Welcome to CICT's first half 2023 financial results briefing. My name is Clarisse, and I'm from the CICT Investor Relations team. It's my pleasure to be your MC for today. CICT released our first half 2023 financial results this morning, and we are pleased to have our management team here to share the highlights with you. We will be starting off with a presentation by our CEO, Mr. Tony Tan, followed by a question and answer session with our management team. I will be introducing them later. Before we start, please take note that this briefing is live, recorded, and will be uploaded on our website later. Without further ado, let's welcome Tony on stage for his presentation. Good morning. It's a little bit formal, I don't know why. No, that's not my typical style. Thanks for coming. First thing in the morning, I think we released our results this morning. You probably have seen it, a little bit of glimpse. I would not want to dwell too much on the details. I think they probably have a lot of burning questions you have, given the diverse kind of, probably what you see already released in the market against our peers. Hopefully, it'll give you a little bit more insight into how we look at the business, which is more important from a forward-looking perspective. I'll just give you some very high-level updates. Overall, I think we've held quite steadily first half. I think on the back of, you probably know, the reopening started last year, more intensively from April onward. Second quarter to second quarter comparison, now naturally you are comparing against a high base. The first half, you look at the first half result and the first quarter result, you've seen a little bit of tapering off in some of the numbers. Nevertheless, we were quite a pleasant surprise. Rather, we were quite pleased that the momentum in second quarter seems to be holding quite okay against our earlier expectation to have a deeper decline given the macro outlook. Second quarter looks pretty decent, both from an operational level and also from a macro level. It looks like things are panning out not as bad as what some of the analysts or economists are painting the picture out there. Nevertheless, we know the headwind in the second half potentially can build up. There also seems to be some sign of a little bit of green shoot. Inflation seems to be peaking in many places. That's probably the key factor underpinning the performance of the REITs. Then for us, obviously, on the ground in Singapore and some of the markets overseas, we are also seeing a little bit of that impact coming through. Some high-level numbers. NPI, 10.1% increase year on year. Again, it's a moderation from first quarter. DI went up by 1.7%. A lot of the distribution has been eaten away by interest costs, largely. The DPU increased by 1.5%. Overall, we've seen the portfolio pretty resilient from occupancy point of view across the board. Both the retail and the office asset, we're seeing the occupancy creeping up. It's in a way a manifestation of a little bit of confidence level, hopefully coming back into the marketplace against the backdrop of maybe three months ago, where there seems to be a little bit more uncertainty. Tenant sales also trending well. Very pleased that we have seen both downtown and suburban mall are picking up. Downtown mall necessarily helped a little bit by the increase. Incrementally, we see more tourists coming back. Going back to office, seems to have normalized, right, to a large extent. Seeing a little bit busy crowd nowadays downtown location. Suburban, holding up pretty well against my earlier projection that I thought when the borders start reopening, you've seen a lot of probably outbound traveler, which we have seen a little bit, but seems like the sales have been tracking quite nicely. Overall, I would say the outlook for retail office, while we are cautious, but we think that there's a little bit of green shoot coming up. Hopefully, that will pan out true in the second half onward. The NPI I mentioned earlier. DI, I mentioned earlier, up by 1.7%. DPU is up by 1.5% against the last year, first half lower base. Hopefully, second half will deliver a bit better numbers. We also started to receive distribution coming from CapitaSpring. If you recall, CapitaSpring, we leased up quite well, but there always been a little bit of different timing gap. We begin to see distribution coming back from CapitaSpring. Our overseas assets are starting to contribute, a bit at a lower level than we hoped for, but I think they are starting to contribute. Obviously, the CapitaSky that we completed last year are going full steam and it's trading very well. Overall, like I alluded to earlier, the portfolio number has been very encouraging. From an occupancy perspective, it creep up overall about from 96.2% first quarter to 96.7%, about 0.5% point on the quarter movement. In fact, the rental reversion, we were quite pleased that we were able to extract a little bit more reversion out from both the retail and office. As a result, you can see quite a nice uplift between the first quarter and the first half rental reversion. Between the office and retail, quite diverse range. The office side, we've seen a low of a 3%+ kind of reversion. Depends on your expiring rent, to a high of 20-odd%. That blended up into office above 6-point-something percent. Retail, we're looking at a range of around 2% to up to about 31%. It's quite a wide diverse range, but nevertheless, pretty healthy across the board. Shopper traffic momentum, I think, which I expected next second half probably will slow down a little bit given the higher base last year. Still a very decent shopper traffic we are seeing to the mall. Although it's already, in fact, higher than what we're seeing in, probably slight, close to almost 2019 level. Not far away from 2019 level. Tenant sales, we continue to maintain, in fact, higher than pre-COVID. On an overall portfolio-wide is about 8.3% higher than pre-COVID. Total borrowing, we have fixed up that 70%. We've done some issuance, which I'll elaborate a little later on. Now we have a very healthy maturity profile, 4.3 years left in the debt side. Just some colors. CQ @ Clarke Quay, we hope to complete by later part of fourth quarter, as in TOP. Progressively, as you visit, if you do go down CQ @ Clarke Quay, periodically, you're seeing some movement of tenants, some movement in terms of the hoarding. Progressively, we'll remove some hoardings. Hopefully, we can start to bring in some of the tenants that we have pre-committed and start trading earlier. Gradually, we see a little bit more ramp-up probably towards the later part of this year, where the bulk of the handover will happen. Raffles City has seen also quite a nice refreshment. We have done through quite a significant reposition of Raffles City. I would say we are only at phase 1 of the repositioning. Roughly 40%+ each of our brand and target positioning has been achieved, and we're looking to look at the remaining about maybe 25%-30% of the tenancy that we need to do a little bit adjustments. Nevertheless, I think the refreshed Raffles City, we are quite happy with it. We brought a lot of our investors from overseas and local as well to explain to them what we are doing, why we position Raffles City this way. I think most of them has been quite pleased with what they see the outcome. Overseas assets. Sorry. Yeah. I think overseas asset, I alluded earlier, still a little bit of green shoot. We have ramped up a little bit on the occupancy for Sydney. It's gone up from first quarter, 83.4%. Today, we are looking at 88.6%. Pretty healthy take-up rate. For example, 66 Goulburn, today we are close to 96% committed. We are working through some of the other asset plans. We're seeing some interesting phenomena which we tested in the market over there. There seems to have a bit of preference for, at least in this environment where there's some level of uncertainty. Pre-fitted out units seems to have a little bit of a traction there, when you get a place well decked out, very conducive environment for their staff. If they want to make their decision quick, I think they can come in quite quickly. We thought that decision to do some fit-out space was right. We are trying out the other building as well. In Frankfurt, a little bit creep up in occupancy largely from MAC. I think last quarter we were looking at 94%-ish. Today, we are 95.3%. Largely pulled up by the MAC, the airport office asset we have. All you know that Gallileo will undergo AEI from January next year, 2024. That will be the last year we get rent. February onward, there will be no rent. We're also very pleased to say that we are actually in a quite advanced discussion with a major tenant that would take up large majority of the building. Hopefully we can give a little bit more news as we progress along. Financial-wise, I think I won't delve too much. Maybe just a few points to note. There are some plus and minuses, first half, second half we're looking at. Generally, from a trading perspective, at least for retail, the second half will typically perform a little bit better than the first half because of the seasonal factor. From an operational level, first half, we have seen the peak of our tariff rate, which is very high. We locked in about mid-SGD 0.30. Come for second half and for 2024, it is a quite a significant reduction, about 16% lower than we are locked in. We would have a little bit of savings, hopefully. If we continue to be very vigilant and make sure we manage the consumption carefully, there should be some savings on the utility side as well. You'll probably also know that we have signed a new PMA, which took effect from 1st June, so there will be a little bit of adjustment potentially towards the end of the year. We'll look at some cost realignment based on the new PMA. Hopefully, we can see some saving as well. Lastly, because we also have locked in our interest costs. We issued bonds, SGD 400 million in June at 3.938%. That would take away some volatility in the shorter rate, which is very elevated. Today, you go to the short-term market on a floating basis, you're probably looking at 4.5% easily. Easily 4.5%, but depends on which tenor you're looking at. Hopefully, on the second half, we start to see a little bit better cash flow coming in. We have not touched our AUD 40 million, which we take in the bank from Australia when we did the acquisition. We have not touched it there. We try not to. If we need to supplement, we'll do that, but ideally, we try not to touch it. We start to see some contribution, which I mentioned earlier, from CapitaSpring. Hopefully, that will improve and accelerate from second half in 2024 onwards. Hopefully, we can get all these mitigating factor to buffer the Gallileo effect. Gallileo effect, Gallileo is about 1.52% of our contribution, so thereabout. Hopefully that would be enough to buffer then. And with all the policy reversion that we are seeing, that should translate into better numbers going forward. Okay, this one I won't touch so much. I think you all should know very well, can analyze. Maybe just to give you a little bit of flavor, I think balance sheet side, very healthy. Just now I was asked a question, some of our peers did their valuation. I think we did an internal exercise. We did assessment in consultation with a valuer. In fact, overall as a portfolio, we've seen very stable number. Singapore, very healthy. A little bit downside risk from overseas asset, but we'll see how it goes for the rest of the year. But overall, as a portfolio, we think the number is pretty okay. I think holding quite well. But we've seen a little bit of uplift in our NAV as well, and that's just result of a grant that we managed to receive from the government to sort of offset the cost of us building the underpass at Funan. That goes into our balance sheet, and it's almost immediate accretion on NAV by SGD 0.01. Okay. We've been quite active. No doubt in a very volatile interest rate environment, we've been quite active on the capital management side. We did bond issue, I mentioned earlier. Also we've been very active in the cash management side. Trying to minimize as much as possible the unnecessary debt carry on our book. If you look at the Later you can talk to Mei Lian, she will give a little bit more colors. We have different tools in place that we can tap if you need to raise money. We have a CP program in place. We have MTN program in place. We have more than enough bilateral bank relationship. In fact, we cover entire maturity for, if I can jump a little bit, maturity for even 2024. This year we are done. 2024, technically we are done because we have enough line. We'll look at the opportune time where we perhaps want to start looking at the potential debt issues, hopefully, and maybe potentially we'll look at some kind of early prolongation. We are in discussion with some financial institution and see how things can move from there. I must say, in the environment today and the next 6-12 months where everybody start guessing how the interest rate will look like, of course, there are very diverse views in the marketplace. Active capital and interest rate management, I think is key. The rest are sensitivity. These are no rocket science. It's essentially the floating part. We left about 22% of our floating rate. If you measure that against any change in interest rate, that will be the impact you see here. Nothing else. I think this one, I mentioned before, I think across the different subsector, we are seeing increased occupancy. We should potentially see, as we walk through the remaining of the leases and we start to also go into our 2024 lease expiry, you can potentially see improvement even from current state. Okay. Let me just jump straight. Retail, I give you a little bit of flavor earlier. I think I don't want to say too much. The reversion number speaks for itself. I think we've seen a little bit narrowing of gap between the downtown suburban, nevertheless, very healthy. Again, it's a very diverse range of reversion number that I mentioned to you earlier. This is something I don't think I'll detail too much. Something to note that which also took courage, we've seen a bit of a shift. These are important because we track all this performance by trade cat very carefully because it affect the way we look at our asset planning going forward. Compare last quarter, this quarter, we've seen that actually largely the same except a big jump from improvement from the beauty and health. First quarter, we've seen a negative number, and beauty and health is our third largest trade cat. This one do well, you have some implication on the way we look at positioning. I think we were quite pleased that this sector has been seeing a nice uplift in the second quarter. Yeah. Okay, this one I mentioned earlier. I think while we walk through Singapore, 96.6%, slightly below. No, in fact, it's slightly higher or flattish. We are working to the remainder leases, so you should see that coming through in the third and fourth quarter on the occupancy side. Yeah. Germany, I mentioned before, Main Airport Center effect and the Gallileo, I mentioned before, we are working on potentially a single tenant taking large majority of space. Australia has seen a little bit of nice ramp up. Hopefully, we can achieve even higher occupancy by year-end. Overall, nothing much. These are our BAU. We constantly try to curate new stuff. It's important. It's also a signal to the market that there's still confidence coming in the retail sector. Some new-to-market brand we managed to bring into our property, both in downtown and suburban. I think that's very encouraging, and I must thank our property management team. In fact, Chris is here. He's helping us on the retail side. His team are working very hard to make sure we differentiate ourselves from our competition. The rest I won't talk so much. I think outlook-wise, all you analysts, you know pretty much very well what we are seeing on the ground. Hopefully, that manifests in a real movement. I mentioned earlier, we've seen probably potentially a little bit of green shoot. Hopefully, that's real. In Sydney, for example, it's been busy. Our folks are on the ground. People are coming back to the office more regularly now. The subway line, the train station are getting busy. A few assets we need to work on. Hopefully, we can translate that into high occupancy. The retail side in the Sydney asset, which is the one in the Greenwood Plaza, I think that's probably going to take a little bit more time. We need some repositioning of that retail space. Location, very prime, connected to the subway line. It's no different from the Raffles Place, but I think we need to position it correctly. Currently, we are working alongside with our partner, Mirvac, to look at the plan. In fact, there's been a bit of cross exchange, and hopefully we can bring them over to Singapore to see some of the things we are doing here. Germany side, I did mention earlier that it's not as grim as what you see it on the headline. On the ground, actually, it's pretty busy. We've seen some leasing momentum picking up. Main Airport Center, for example, some energy sector, some aviation sectors are starting to look at space again. In the midst of some tenants who are looking at rightsizing. All these are, I think, is a little bit healthy movement we're going forward. Hopefully with a little bit higher, in fact, very much an elevated cost of capital, we potentially would see in the past, always large development pipeline will slowly taper down. I think in the past, both in the Sydney market and in the German market, the low cost of capital has created quite a bit of a speculative kind of development activity. We think going forward, that activity should taper down. I think value creation, no different. We have been doing that all the time. We continue to be very agile. Look at our portfolio. Earlier, I have a question about when you acquire asset, let's say it's SGD 700 million, then SGD 800 million, then it became now SGD 700 million. To us, we are a long-term player, right? Valuation goes up and down, and sometimes it's triggered by factors that are beyond your control. Interest rate, cap rate, transaction, and different market look at valuation in different way. One key thing is, if we position the asset right, that's the key fundamental. Driving value will come later. For us, critically, we need to make sure every of the assets will have the chance to run its full potential. We keep pace to ensure that we put in the necessary CapEx at the right time, not overly burdened on the portfolio in any particular year. We try to keep pace there. Overall, we like to keep some dry powder for other works along the way. This will ensure that CICT will able to deliver a resilient and consistent return, and that should translate over time a higher confidence on CICT as a very stable vehicle with growth. That's ultimately our objective. Highly liquid, stable vehicle, low-risk premium. I think if we can achieve that, we have a tremendous advantage over our peers. With that, I'll stop here. Happy to take questions. I invite my team member here, who has been very instrumental in getting all this execution right. Thanks. Thanks, Tony Tan. May I invite the management team on stage? Let me quickly introduce our panel today. Seated in the center, we have Tony. On Tony's right, we have Ms. Wong Mei Lian, our CFO. On Tony's left, we have our Head of Investment, Ms. Jacqueline Lee. To the far left, we have Mr. Lee Yi Zhuan, our Head of Portfolio Management. Some quick housekeeping rules before we start. For our physical audience, please raise your hands if you have any questions. Please state your name and company, and we kindly ask that you limit to two questions per turn. If you have more questions, we also come back to you. For our online audience, please feel free to join in by dropping your questions in the chat box. We can start the ball rolling. Do we have the first question? Hi, Tony. Mervin from JP Morgan. Congrats on the very strong rental reversions. It's accelerating. The rental reversions is based on fixed rents. Can we get a sense in terms of total rent, including the variable rents? Is it as strong or slightly lower and guidance for the second half? Second question is in regards to electricity costs. You made a comment about a 16% decline. Is that half and half or a drop towards 2024? Thanks. Yeah. Yi Zhuan, you want to address the GTO rent? Oh, hi. Okay. I wasn't expecting it to start first. Yeah, I think I don't have the number offhand on actual percentage of site. I would say that actually the GTO has been improving. I think first half has been pretty strong also. I think the reversion in the total rent, including of sales, would be also pretty strong. Yeah. From the rent structure perspective, in the course of the last 12-18 months, we have gradually shifted more to normalized level. There was those that in the past we have granted a bit more concession or a bit of restructuring of the leases. Most of them we have gone back to the normal way. The usual, closer to where the market rent is, and then with a little bit of adjustment depending on how we look at the trade, whether we want to participate a little bit upside or participate less in the upside. Yeah. Those are more tactical. Overall, if you look at, I think there's a Look at the range of the turnover rent across our portfolio is from five, I think Slide 24. 5-17. It's still a wide range. It's a reflection of different mall are quite different shape. Yeah. I think Mervin has a second question. Yeah on the electrical tariffs. It's second half against first half. 2024 is still higher. It's still higher than 2022. 2022, I think if I recall correctly, it was SGD 0.24. Now we are more like high SGD 0.28, SGD 0.29. Yeah. Same rate. Probably around, I think 20-some cents around there. Yeah. Every day is different now. The effects and the trend. Yeah. Yes. Hi, morning. This is (Kan Qian) here from Goldman Sachs. First question is on Gallileo. Is there any CapEx and also the 18 months to take into account rent-free? Can you also comment on rent of the new tenant versus the outgoing tenant? It's still under discussion, there are some confidentiality. It's an uplift in the rent now, obviously. 18 months, no. That's the period where the landlord will undertake that upgrade. That period is not lease commencement. Anticipate lease commencement by middle of 2025. Yeah. What about the CapEx? We are still working through the details. There will be quite a bit of CapEx required because there will be the base building that we need to upgrade, because that building was built more than, I think almost 20 years ago. Some of the equipment, although it's functioning well, but it's not at that level where the new occupier demand. These days, I think they're looking at a very high-grade green building. We are putting quite a fair bit of attention to that upgrading. That to us is very defensive because you want to protect the value of the property on a forward basis. You have to do the work today. Yeah. That value will come in. I think market will potentially recognize that because there's already a clear differentiation on what occupier want. We are bringing the building up to the best standard over there. Yeah. Thanks. My second question is on second half focus, right? Now that operating metrics are improving across most assets, are you still focusing on existing operations or more on acquisition divestment in second half? I think we look at everything, right? That's why we have a full team here. We have investment and portfolio folks. It doesn't sit still. I mean, constantly we definitely need to ensure our asset perform well, and there's no sitting back and relax. I mean, it's very dynamic. Especially you look at, in fact, our office side, we have a lot of things to do. Office assets, some of the assets, look at the range of legacy of the assets, right? This meeting is being recorded. It probably takes years. Even you not seem managed to agree on what the ultimate product you want to reproduce, along the way, there are a lot of work is needed. We are ongoing. We have both town and urban assets that we need to respond because consumer, their behavior changed. Obviously, after COVID, I think a lot of things have changed. The consumer behavior definitely has changed. This meeting is being recorded. David from Daiwa. Can you remind us again how you recognize government grant income for the Funan walkway? It seems like you're saying it improves your NAV, but it also seems like it's negative for your DPU. Can you just go through the accounting for this? I'll pass to Mei Lian to explain. There's no impact to DPU. The grant is recognized under other income in the income statement. This is actually cleared with the auditors, KPMG. That's a requirement given that the grant is in relation to Funan, which is actually a fair value. In terms of DPU impact, there is no DPU impact because this is actually cash that is not generated from operations. It will not be distributed to unit holders, but it will be used to defray the cost that we've spent in the building of the underground path. Okay. Just to clarify, so you recognize SGD 34 million of other income, but you have to remove that from the distribution because it's not going to be distributed. Is that? Yes. Yeah, because the money is spent on the construction. At the time you look at Funan redevelopment is the whole totality, the plan including building the underground passageway, the link. Then, we can seek reimbursement for the authority. The cost will not be known until it's fully completed. Yeah. My follow-up question is with regard to Raffles City Mall. Now that you have more visibility as to the committed passing rent post-AEI, what is the magnitude of the uplift compared with when Robinsons was still a tenant? How much uplift are you going to enjoy? Earlier, I did mention, but later I can pass to Yi Zhuan, who give you a little bit more color. Earlier, I mentioned, I think we did a little bit about close to 40% of the repositioning exercise. A large part is in the old Robinsons space where we did some movement. There are moving parts that contribute in income growth different way. There are still areas we are not completely done yet. I can't name because it's sensitive. Generally, I think we are looking at another potential 25%-30% change in the tenant type. Yeah. I think the full impact we'll probably know in the next probably another 12-18 months, hope. Yeah. It's higher. Yeah. Don't forget, hotel has also been doing very well overall. Hotel benefited from the entire repositioning exercise as well. Hospitality, of course, is on fire now, right? I think that also will be quite a nice contributor. Yeah. Do you have the next question? Hey. Morning, everybody. Brandon from Citi. Just to follow up on the portfolio reconstitution question. When you mention about these legacy assets, are you talking more about just tenant remixing or redevelopment? When you talk about redevelopment, is there a certain size that you're looking at? If you look at next year, we have the expiry of the two government incentive schemes. Are you looking to take advantage of that before the expiry? Yi Zhuan, you want to take that? Mm-hmm. Yeah. Okay. Maybe when we talk about the redevelopment schemes, those will take probably longer than something that we can do next year or something. Definitely, we are studying a couple of options. If you talk a timeline, it will be a few years away. We are aware that some of the schemes that the government has been looking at, like the SDI as well as the CBD incentive schemes, some of them are expiring soon. I think at the end of the day, our view is that when you take a look at what the government is trying to achieve, have they actually reached their objectives? We don't think so. Some of these things, we do expect some of these schemes, probably, we look at how they probably extend or actually relook at some of the schemes. At the end of the day, it is really looking at the scheme itself. Whether the incentives that we get, does it actually fit into the kind of things that we want to do for our assets? On the basis we will study. Yeah. It is not something that in 2024 we suddenly see that there is no redevelopment coming through. Yeah. Yeah. The second question is about tenant sales. Yeah. I think if you look at first half, it seems to have slowed from comparing second quarter to first quarter. Going into second half, if we see Chinese tourists remaining where they are, do you think this could be a concern for you? Okay. Maybe I'll start first. For tenant sales, for the second half of the year, of course, hopefully, we think that actually the Chinese tourists coming through with the reopening, it got off to a slow start. I think if you look at STB's view, as well as our own internal, with increased flight capacity and whatnot in the second half of the year, hopefully, we see more of these Chinese tourists coming. They are still actually quite a fraction of pre-COVID periods, I think there's quite a fair bit of room to grow. We also see F1 and also a whole series of things like the concerts. Everybody's talking about concerts nowadays, right? Those should help to drive a lot more tourism to Singapore. I think retail sales-wise in the second half of the year should have some kind of momentum that will still carry through. Just one last one on the Gallileo again. During the 18 months, should we be expecting some more of income support on capital gains payout? Too early to say. Too early to say. We have some levels, I think at this point we're not going to comment anything yet. Thanks. Thanks, Brandon. Can we have the next question? Derek. Hi, Derek, Morgan Stanley. Just a question on these acquisitions. Looking at the interest rate environment, still very elevated, will you be more keen on acquiring a listed platform, like a REIT or private real estate? We keep options open. The spread is one consideration. Of course, it's a spread depending on the underlying pricing and where are the potential. Then we look at the interest rate environment, the cost of capital. It's moving. Firstly, it's hopefully trending in the right direction. That's one factor we look at it, purely from a financial point of view. Platform, not easy. Platform, typically not easy. If they are something interesting, I don't think we rule out. Like I said, we don't keep our eyes shut. We may look at it, but we may or may not go in. We just have to see the merits of the transaction. Yeah. Earlier you mentioned, you talked to your valuers internally. The overseas portfolio seems there could be some downside risks and valuations. Could you elaborate a bit more on how much downward movement there could be? Yi Zhuan, you want to take that? Well, I think if we take a look across the expansion in cap rates in some of the, like Australia. Especially when some of our peers valuation is also in Australia itself. We think that probably we can expect maybe mid-single kind of downside in terms of valuation. I think that at the end, go back to how the whole portfolio is. Overseas is only 7% of the overall portfolio. Actually, at our portfolio level, it's not going to be very material. I think it's something that's manageable. Of course, it's very hard to say, that on a full year basis, how this number will pan out, because at the end of the day, it's also dependent on, in Australia, suddenly what kind of transactions we see in the market. Currently, there's not a lot of it, when some of these come through, how will actually the buyer and seller price meets. It will have an impact on the valuation. I think we wouldn't want to read too much into it and how it will go in the year-end, but definitely we do expect some of it to come up a little bit for the overseas. Again, I go back to the overall portfolio. I don't think it will materially change as an overall portfolio. Yeah. How much cap rate expansion in Australia and Germany? I think right now, if I'm not wrong, we see around 0.5 ±%. Yeah. I would say that even when I looked at our December 2022 assumptions. Our cap rate usually is a little bit on the more conservative side of things, so there's a little bit of buffer. I would say that even with some of the expansion, hopefully it will not be as extreme as the ones we see in our competitors. Yeah. I think that's for both Australia and Germany. Yes. It's for both Australia and Germany. Thank you. Thanks, Derek. I saw Rachel put her hand just now. Hi. Good morning. I'm Rachel from DBS. Thanks for the call. A few questions from me. I think, firstly, I think you're a bit cautious in terms of your outlook for office in second half of the year. I'm just wondering whether, is there any cause for concern, any vacancies coming up, shadow space creeping up in expected rents in second half of the year? Yeah. Okay. I think the reason why we are kind of cautious about the second half for office, right? I think fundamentally two parts. One is the shadow space, broadly speaking, and also in the second half of the year, we expect a major competition in the market. We think that may temper a bit of the rent that we will see. Right now, if I'm not mistaken, IOI is currently around 40 ±% kind of percentage commitment. I would say that in the midterm, right, in terms of the limited supply, right, at the end of the day, we do think that there's still some legs in terms of how rental can still grow. Touching on the shadow space perspective, I think that if you look at some of the consultancy report, the shadow space actually has come down a little bit, and even though we are seeing numbers ranging from mid-300s to about 500s, right, only about half of it is coming from the CBD. I would say that, is it something that we are overly concerned? I would say no. It's just something that we thought that it may limit the kind of rental growth we might see in the second half, because on top of that, there's also a little bit of uncertainty in terms of the broader economies, right? I think some of the tenants have also, instead of looking at relocation at this point because of high CapEx, a lot of them are looking at renewals. Yeah. Just maybe follow up, shadow space on your portfolio, has it been increasing? Actually, shadow space in our portfolio is really quite immaterial. Right now, I think we do have one that is kind of backfilled already. We already found a replacement tenant, and, in fact, some of our shadow space, when we find replacement tenants, right, we probably can get a better rental outside of that. It's not too bad. Yeah. I think based on current mood, the sweet spot demand for space is smaller. It depends on the building's configuration, and then you may or may not be able to cater to the current needs. In our portfolio, the couple of assets may be trying to tackle that kind of space, 5,000 sq ft, 10,000 sq ft area, that we can tap into. Large space occupier, I think at the moment, I think probably would face a bit more challenge from those shadow space, where then when you release the space in the market, you release by floor, right? Three, four floors in the market. Those large space occupier looking to backfill would probably take a longer time. Yeah. Okay, thanks. My next question is on tenant sales. Happy to see that the gap between your downtown and suburban is closing. Just maybe on more forward-looking, do you expect that the gap between the downtown and the suburban to really close to be similar, to drive up? Do you feel that the increase in tenant sales moving forward will be largely driven by the suburban? If you look at trending-wise, right? Trending-wise, last year, second half, downtown fly, right? Suburban sort of flat. I mean, treading along. You can see that kind of year-on-year effect come into play this year. While we think that downtown would start to see more traction from the inbound traffic coming in, that high base on last year will probably be a so-called softener, vis-a-vis suburban, where it's a little bit more moderated. Yeah. I mean, purely from a year-on-year comparison, that's the way. From a momentum perspective, I think downtown is picking up okay. Yeah. Because all these events coming up, the inbound traveler coming in, I think on a sequential basis should be okay. Yeah. Sorry, just one more question. In terms of acquisition and divestment, do you think the market is ready for you to look at acquisition and divestments? Which market? If you look at deals out there are a lot of deals out there, right? It's whether the expectation has met. Still a bit not easy. I think the price expectation between what we observe in the market, the asking and what the buyer prepared to pay, I think it's still a bit of a gap. That largely is function of broader economy outlook, not very certain, which is really a factor of how the entire interest rate environment should shape up, right? All this has got to do with the cost of capital, whether availability of cost of the capital are there, and it's all intertwined. To me, that capitulation can come quite quickly, right? When that signal in the market is very strong, now foresee the capitulation very fast. Yeah. Just waiting the buyer side will meet. Yeah. Thank you. Yeah. I think there's a little bit of steam in the market now. Wei Chow. Turning to the online audience, I'd like to pass on to Ho Mei Peng, who is also our Head of Investor Relations, to share the questions. Ho Mei Peng. I'm combining a couple of questions. Denver and Dick Tiang are asking about Gallileo. During the 18 months where the property is undergoing AEI, what will be the impact on DPU? Is the first question. The other question we received from Denver again, office rents expected to ease in the second half 2023. What about the future of the office market? Any impacts from work from home? Maybe you want to take the Gallileo DI impact? The DI impact from Gallileo on a stabilized basis is about SGD 10 million a year. SGD 10 million against our, I think DI is about SGD 700+ million. Yes. Yeah. It's quite small. Small amount. Yeah. Any interest rate saving will be more than enough to cover that. Only like a 1% move is SGD 22 million. Right? Yeah. Second question is more the office market. You want to take it? Yeah. Particularly on work from home, I think it kind of largely stabilized this year, right? Around a lot of companies are actually saying that it's going to be hybrid rather than a full remote. Usually around three to four days in office. I think that will kind of support. In fact, actually, I would say that more and more companies are actually hoping that their staff come back to office more than ever. In terms of how this actually pans out, I think it's a good support for office demand going forward. In fact, actually, maybe I'll share, looking at the first half of the year, right? Yeah. On a Singapore portfolio basis, we actually see more expansion requirement than downsize requirement, both in terms of the number of tenants as well as the amount of space. I think that is a good sign of how things will come in the second half, and even going beyond the second half. Utilization rate, I think right now is around about 70%. I think office return rate is quite stabilized. Hopefully, this will pick up, but we don't think it will ever go back to the pre-pandemic times. The interesting thing also is then that, because of how people are now working a little bit on the home, some of these things, when people work from home, it actually helps to support our suburban kind of retail. In a way, what we kinda help benefit our suburban malls. I would say that by and large, I think work from home is quite contained, yeah. Thanks. Can we have the next question from the phone? Maybe Jacqueline can give a little bit more color how the investment market looking at this space, the office space. Yeah. Okay. Maybe in terms of work from home and also flight to quality that we are seeing these days. From an investment point of view, we believe that if the asset is well located and of a quality asset, those assets will still be able to hold in terms of valuation and will still be sought after. I think, and as Yi Zhuan mentioned, work from home is also beginning to kind of stabilize. Yeah. Thanks, Jacqueline. I think we have the next question from Donald. Hi, this is Donald from Bank of America. A couple of questions. First is on your Singapore office occupancy. On a Q- on- Q basis, there is some movements, notably from Asia Square, Capita Green and Capital Tower. Could you comment on occupancy movement, please, and which tenants? Yi Zhuan, you want to take that? Okay. Yeah, for AST 2, we saw some movement in the sense that one of our tenants, Temasek, released back to us, so that AST 2 number came off. Similarly, I think, one of the tenants in Capital Tower was also the lease elapsed, so they kind of come back. That's why we see a temporary drop in terms of the occupancy numbers. I think that was the kind of concern that we may have. I would say that we have actually quite renewed across the portfolio. We have seen some pretty strong renewals. We renewed some of our key tenants, in both CG and RCT, for instance. I would say that there's actually a couple of deals, right, that we are working on that will help to bring back the CT numbers and the AST 2 numbers. Yeah. Earlier you mentioned that you're seeing more expansion requirements than downsizing. Which industries are expanding? Okay. Roughly, we will still see a lot of those are asset management, banking, financial services. Yeah. That's on Singoffice. For your 66 Goulburn Street, Sydney, NSW 2000, on your Spec Suite that you're doing, what's the leasing CapEx that you're incurring, and what's the impact on your cash rents? Sorry, at this moment, I don't have the CapEx number offhand. Probably I'll come back to you on that. Yeah. Sure. Thanks. My last question is acquisitions. Tony, do you think your cost of capital now is conducive for acquisition? If you were to buy anything today, is it more likely in Singapore, U.K. or Australia, or Europe or Australia? The cost of capital, I think earlier I alluded, there's a little bit of a buyer, seller still there. I think that's still a reflection of what I feel in the marketplace. Certainly from both on the debt and equity side, it has improved compared to six months ago. Yeah. Which market? We keep option open. I think ideally, we still want to build our base in Singapore as much as possible. I know this is our home market. It doesn't mean that it has to be an outright acquisition. It can be an outright portfolio expansion. Development, that those are also building your presence here by entrenching your positioning stronger and growing the asset size, that would give you that competitive advantage. I think we continue to do that. From an in-organic, that is outright getting from third party, I think we have options. We'll find the right moment. We do have pipeline from our own partner sponsor. We have the call option for CapitaSpring, which we can look to see when we should exercise it, if we want to exercise it. We'll see what's available in the market, which I said there's plenty out there. Just the expectation, I think, still a bit of a gap. Yeah. Okay. I think we have a couple more questions from the online audience. Hi. This is a question from Derek, DBS. Can management provide some insights into the occupancy cost for the retail malls? Are we still able to have positive rent reversion given ongoing business cost pressures, and also whether retailers are generally profitable? This is the first question. The other question also retail related, is from a unitholder. It's about CQ @ Clarke Quay. CQ @ Clarke Quay, what is the CapEx cost and projected rate of return? Also, what is CQ's current occupancy or committed occupancy for CQ @ Clarke Quay? @ Clarke Quay? Yeah. Two questions. Thank you. Yi Zhuan, you want to take that? Well, for CQ @ Clarke Quay, right now, the kind of commitment rates that we are getting is around 85% ± around there. We expect the commitment numbers to come up a little bit closer towards the completion of the AEI, where retailers, they can see better what we are trying to achieve. Yeah. I think pertaining to your first question, the rent occupancy cost. My view is we are still in a pretty healthy range. We are at 16.8% OC. In a normal time, pre-COVID, I would say we are in a very, very comfortable position. That means we see quite a fair view upside in term of adjustment based on purely from an occupancy cost perspective. That means the threshold for different subsector in the retail space, there should be some room. The second question posed, I think, is correct, because then question is whether the profitability of the retailer will be threatened. We are still assessing. I think at the moment, the honest truth is that the retailer themselves are making some adjustment, and you're seeing some price elevated, which is transmitted to the CPI. When all this number, all historical number and stay elevated, right? My view is that I think a lot of retailer has been passing on the cost to the consumer, and consumer has been able to absorb, because then you see the tenancies are all rebounding quite strongly. Where is that sweet spot? Will they be able to continue to pass on that cost? I think we are probably nearer the end than at the beginning. We probably could see a little bit of potential upside from a rent adjustment. Depends on trade to trade, right? Tenant to tenant. Importantly, I think we need to posture correct, because for the right tenant, we are prepared to take a little bit of position, which we did continuously throughout the whole entire COVID period. For the right tenant, for the right positioning to bring in, then we may want to participate a little bit more on the upside. That's where I think to us, the more importance of total rent, and that's where we want to drive the GTO component. It's a bit of tactical strategy that is required going forward. Safe to say, we are still trying to see what is the post-pandemic acceptable occupancy costs for the different sub-trade. It varies from, I think, sector to sector, the subject sector to sector. Totally, we find there's a lot of profiteering along the entire supply chain, right? Which part of the supply chain is creaming off the most? You could begin to see evidence in the market when all the big corporate companies start to announce their results. Who are making the big bucks? You probably will know who are the one that's creaming off the most. Yeah. At the end of the entire supply chain is the retailer. The retailer meeting the consumer. Maybe that's the endpoint. That part, I think, we have to take some time to figure out. I don't think we are in the pain point. We probably see still some upside in the possibility of rent passing on. Of course, we want to be very cognizant how we want to do it. It has to be very tactical. Yeah. I hope I answered that question. Online one. Yes. Yeah. Continue, please. Thank you. Do you have the next question from Joy? Joy from HSBC. Two question. First, if we go back to Gallileo. Post CapEx, can we expect a green certificate for that building? Was that driven from management or was that driven from a demand perspective? It's definitely going to be pretty green. I think it's quite green out there. I did allude to you, to a large extent, it's occupied demand. We need to ensure beyond this AEI, and even beyond, assuming we manage to sign on this tenant, right? Beyond their tenure, we need to be able to sustain the value. The only way to do it is to get your specs where the market is. For me, it's a little bit defensive as well to get that building up to the stage where even after 5-10 years down the road, we know that this building will always be on the top of demand. You want to add that? We just echo the green rating for the asset for Gallileo would really be up, and it's in line with what tenants generally in the Frankfurt market is looking at in the fight to quality. When they are looking for their spaces. If you look at your portfolio, what percentage of the office portfolio still needs a green CapEx or defensive CapEx? I would say that generally, it's not specific to say any building in particular. Of course, there's a few buildings now currently, if you look at their Green Mark ratings, like Green Mark Gold or something, based on the new standards. This standard will keep increasing. BCA will just keep increasing the standard of Green Mark. We always have to keep investing in green CapEx. I would say that green CapEx will kind of settle roughly average over the next three years, about 40% of the overall CapEx that we spend in the portfolio. Thank you. Second question is on hotel. I guess you mentioned that hotel contributes to part of the growth in RC. Are the rates above pre-COVID? I remember you restructured the lease. Post-restructuring, do you still get above pre-COVID rental from Yeah, we are higher now. Can we get some sort of It's higher than pre-COVID. Yeah. No, I can't give you detail. These are confidential. We structured them. It's actually quite in line with what we did for some of the retail trades there, where we participate on the turnover rent. There'll be step-up along the way. Right. The touch point where to bring down and what GTO percentage to charge is a function of the projection. We mutually agreed on where do you think the growth, how the growth trajectory will look like in 2022. That was 2020, and then where the recovery coming from, right? We did a restructuring in 2020. We have came to a position mutually that this is the growth that were acceptable. I think they have reached that goal. I can say overall, that's been more beneficial than it was. The last landing point of where the fixed rent is, and the floating rent. The floating rent especially, the floating rent is higher than it used to be. The better the trade, we get even more. We are seeing that trajectory coming true now. The RevPAR is way above what we had projected. Thank you, Joy. Do you have the next question? Mervin? Mervin here. I've got a question in terms of the share portfolio. Seeing bigger occupancy, are you able to disclose what the assigned rents and incentives you have had to provide? Which one again? For Australia. You want me to comment on that? For Australia, the rents are pretty much in line with market, and from the centers is around 35%. Yeah. Averaging roughly around there. Probably just to touch on a little bit, I think, just now we talked also about fitted out space, right? I think the fitted out space that we did at, say Gallileo, right? Sorry, at 66 Goulburn Street. Yeah, too many buildings all starting in 66 Goulburn Street. For 66 Goulburn Street, the fitted out space, the CapEx we spend actually is part of TI that, the 35% ± kind of TI that we are giving out. Yeah. In terms of portfolio mix, given office is a negative carry based on spot foreign costs, looks a bit more challenged or at least more cautious. Is it time to pivot more towards retail for the next few years? There is still demand for 999-year leasehold properties, which you do have, despite the negative carry. What's your thoughts on if it is right time to pivot towards retail, given the tourist numbers have not fully recovered yet? Can you turn to slide 13? Actually, today, retail is a larger component in our portfolio. If you look at that split, it's already larger, 53%. Yeah. In terms of composition, retail is marginally ahead of the office in totality, and office is split by CBD, non-CBD, and then of course, overseas. That's give you a little bit of sensing the number. Negative carry, I assume you're referring to Singapore, right? Singapore is about 33%. It's not an unhealthy level. I think we'll see how things will shape up from there. At the moment, I think we are quite happy with the composition. Yeah. It's not negative carry because the yield on a passing basis is probably close to 4% for some of the assets. Yeah. Do you have any other questions? Hi, this is Terrence from UBS. Your guidance for Singapore office is for moderating rent growth. Just want to ask how this would translate to your outlook for Singapore office rental reversions. Since I see that your expiring rents are about SGD 11.12 per sq ft. If I'm not wrong, the new buildings are calling for still a much higher asking price. For the office, I think, right now, this first half, we have the positive rent reversion of 9.6%. Probably it will come off a little bit come year-end, but we still expect to be firmly in the positive territory. I think the expiry kind of rents show that with the gap to CBRE's market rent of around SGD 11.80 for the second quarter, right, Fortune, it does give us a little bit of a comfort and buffer in terms of the renegotiation and to get a positive rent reversion out of those. It's because I think we do have some cases in the second quarter, some of the deals we are seeing very strong reversion that can't push this up. Right or not, we can still get that kind of 20%, 40% of reversion for some of these that comes from a low base, right? In terms of pure percentage wise may not come through in the second half. That's why I think the rent reversion will moderate a little bit. Okay. A couple of deals we work on, I think, hopefully we can get it on the signing page, right? Those space are vacant for a long time. Compared to the long-time vacant space and occurrence, I think it's a nice uplift. We are looking at easily strong double-digit kind of uplift, but that will not be reported in the reversion because typically for too long a vacant period, we don't report in the reversion. That may not come true. What Yi Zhuan is alluding is that, we clock in quite a nice, pretty strong reversion. What we are negotiating now, overall, maybe it has just trend down a little bit, but still probably in a pretty healthy kind of range. For Singapore downtown retail, I think you spoke about the momentum continuing in the second half, tailwinds of the reopening. I think you also alluded to how there could be a high base effect. Maybe some of these rents that we are seeing in the first half is coming off from a low base signed in COVID. Between the two, how do we then form our expectations of your downtown retail reversions in the second half? I just want to correct you. It's not the base effect arising from the rent last year. It's more the trading. The sales momentum last year strong, right? For the same tenant, they could be trading for a couple of years, right? 2023, some tenants that were signed 2020, or at least renegotiated on a 2020 basis, may be up for renewal. Some will spill to 2024. Those you probably can see a little bit uplift from there. Whether you'll be on a blended basis still on a 7%+ kind we're looking at, hard to say because it depends on case to case. I mentioned, the range of reversion is very wide. Retail can as strong as 30%-specific to that unit, or it can be 3.5%. If you look at it on a weighted average, that's what we measure is on a weighted average basis. The number, we can't make a prediction now. Generally, momentum-wise, you can take away the fact that 2023, 2024, some of the expiry are signed during the 2020, 2021 period, a couple of them. Some of them are even longer, the pre-COVID, may or may not have been restructured, right? Depend on how well they sustain through that entire COVID period. It's going to be quite a noisy number. What we report is just always a blended basis. Within that, you can see a wide range. Thank you. Can we have the next question, Krishna? Just wanted to squeeze something on your liability side. You have about SGD 1.5 billion of debt for maturity. Can you give some color on where are the interest costs? If you assume same thing, that is the currency mix, the maturity, and your hedging, how much it will go up? That's the first question. Second question is on your F&B operation. I think you did mention that there is a strong demand from that. Can you give some color on what is the typical lease period for the F&B operators and also, these F&B are just pure F&B operators? I just want to ensure because I think I do see there is some co-mingling, right? A shoe bestseller can also sell coffee. I just wanted to ensure that this is just pure F&B and even the co-mingling space also is not included in the F&B side of things. Can you give just some comment on that side of operations? You talk about liability. The first question, if we assume the current interest rate environment, current interest rate level stays at prevailing. Of the 2024 debt tower, we'll be looking at an increase of about 0.4%- 0.5% overall. That will contribute to say, our overall portfolio cost of closer to the mid 3% levels. We're currently at 3.2%. Your question on F&B specific, is that something that you really want to know so that I can- I will. Yeah. Let me just, in my own observation that when I walk around the malls, there is quite a bit of churn, definitely. One comes in, one goes out. Yeah. It may be the same operator coming up with a different sort of concept. The cost is not on your side. The cost is on their side if they have to come up with a different concept. Just wanted to know that, is it the same operator coming or is it a different operator coming, this period is quite short. It's a mix of both. We do have multi-label operator who can have a portfolio of different brands and different product type, cater for different market segment. If the market change, it could be the same operator will change concept at the end of the expiry. Right. Because there will be some shelf life by the end. Certain more evergreen one may take a longer time, but certain F&B concept will come a point in time where they need to refresh. Refresh also from a look and feel perspective, they need to do that refresh. That doesn't mean the entire positioning of the mall. That's a discussion point we need to have with them. Like for example, we discuss with them on renewal basis to say, "Perhaps your portfolio would prefer this brand come in." We have to talk to them now. It's a combination. Certainly we always want to try to bring also exciting new ones to the market. I know I mentioned a few names, that we try it out. It's a hit or miss. Sometimes we hit it, we get it right. They have a leg to run for a while, and then we populate enough portfolio, and then suddenly they are all over the place, then you see the sales start coming up. This kind of pattern, we've seen it many, many times in different cycles, right? It is just part and parcel of life cycle of any kind of retailer, whether it's F&B or not F&B, which we have to manage actively. That's part of the asset management we talk about, constant adjusting to the consumer preference, and they will change over time. Like today, you go to Raffles City, there's a big new donut, the marketplace. It's always long queue. I don't know how long it lasts. You ask me, will it be another two years? Hard to say. Just wondering if you feel that you are being a bit too overexposed to F&B. No. I think as a percentage of the NLA, they are the largest contributor now. Around 35% of the revenue come from F&B, occupying about less than 30% of the space. They are overproducing from income point of view perspective, right? I think that's a good thing. From a space, allocation is not excessive, less than 30%. It varies from mall to mall. Within the F&B, it's wide spectrum, right? You got the fast food restaurant, you got the takeaway, we got the casual dining, got the Western cuisine, Chinese cuisine. It's a whole list of brand potential mix that you can see in different assets. Some are more relevant than others. Downtown will be maybe slightly different from suburban. In suburban, even then, certain trade may be even more important than the sit-down one. There's a bit of a curated kind of, not just F&B alone. F&B, obviously, you have to curate quite well. The other asset subsector, retail subsector, I think we need to curate quite carefully as well. Yeah. To your point, I don't think it's excessive at this point in time. For example, CQ @ Clarke Quay will always be quite heavy on F&B because it's just unique, right? Most of the mall, I think we are okay. Yeah. I just want to squeeze one thing a bit more looking in the medium term. Your MTN is, I think, 50% of your liability base. If the interest rate environment stays there, do you think that that comes down and you may want to establish more bilateral facilities? Yeah. I think we will continue to diversify our funding sources, not just rely on the banking sector. Cap markets is actually a very important source of capital for us. I think we will anticipate a good mix of MTN and bank loans going forward. Yeah. There's a bit of flight to quality, flight to safety from a lender perspective, whether it's a financial institution or the debt capital market side. We can see quite clear, right? We think that's quite encouraging. We also get affirmation from Moody's that they actually raise it up to stable. We also know that it's not a job done today. We have to stay static. We constantly ensure. Because when you look at the overall confidence level on why the lenders are prepared to lend to us is your cash flow, right? Your ability to reposition yourself quickly, your market leadership position, your access to capital. Sometimes the irony is that you have access to capital, even though you're on an elevated leverage, right? Because your ability to access the capital give the agency that confidence. Ultimately, we need to have always this ready credit facility in place, and it costs money to get the ready credit in place. That, to us, is also a bit of credit enhancement. We pay a little bit of commitment fee, but actually carry a little bit of credit enhancement. It's important to look at it totality. Yeah. While we try to be agile, try to get the different capital source, and diversify over time, but there are a few key fundamental things we work on. Cash flow, make sure your insurance is there, right? You got your base insurance, assess the market at the right time, create that desire to invest in us, we'll be okay. Yeah. Thank you very much. Thank you, Krishna. I think in the interest of time, we shall take one last question, probably from online. Yes. Okay. I think this is a question from two online viewers, Evelyn and Wei Ming. They are asking about whether we have any plans to reduce our aggregate leverage, and then whether CICT has any target aggregate leverage ratios. Thank you. Yes, over time. Yeah. I think in retrospect, it is all about the state of where the cost of capital is, right? Pre-COVID, pre-change in the interest rate era, where we are at this level, we are very comfortable. In fact, we were more than comfortable to work our asset very hard at a certain leverage level. When your cost of debt goes up this level, then you just could be very circumspect. It is quite dynamic. Today, we are looking at maybe 3.5%-4% kind of range in terms of financing cost, versus in the past it is probably 2%, 2.5%-3%. It is actually a step up already. We just got to adjust the appropriate level of gearing. When the interest rate environment change, we just have to adjust, because ultimately, we are undertaking the stewardship function of capital, make sure that our balance sheet work hard for all stakeholders, whether it's equity investor and debt investors. We want to make sure that we don't want to have a lazy balance sheet. Ultimately, investors want to see us ensuring that whatever money, whether it's on the debt side or capital side, we work hard to ensure that asset perform and deliver to all the stakeholders. We have to maneuver that with time. Given opportunity, a right opportunity, yeah, we may want to do a bit of a deleveraging, maybe, but the way to do it, I think we have to be very smart about it and very tactical, where is the best way to do it. Sometimes making sure your portfolio perform itself create the valuation uplift, solve the problem. It could be as easy as that, right? Of course, it's not easy. We've got to work damn hard to ensure that our asset perform on a portfolio-wide basis. You get a sufficient valuation uplift. You self-solve the valuation, then the cash flows start coming in. The other form is inorganically, there's opportunity. We look at it. Yeah, it could be monetization. We have done that. Portfolio reconstitution, we do that. We divest some, we reinvest some. At the same time, do a little bit equity fundraising, or we look at joint venture partner if we cannot afford to do any kind of inorganic transaction on our own. We just have to deploy the various tools or avenues available for us to look into it, to reach a stage where the market is confident enough, the debt side is confident enough to ensure that CICT can function as a smooth machinery, and that's important, right? Ultimately, REIT is about managing your portfolio or asset and also managing your capital. You just have to blend these two in an efficient way. Okay. One last question from Gula. I'm so sorry. Thanks for the whole presentation and Q&A. For Gallileo, will there be any more decline in valuation? Or will the valuers look ahead at your higher rentals if you manage to sign your new tenant and give you a stable valuation while you do the AEI before listing it once the new tenant comes in, cap rates notwithstanding? You want to take that? Okay, I can add on. I would say that for Gallileo, compared to December 2022, definitely if assuming some of these rental does come through what you sign and everything, it should help the valuation. I would say that we do expect the valuation still to come off a little bit because of the broader market. I can also just add on that. We can't predict how the valuation number will, because it's a function of your discount rate you use. The discount rate you use is a function of where the interest market is. It also is a function of where the market transaction happen. It's also a function of your underlying passing rent. It's also a function of your underlying credit risk, right? If we are able to get it all right, then I think at least confidently we say that we should be able to protect the value. Against all these different variables, very hard to predict how the future number will look like. It can go up and down in the course of the next one, two year. It can go down, it can go up. It all depends on how the market view the underlying credit risk, what the commercial term we sign on. The underlying credit risk would have potential implication on your terminal yield, your cap rate, the so-called cap rate at the terminal yield level. The discount rate will also be affected. They all intertwine. At this point in time, we cannot really comment anything beyond that. What we can say is that when we undertake that CapEx, of course, there will be a progressive kind of drawdown of payment. Purely from a cash flow this year basis, if the valuer were to look at a pure this year, it will be a negative outflow in the early stage before the income come in. Purely on that. With the passage of time, when most of the CapEx has been incurred and paid, what's left coming in is your income, net income. You can imagine the trajectory of the potential valuation movement. It can go down, gradually as you are close to handover, potentially it could go up again. Yeah. I can't give a number to it, but certainly, we think if we can confirm and secure that tenant that we are talking, then it's definitely a good confidence booster from a value protection point of view, yeah. Solid credit. Yeah. Solid credit. Yeah. Higher than us. Okay. Thank you for the questions. Okay, I think just to quickly wrap up, CICT has reported a resilient set of results thanks to our proactive portfolio management and our prudent capital management. Thank you for joining us at this briefing today. Feel free to reach out to us if you have any further questions. Thank you and have a nice day. Thanks a lot. Thanks for coming. Thank you.