. Next, we have [ Geraldine ].

Maybe just on the acquisition, I think you have shortlisted, I think, 4 countries. So are you able to share with the environment, which is still giving you the best in terms of yield spread?

Okay. Like what I emphasized earlier is Singapore will be the core market in terms of the -- where the wider margin of yield spread, that should be the largest yield spread that we are looking at in Singapore. So that will remain our core market that we will continue to want to pursue. And for Japan, although the interest rate is on the upward trend, structurally, it is also a tight market with low vacancies in markets like Osaka and Greater Tokyo, the vacancy is tapering down. And we are still seeing resilient demand that is supporting the steady rental growth. So we will also look out for deals with strong rent growth potential. So that's Japan. The 3 markets, Vietnam, Malaysia, India, which is more the prime beneficiaries of the China Plus One strategy. So that is the growth momentum that we are looking at. And structurally, in terms of the supply, it is relatively undersupplied for modern logistics specs as compared to the developed economy. So -- and like I mentioned, Australia, not really, there's a negative yield spread, likewise for Hong Kong and Korea. So I hope that answers your question, Geraldine.

Okay. So given that supply is tight and rents are still climbing, so we should not expect you to actually acquire a higher cap rate even with the rate environment. Is that right to say?

You are talking about which market?

The 3. So Vietnam, Malaysia, India, the China Plus One trio.

I mean based on -- it has to be also provide that positive spread before we would want to look at acquisition because accretive acquisitions is important as well. So we will factor that in, in our evaluation criteria and the accretion that's going to be generated from that opportunity.

Okay. And I may not have catch this, are you able to share the yield on cost for the Changi South redevelopment?

Okay. So I was sharing earlier on like our past projects, typically like the recent one that we just completed, we are generating about a 6.5% yield on cost. So for the Changi one, we are also looking at around the similar range, 6% to 6.5% yield on cost.

Okay. So this will be the benchmark for future redevelopments?

Future benchmark. But I think if we look at the projected kind of rent versus the construction cost, in the recent years, that has been the case. So it really also depends on the construction cost element. So it's very hard to really set the benchmark. Of course, the higher yield on cost, the better. So it really depends on the cost environment. But based on what we are looking at around similar level.

As in, so both climbing, I just see which one is climbing faster.

Okay. Let's move to Dale.

Congrats on the strong results. Just a few follow-up questions from me. With regards to the redevelopment, I'm assuming that the land tenure will be topped up?

Yes.

Okay. Got it. Okay. And with regards to this redevelopment also, how should we be looking at your financing of this? I mean, I guess it is relatively paid down, but should we be expecting you to ramp up your divestments to fund this redevelopment?

Yes. So earlier on, I have mentioned that we have also -- we are working towards the next financial year pipeline. We need to start now so that we are able to generate sufficient pipeline to translate the lead into execution. So that is something that we are continuing working. So definitely, divestment continues in terms of the momentum. And if we look at in terms of the actual spending, the CapEx spending for the AEI, it is progressive and it is generally more backloaded towards the end of the completion. And we are looking at commencing in quarter 1 in the new financial year with TOP about 2 years later. So we think with that timing versus the divestment pipeline and opportunities that we are right now doing, we should be able to manage that in terms of -- from the gearing perspective. Which has been the case, I mean, if you look at what we have done for 5A Joo Koon, progressively, we have been incurring the CapEx and simultaneously, we have also been selling. So that is how we have been able to execute and manage our gearing over time.

Okay. That is clear. Okay. And then over in China, I just wanted to check, I think, versus maybe a few quarters ago, last quarter in terms of the lease renewals or even new leases signed, has the terms changed, for example, in terms of the length of the leases or I don't know, if there's any so-called incentives or take-up period? Has any of these terms actually changed?

So far, we don't see any material changes. But there are cases whereby the -- in general, it's still about 1 year or less, but there are cases whereby we see there's more than 1 year, even 2, 3 years. So it could be a sign that the tenants want to lock in at the current rates or the market is expecting to go up. So no material changes at this stage. It's still 1-year leases in general.

Okay. And the incentives or rent-free periods has not changed also?

In terms of rent incentives for certain markets which are bottoming out and also recovering like the West, we see lesser incentives are given. So in those cases, there are less incentives. But other cases are in the North, it still remains to be still waiting to see the incentives are being reduced for competitive reasons.

Okay. Sounds good. Sorry. Last one I wanted to also slip in is, I saw your management fees in units for first half '27. It seems lower compared to a year ago. Should this be the new rate we should be expecting going forward?

Sorry, can you mute your line?

Dale, where did you get that piece of information from?

I was just looking at your financial statements, just broadly looking on the 6 months this year versus last year, the management fees in units actually came off?

Not to our knowledge, but we'll come back to you while we look for the specific piece of information. Vijay, would you like to pose your question?

Three questions from me. Maybe I'll just post it one by one. In terms of second quarter property expenses, it jumped a bit between first quarter and the second quarter. Is there any one-offs quarter-on-quarter or something that should take note of?

Okay. So I think on the property expenses in 1Q, it is lower than usual because we had a one-time adjustment on utilities. So we had previously before 1Q over accrued and then there was like a one-time reversal of over accrual in 1Q. And then in 2Q, we have higher property expenses because there is another one-time adjustment for prior periods under accrual of property taxes now that we have received the assessment from IRAS. So your 2Q is much higher, mainly because of a double effect from the lower adjustment in 1Q and the higher adjustment in 2Q.

Got it. So basically, these are one-offs and strip off it...

Yes. One-offs.

There is no specific changes to margins. Okay.

Yes. You are right.

My second question is, I noticed that there was one-off adjustments of $8.7 million to a distributable income this quarter. Is there anything specific to take note of?

Sorry, which page is that in the SGX announcement?

No, in the [ indiscernible ] other non-tax deductible items and other adjustments of $8.7 million.

No, you broke off. Can you repeat your question?

One-off adjustments in the distributable income for this quarter was significantly higher than the previous quarters, like $8.7 million. Is there anything specific, one-off adjustments for this quarter to be taken note of in distributable income?

No. You are referring to page 8, right? Of the SGX announcement.

Yes.

Right. It's not anything unusual from the norm, mainly arising from rental amortization adjustments as well as other non-tax -- other tax adjustments, but nothing exceptionally to note.

Okay. My last question is, your loss on disposal of subsidiaries of $6 million versus your divestment gains typically on your assets, which you have reported, especially on China. How should we reconcile this? Is this because of entity unwinding in China?

Are you referring to the $6.8 million on page?

Yes.

Okay. We'll come back. I think -- okay, CFO has located the number.

Okay. So for the loss on the disposal of subsidiaries, this relates mainly from our China divestments where the 2 China assets were divested via the divestments of the onshore entities rather than the sale of asset itself. So it relates to the divestment of the Chinese assets.

Okay. So there's no taxes on the -- is that how we should look at it?

Not really taxes. It relates to FX, divestment costs and everything in there.

Okay. Next we have -- Mervin, you have another question?

Yes. Sorry, do you have a chance to calculate the expected rents for the Chinese South redevelopment? What will be the targeted rents?

In terms of square feet...

Assuming 6% to 6.5% yield on cost. Yes.

You will be typically looking at close to 2.5, 2.6.

Okay.

Sorry, about between 2.3 to 2.5.

Second question I have is in terms of overall strategy. I don't know Joy has joined you guys, I don't know whether she has advised you in terms of how we can drive improved performance or course a rerating, because obviously sponsor is looking to do a listing next year, so they need to demonstrate AUM growth. Any thoughts on how we can drive DPU and rerating the stock?

Maybe you should pose a question to Joy. Or we should invite her to this call. But Jean, anything you wish to share?

No, I think in terms of the rerating, I think -- I mean, we have been trying to execute our portfolio rejuvenation strategy, right? So in terms of once we have the recycled proceeds, really we want to look to redeploy the recycled proceeds to the growth market, which I've mentioned earlier on. We want to continue to have Singapore as our anchor, our core market, which is why I think we will continue to look to improve and enhance the specifications of our assets in Singapore via whether organic growth or inorganic growth. Then in terms of -- I mean, our market focus, we have always been maintaining it the 70-30 kind of capital allocation where 70% is on developed markets and 30% is the emerging markets. And I think the other thing is on the sponsor support. So in terms of the recycling to the renminbi fund, it is something like I mentioned earlier on, if there are opportunities, and it is something that we will want to continue to look to explore.

Sure. Just in terms of acquisitions in Vietnam, Malaysia, India, any of these coming from a sponsor? If it is -- just curious why are they taking so long.

There are a combination of the third party as well as sponsor. But looking at -- if we look at the quantum, it is pretty sizable. So right now, the priority is focusing more on the third party, whereas on the sponsor side, they can afford to wait a bit.

Okay. Look forward to improved performance going forward.

Okay. Any more follow-on questions? Oh, Wilson.

Just one quick question on occupancy. So at the portfolio level, I think it is at 96%. I mean, do you expect that to be broadly stable moving forward and specifically for China? I think last quarter you guys were looking at maybe having it at 93%-94%. Is the outlook for China's occupancy looking a bit better than you are expecting?

So for China itself, yes, we are looking at around this range of about 94% and -- because going forward, we will be looking selectively to increase rents for those higher occupied properties, pushing for rents. Because in the past we have been trying to -- there was sacrifice of rents for the sake of occupancy because we want the tenants to remain sticky with us. So we are looking at a range of 94% still going forward. And in terms of portfolio-wise, we do not see any major changes to this range around 96%, the portfolio level.

Okay. Looks like no more questions. Shall we end the call unless somebody raise hand now? If not, okay. Thank you, guys. Thanks for joining us on the call. Any more questions, you can always email me. Thank you.

Thank you.

Bye.