Half Year 2023 Mapletree Pan Asia Commercial Trust Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: M. Khi - JPMorgan Chase & Co, Research Division - Analyst : I'm Terence from JPMorgan. I just had 2 sets of questions. First, I wanted to ask on the proportion of space that was renewed for the 3 renewals, the BMW, Arup, and BoA and also the level of reversions and whether this was included in the reversion number. Wee Leong Koh - Mapletree Pan Asia Commercial Trust - Co-Head of Investments & Asset Management - Mapletree Commercial Trust Management Limited Hi Terence, this is Wee Leong. Just our reversion numbers only include leases which expired in this current financial year. So the reversion numbers would only have included BOA's lease. BMW's lease as well as Arup's leases are expiring in the next financial year. So those numbers will come through in the next year, but just to give you a sense, Arup is on a slightly positive rental reversion. BMW's lease is slightly negative from their current lease, but it's still quite a good level above the current market rentals. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2022 / 1:30AM, MACT.SI - Half Year 2023 Mapletree Pan Asia Commercial Trust Earnings Call Hosted by HSBC In terms of space, I mean, in the top 10 tenant listing, you can see the percentage of our gross rental revenue that gives you a rough indication of how much space that -- each of these tenants take up.

Question: M. Khi - JPMorgan Chase & Co, Research Division - Analyst : And just wanted to get a sense with the current interest rate environment, do you see that the timelines for the execution of the strategy could be extended? Hwee Li Lim - Mapletree Pan Asia Commercial Trust - Executive Director & CEO - Mapletree Commercial Trust Management Ltd. I think it will be longer than I like. Generally, I'd say in the current interest rate environment everybody will be a little bit more cautious. I think you have rightfully pointed out that any potential investors will be a little bit more cautious. So definitely your timeline will be a little bit more dragged out than I would have liked.

Question: M. Khi - JPMorgan Chase & Co, Research Division - Analyst : Going back to Festival Walk and thank you for sharing the tenant sales data. I wanted to ask with tenant sales down like so much from pre-COVID or pre-2019 levels, what proportion of Festival Walk leases are still from the era that means from the pre-2019 era? And how should we look at the recovery of tenants? Let's say if the borders were to reopen, will we reset back to 90% or would we go above pre-COVID levels? Chow Mun Leong Management This is Mun. I think it's a difficult question to answer because like what Sharon has mentioned earlier, a lot is actually predicated on the COVID situation in Hong Kong right now, whether the borders will be open or whether the social distancing measures will be relaxed. We were in Hong Kong a couple of weeks ago. Everywhere we go, we need to actually scan. It's quite similar to Singapore a few months back. We have to scan a safe REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2022 / 1:30AM, MACT.SI - Half Year 2023 Mapletree Pan Asia Commercial Trust Earnings Call Hosted by HSBC entry before we go into a mall, before going to a hotel. So it's the same situation right now. So things is a bit challenging. As to how much it will recover, I think we do really hope that it can recover back to pre-COVID level in 2018. But as to the timing as to where it can happen, it really depends on where there can be more relaxation on the social distancing restrictions as well as the border opening.

Question: M. Khi - JPMorgan Chase & Co, Research Division - Analyst : Okay. And maybe on a more positive note, could you share a bit more on the AEI for VivoCity in terms of the CapEx and the timeline? Hwee Li Lim - Mapletree Pan Asia Commercial Trust - Executive Director & CEO - Mapletree Commercial Trust Management Ltd. Maybe if I can just add to the Festival Walk one. Just a few markers. We are about 30% from the pre-COVID sales level of 2018. So that's 1 target. There's another 10% to go. How long? When the borders open, you got to give us some lead time -- you got to give us some breather because we have to -- the balance of leases have to go before the malls will start coming up. But we remain very confident and we put it as a core asset for good reason. I think it suffered for deco issues. But fundamentally as a mall itself, it still has its presence and its (inaudible). That's why it still remains as a core asset for us in side-by-side together with Vivo and MBC. So it's not all doomsday. And the other comfort that you can take is you look at the sense of the third party which is the valuers outlook, for us we may start -- because we are at the operating level. They are the ones that have a macro outlook as to where they see the whole entire Hong Kong are going. I take one comfort off them, which is the maintenance of the cap rate. From what I see in the cap rate, there are unlikely to be major changes. So that is a positive view in my term when I read third-parties experts applying valuation cap rates on assets, which is actually a reflection on the view of the market going forward. Chow Mun Leong Management On the Vivo, I think if you go to Vivo today, I think the times has really been hard. I think we are starting and commencing on this AEI. We are expecting to complete it by mid-2023. The total CapEx we have estimated is about $13 million. Hwee Li Lim - Mapletree Pan Asia Commercial Trust - Executive Director & CEO - Mapletree Commercial Trust Management Ltd. So this is one of the large pieces that is part of our continuous exercise to serve the mall. I think if you remember long time ago, a couple of years ago, we forced in and constructed the escalator and I think we did guide the market is as a prep in case I need to do -- we need to deal with the big anchor spaces. I think the time is due that we exercise this portion and I think it's a very, very good addition. We have signed up close to about 50% of the tenancy even though it's in a COVID period. I think that's a good testament of the standard of the mall, Vivo City. It will be quite interesting because it will be a mix of department store, F&B and very nice 2 higher luxury not fashion, but I'm talking about makeup brands cornering the -- fronting the 2 key lots, yes. So we have started. By next year after Chinese New Year, I think you should be able to see something. You'll be on it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2022 / 1:30AM, MACT.SI - Half Year 2023 Mapletree Pan Asia Commercial Trust Earnings Call Hosted by HSBC

Question: M. Khi - JPMorgan Chase & Co, Research Division - Analyst : It is not good enough. Hwee Li Lim - Mapletree Pan Asia Commercial Trust - Executive Director & CEO - Mapletree Commercial Trust Management Ltd. Actually we are doing very well on this. When I look at the food court, it's unfortunate that the structural, there is some capping in our ability to expand the space. The operations of the food court and the numbers that they are pulling in is very, very good. It's very, very good. It's a reverse from your observation.

Question: M. Khi - JPMorgan Chase & Co, Research Division - Analyst : I just have to visit Festival Walk more often. Just one last question maybe for Janica. I wanted to ask on the perps. Could you share -- I understand that the interest costs have been swapped to Japanese yen. Could you share what's the sort of like interest cost for the perps because I noticed that it does move?

Question: M. Khi - JPMorgan Chase & Co, Research Division - Analyst : The MPACT parks.