Everyone. Thank you for dialing in to this briefing regarding the acquisition of two retail properties in Singapore and the commencement of asset light business. Today, we are glad to have our CEO, Mr. George Hongchoy, our CFO, Mr. Kok Siong Ng, our CCDO, Mr. Ronald Tham, and our COO International, Mr. Greg Chubb with us. As usual, you may submit your questions during the call by using the chat function and choose Link_QA as the receiver. If you encounter any problem submitting questions via the chat box, you may send us an email to ir@linkreit.com. The questions will be conveyed to the management during the Q&A session. I'll now hand over the time to KS to take us through the presentation. KS, please. Thank you, Sylvia. Good morning to all. Last evening, we announced the acquisition of Jurong Point and Swing By @ Thomson Plaza from Mercatus, together with the commencement of our asset and property management business in Singapore. This will be our first investment into Singapore and represents our continued push towards pursuing diversification in our income sources and geographic presence. Strategically located in major heartlands, both assets are BCA Green Mark certified with great specifications. The total consideration of the portfolio is SGD 2.161 billion, representing a discount of about 6% to the appraised value. We anticipate completion by 31st March 2023. Link will acquire both Jurong Point and Swing By @ Thomson Plaza through Diamond Run Limited, which we wholly own. This will allow us to acquire the sellers' assets and property management capabilities through the transfer of approximately 140 employees from the sellers' platform. We have entered into a 10-year agreement to provide asset and property management services to AMK Hub, which will remain under Mercatus ownership. Strategically, this transaction will increase our geographical diversification and position us as an APAC fund and asset manager. We will be the top 10 retail asset owner and 6th largest manager operator in Singapore, providing meaningful tenant relationships. We also leveraged the expertise of the experienced Mercatus team further to expand our Singapore presence in a disciplined manner. In line with our strategy to embrace growth through capital partnerships, we are actively targeting capital partners to take on a partial stake in this portfolio. Primarily, we are looking to create strategic partnerships with reputable like-minded investors. Bringing on capital partners allows us to manage our gearing level and optimize our capital structure. We have always liked Singapore for its sound economic fundamentals. It is a transparent market with a strong rule of law and competent government. The stability of the Singapore dollar is conducive for long-term sustainable economic growth. GDP growth, inflation, and employment numbers are all looking healthy. This acquisition represents a unique opportunity to acquire a sizable retail platform in Singapore, which we believe is in the best interest of unit holders. Both malls enjoy excellent natural footfall from surrounding residential estates and stand to benefit from upcoming development projects. Occupancy rates have remained high despite COVID-19, with cash flow supported by tenants from non-discretionary trades. Rents at suburban malls have been very resilient, with supply tightly controlled. With Link's track record and experience of the MCL team, we are in a good position to unlock value through enhancing operating efficiencies and optimizing the tenant mix. We are entering into a 10-year asset and property management services agreement for Ang Mo Kio Hub, which is called AMK Hub, which supplements Link's revenue with new fee income and boosts our profitability. Both properties collectively serve population catchments amounting to almost 10% of Singapore's population. The upcoming developments and completions of the railway infrastructure are expected to facilitate traffic and movement within the region, which will drive further footfall for the assets. Furthermore, both malls enjoy limited competition in their primary trade areas. They have been successfully differentiating themselves and remain popular for their focus on non-discretionary trades and affordability. A key advantage of the properties is their proximity to key transportation infrastructure, particularly Jurong Point, located at 1 of 11 integrated transport hubs. SwingBy @ Thomson Plaza recently saw the completion of the Upper Thomson MRT station, which became operational last month. Apart from train and bus stations, both properties has various pedestrian amenities such as link bridges for easy access to residential estates nearby. The properties have robust asset fundamentals with a 99.8% occupancy rate despite pandemic restrictions. Approximately 60% of tenants are in non-discretionary trades, which tend to remain resilient through periods of economic volatility. The short wait of approximately 2 years with approximately 85% of gross rent expiring by 2025 enables the resetting of rents in this current inflationary environment. Suburban retail has been a very resilient asset class. From the chart on top left of the slide, suburban rent grew by 2% since 1Q 2022, while that of prime retail actually declined by 12%. Suburban retail occupancy rates have similarly remained stable during the pandemic. Outlook on customer spending is also positive. We are seeing a strong rebound post-COVID, with retail sales expected to grow at about 3.8% per annum for the next 10 years. In the Singapore market, opportunities to acquire suburban retail malls are rare, with supply being tightly controlled by the URA. Forecast supply on new suburban retail space annually from 2022 to 2025 is less than half of that of 2017 to 2021. This transaction therefore represents a unique opportunity to acquire a resilient asset class. Link is also well-positioned to unlock value by employing our strong asset enhancement capabilities. We'll use our expertise to drive operational efficiencies and tap into Link's vast tenant pool in Hong Kong and mainland China to introduce new trades and new tenants to the malls. We also stand to benefit from the deep expertise and local know-how of the MCL team. Our objective is to unlock value by improving the overall shopping experience and asset performance, and we look forward to the results of the knowledge-sharing between our teams. This transaction will also encompass the establishment of an asset and property management services agreement for AMK Hub over the next 10 years, and this is expected to provide a new source of recurring asset-light income. The transaction is expected to be immediately accretive to Link. It provides an upfront indicative entry yield of about 4.9% with a positive spread over Link's existing borrowing cost. Transaction will be financed by a combination of internal cash resources and bank borrowings denominated in local currency SGD. Post-transaction, the pro forma gearing will be 27.1%. With this acquisition, Link's total portfolio value increases to HKD 246 billion, with Singapore contributing 4.9%. This asset brings us a big step forward in increasing our portfolio diversity. We are excited to embark on our next chapter of growth with this investment in Singapore. Thank you, everyone. Thank you, KS, for the presentation. We're now open to QA from the floor. Kindly submit your questions during the call by using the chat function. Choose Link_QA as the receiver. The first question is regarding the funding. What kind of loan are we using, fixed or floating? What funding costs should that be if we fund it in Sing Dollar? Management, please. Yes. Thank you. Currently the plan is to look at a combination of fixed and float funding in SGD. The truth is whether we fix it or float today, the yield curve is pretty flat, whether it's a 3-month SORA or 3-year or 5-year. On average, if you look at a quick 50, 650 float, we'll be looking at a benchmark rate funding cost of about 3.1%-3.2%. Add in a margin of, say, about 100 bips, we should be looking at about 4.2% type of funding cost all in on a 50, 650 float. I think the intention is not to be too excited to over-fix it or leave it too much on float, but keep options open in case rates start to fluctuate. Of course, behind the cash flow, there's lease expiry that will come that will of course then reflect where the rates and inflations are. Thank you. I think one more point to add is that obviously Singapore monetary policy does not necessarily align with the U.S. compared to Hong Kong. That's one of the points for diversification. Thank you, George. Thank you, KS. The other question is on the strategy. Any further acquisition plans in ASEAN in the pipeline? Management, please. I guess, you know our reputation. We continue to look at everything. We'll tell you all when anything comes up, but we might focus on a few markets. Singapore, Australia, Hong Kong, mainland China, have been some of the areas that we have focused on lately. Okay. Thank you, George. There is another question on the disposal plan. Will there be any disposal to reduce the gearing? Management, please. We're working on a variety of possibilities. From outright sale to possibility of bringing in couple partners to recap invest in some of our existing assets, et cetera. Also with this project, as we said, we may end up completing this deal without investing 100%. There's still a few, I guess, I think balls in the air that we'll need to finalize over the next few months, and we'll update you all as soon as we can. Thank you, George. There is a few specific questions. Could you clarify why NEX and YEX has been excluded from the package? Why they acquired two asset after of which offer better investment opportunities than NEX? Management, please. You have to ask the seller. Sorry. They excluded it. I guess we want to guess what was the reason is that NEX is only 50% owned by KGS and the other 50% is subject to they have the right of first refusal. Anything more than that, you probably have to ask the seller. They did, like, exclude it during the process. There's another question, a similar question. Does our service agreement for AMK Hub contain a right of first offer for this asset in the future? Management, please. Ronald? No. There are no rights of first refusal, over any of the assets. I mean, as George explained, and yet excluded, but it is subject to a true-up, so we'll see what happens with that. AMK, as you know, we'll be managing this asset, so we know this asset really well. You know, if and one day it comes out in the market, you know, we hope to be in a good position, to have a go at it. You know, nothing is promised. Thank you, Ronald. There's a question on the operation of the two assets that we acquired. The occupancy of these two assets are particularly full. How much is this portfolio under rented? Management, please. Greg? Morning, everyone. We will be taking time working with the existing Mercatus team to work through trade mix options, and it will be both a focus on driving sustainable income growth and improving the tenant mix in the assets. I guess one thing that we would point to is the discount to the appraised value, and some of that would point to the under-rented nature of the asset or assets, I should say. We do see that there being significant opportunity to improve the tenant mix and the income attributes of the assets, and also noting the occupancy cost of the retailers in the portfolio is very, very sustainable. Thank you. If you look at the lease expiry profile, as we try to highlight, quite a lot of leases expiring over the next two years. That gives our team the opportunity to really review the type of tenants that we want to have in the mall, especially to your own point. Sometimes remix as necessary. I doubt we'll change every one. You know, that's not the point, and that's not how we do it. With some disciplined asset management, we're confident of how what we have underwritten internally. Thank you, George and Greg. There's another question on the fee income from AMK Hub. How much fee income should we expect to gain from this management service? Management, please. KS? The fee structure of the asset and property management is actually industry common. It's about two plus two plus certain bps. I think all in we were looking at about SGD 6 million-SGD 8 million of net fees back to us. Correct me if I'm wrong, Ronald. Yeah. That's about right. Yeah. Is this in line with market terms? Yes. Pretty much I think we have structured the AMK Hub contracts very close to market terms. I think the other significant, while we don't own the asset, because we manage it, basically in 1 go, we have tenant relationship across 3 good-sized property. That's why it is important for us as we enter a new market to really know the tenants, especially the local ones. Fees is 1 thing, which I'm sure you all factor into the model. Tenant relationship is as important to us. Having relationship not just from 2, but 3 assets, create a lot of synergy for us as well. Thank you, management. Will there be any asset enhancement on these two assets to enhance the profitability? Management, please. Thomson Plaza, owned by Thomson, has seen a very successful asset enhancement program in recent times. That asset is very well positioned. Jurong Point being the largest suburban asset in Singapore provides with significant opportunity. It's got a very strong trade area, a very diverse demographic. Again, there is what I'd term almost unlimited opportunity to enhance Jurong Point over time, whether it be around enhancing the tenant mix, improving connections. We know there is extensions to the rail network around Jurong Point, we'll be looking to make connections there. Ultimately, it's a matter of continuing the very strong positioning in the market that Jurong Point is famous for. We see there being significant opportunities to enhance the asset, both at a smaller tenant level but also at a broader asset level. Thank you, Greg. KS, can you clarify the SGD 6 million-SGD 8 million fee, can we say in SGD? Sing dollar, Sing dollars. Yeah. It's in Sing dollar. Okay. This question is for KS as well. What's the comfortable gearing ratio? Thank you. I think we have signaled for a few seasons now that we are comfortable with up to about 30%, mid-20s% to 30s%. I think today, after this deal or come March, we'll be coming into about 27%, with intentions to sell some stakes to capital partners as well as recycling of the Hong Kong portfolio. I think you'll see us traversing between the mid-20s% to high 20s%, maybe touch 30%. I think the intention is to continue to keep all the other debt metrics besides LTV, maturity profile, funding, re-refinancing risk, as well as interest coverage. I think so far we are comfortable given the quality of the assets, the cash flow. I think yes, we will continue to signal to the high 20s%, at this point. I think there's two important points to add. One is, we have obviously focused on growth on our balance sheet. As you look at gearing, there's obviously, you know, the gearing at a balance sheet level. Over time, what we wanna create is a business where our AUM is bigger than our GAV, where we would have some of the assets, even with consolidating some of the debt or some will just be equity accounted, to lower the impact on our overall gearing. That's something that with this particular project, we are successful in bringing in capital partner. You'll probably see that being achieved as our first step. That's important. Second is, I guess in your projection, how high and how long interest rate will stay up. That would have impact as we increase gearing. We're mindful of that, and we're looking at ways to lower that with capital recycling, hopefully within the next six to 12 months. Thank you, management. The question is about the capital partners. These assets has been on market for some time, and we also announced our capital partnership program not long ago. How much interest is there from potential capital partners? Would the capital partnership only be drawn upon, given SwingBy is already a strata titled? Management, please. We're still discussing with several parties, quite well down the line. I guess until they see that we actually have signed the contract, sometimes it's a little difficult to for them to take it to their investment committees. We'll try to get this all signed up before the completion date. Well, there are few moving parts are very difficult to give you an exact position today. We're looking to bring those in. I guess, this asset is core with a very small plus. That you can then assess roughly who those people are who will come in with us. George, would you mind talking about what kind of criteria do we use to select our capital partners? KS? I think if you look at the portfolio, there's core plus, and potentially an opportunity around redevelopment. I think we have been looking at capital partners along those space. Specifically, if I would share, would be, some of these, family offices clubbing together. There's also insurance and pension funds that we are talking to. I think the criteria for us is, of course, hopefully these capital partners, besides, bringing in the liquidity, they are also familiar with the asset class that could help us, as part of our capital partners and not just overly passive. I think in this aspect, in terms of the asset class and returns profile, we are pretty much clear that, sovereign insurance and pension funds are the best fit. I think it's worth adding, since KS mentioned those type of potential capital partners, is that we are REIT, in most cases we, while we might do a 10-year projection in our underwriting, we don't really, you know, have a 5, 7-year exit plan for most of our assets although we review how long we wanna hold them on a yearly basis. We want to have capital partners who also behave like that, rather than, you know, having to be forcing us to sell together with them because they need to get out after a few years. Like-minded in so many different ways, that make the process a little bit longer. You know, each side need to go through the internal investment process as well. Thanks. Thank you, management. As well, onboarding 140 new employees as part of the acquisition, what financial impact does this have on the analyzed G&A? Management, please. KS? The 140 headcount is actually inclusive of the operational headcount directly employed in the mall. If you look at the total number, when we split up, there's probably about 100-110 that are actively working in the 3 malls. You only have a HQ staff about 30-40. That is a required support cost of running any business offshore for us. In terms of finance, HR, IT, investment, asset management support. I think when we look at the whole package, it's not going to be an increase marginally more because of the asset. A lot of the cost will be actually put down to the MPI, which we call it a direct cost. If you look at the 30, 40, there's going to be incremental G&A costs, which we will disclose further down the road. Separately, there will also be support from the seller on integrating the staff and some, I guess some assistance from their part. I think the key for us is that this is a platform that allow us to use in the future, in Singapore, especially because of their local knowledge of, you know, the tenant market, retail market. They will report directly to Greg. More importantly is, as we have a larger footprint, it provides us these individuals, just as those in Hong Kong and China, to look at developing their career in other locations as well, so we can leverage on their skill set. You know, through this whole process, for example, while we were doing due diligence, we have our colleagues from Australia, Hong Kong, going there to assess the profitability, the growth potential of these assets. Likewise, I'm sure we will learn from our new Singapore colleagues, and see what, you know, they are doing better than the rest. Over time, lift up the whole standard of how we do things across the entire footprint. Thank you, Management. There are questions on the operations of the malls. What are the rental reversion for the last 2 years, and how would you guide the rental reversion going forward? Management, please. Greg? Broadly, the reversions have been positive over the last few years. Also important to note that during the COVID period, occupancy and rental collections have been very, very strong. We're starting from a very strong base, and the Mercatus team has done a very, very strong job in managing the portfolio during the COVID period. All I would suggest at this point in time is that we see positive reversion trends continuing. We'll be doing all we can to enhance the mix and the income returns for the assets, for the two assets that we will be directly owning and for AMK, that we'll be managing on behalf of Mercatus. Thank you. Thank you, Greg. Some more questions on the same topic. Could you comment on the MPI margins and what has been the impact of high utility costs towards the MPI margin? Management, please. Greg? KS, you able to talk to the margin? I mean... I think if you look at the M3U at 4.9, I think clearly it looks like a very sound deal. I think in all fairness, most of us in doing the underwriting do recognize that the Singapore utility cost is going to go up by at least double that amount. I think MPI margin is going to look like something from 70 over to coming down slightly, let's see whether rental reversion side we can then pick it up. I think overall, we have considered the increased utility cost and potentially some of these wage inflations that we are seeing across Asia. Also our experience in managing energy efficiencies and just broader ESG strength that we bring to the management of this portfolio is something that we'll be focused on very, very strongly. We do appreciate the rising costs of energy, for example, not just in Singapore, but across the regions. It's something that we're very, very focused on at a portfolio level. We'll bring that same level of thinking to the Mercatus team as we look to enhance our margins across the portfolio. When we first started the journey looking at energy savings, we're trying to find benchmarks, external benchmarks to measure our Hong Kong property against. I guess now, you know, with assets in China, Hong Kong, Australia, Singapore, we do have internal benchmark to make sure that we keep improving on energy usage. It is also important to have this set of assets to benchmark against each other. When we first started looking at this, we were looking at some comparables all the way from the US, et cetera. You know, temperature difference, humidity difference make a big impact on how much electricity we use, et cetera. I think Singapore is a good one for us to use against Hong Kong and China, and vice versa. Thank you, management. On a separate note, but a related topic, could management clarify on the intent behind the recent CB issuance? Is it for financing this acquisition? I'm not sure because the money has been collected, put in the bank. We've paid down some loans outstanding. As far as money is fungible, we optimize it as a treasury op day-to-day. Clearly the CB money has been used for bringing down our optimizing our gearing costs. I think the CB, if I were to revisit, was a window that we saw about a month ago that we thought the interest cost savings versus equity option traded out does make sense for unit holders. We articulated that we are saving about 125-150 bps per year, and we issued a CB on the 5 to 3. Let's say 4. You'll be looking at about saving about 5% interest costs over the potential life of the CB. Trade our equity options, looking at about conversion price, about 17.5. I guess it looks good today with unit price having come back up. Dilution is actually only about 2% over. Clearly market has changed. China opened up. Everybody is looking a bit more optimistic. The conversion at 60 over is still quite a distance off. I think the point of the CB is also to tap that liquidity from the market. The strong gets to refinance, the weak, the window is closed. There's a competitive angle to this funding playing field that we are also positioning ourselves. I think when we look at this deal in terms of financing, we are looking at asset level financing at LTV about 50-60%. Equity portion, we can draw from the Hong Kong Treasury, or we can draw down SGD, or we can also tap new SGD loans if there's appetite. I think as far as we're concerned, the CB is not, it's not actually tapped on. I think at the end of the day, whether it's the CB or the asset, it's about Link credit margin. The credit margin today is still looking at about high double digit, not crossing into the 1% credit margin. We remain our strong credit margin to fund our needs. I think that's the most important. It's hard to compare whether the CB is actually going to be used specifically for acquisition. Thank you, KS. If we have not received further questions, the following one will be the last question. What's the impact on DPU for this deal? Management, please. Yes. I would not comment on the overall DPU because we are not supposed to. I think marginally this deal would, after factoring all the costs. Clearly there's the manpower absorption of 140, then there is the AM fees that help offset a little bit or the HQ costs. Then you saw the asset deal being priced out at 4.9% yield. We think our funding costs should come in near to about four-ish, low four-ish. Of course, if we manage to bring in capital partners, there's another layer of AM and fund and FM fees. I think put together, I would say we will be seeing an accretion in the plus minus of 50 bps for this deal from the 4.9%. Right. 50 bps on the SGD 2.1 billion-SGD 2.2 billion asset size would be a good indicative of the marginal DPU. Okay. Thanks, KS, for not saying what you said, and then you said it. I guess with traveling being easier, not offering you exact dates, but certainly, you know, if you have the chance, be in Singapore, look at these assets and after completion, we'll be able to bring you there with our own colleagues. Whether we'll try and work out some time where we can host you in Australia or Singapore or China. I think 2023 is definitely a time when we can do some asset tours, which is something that we all miss for the last two, three years. We'll look forward to that. Give us some time. I think we're not going to plan anything too early, as all things need to settle down a little bit after all these relaxation. Just touch... While we have everyone on the call here, just to say, you know, with the opening in Hong Kong, where we are, say, very pleased that it's happening a little bit faster than some of us expected. You know, the reversion in terms of percentage of leases, having positive reversion have increased significantly. There are still a few where we decided to give them some support, but that proportion has really skewed towards a positive reversion, which is pleasing to see. For China, it has been challenging. Obviously, even as all the reopening has happened, but a lot of colleagues are sick. A lot of shoppers are not coming out yet. I think it will be a very slow reopening. It's not a quick rebound as we have seen in the early 2020 when China sort of reopened at that time. Again, after Chinese New Year, I think we'll expect the Chinese New Year trade will be good. Similar to Hong Kong, the percentage of leases that we are talking to, tenants are going to be more positive than negative. It's all going the right direction for us. I think Australia is, well, glad you're enjoying the sunshine and all that. Good to have a slightly more positive tone on this call than we had in the last one or two years. Thank you, management. This is the end of the call. Thank you very much for dialing in today and wish you a prosperous and fruitful 2023. Thank you. Happy New Year, everyone. Happy New Year. Thank you. Take care.