Mapletree Logistics Trust

Hi, greetings everyone. Thanks for dialing in.

Let me take you through the key highlights for 2Q FY2021/22. Gross revenue rose 25.2% year-on-year to S$165 million.

NPI grew 21.5% to S$144 million. Consequently, amount distributable to unit holders grew by 19.2% to S$93.4 million translating to a DPU of 2.173 cents, 5.7% higher than last year.

DPU rose on the back of a good performance from existing properties, accretive acquisitions completed last year, and contributions from the completed redevelopment of Mapletree Ouluo Logistics Park Phase 2 which [indiscernible] in May last year. As of 30th September, MLP's portfolio occupancy stood at 97.8% with a well-staggered lease expiry profile and WALE of 3.7 years.

Average rental reversion for leases renewed or replaced in 2Q 2.4% Capital management wise, aggregate leverage ratio stood at 38.2% as at 30th September. MLT's debt maturity profile remains well-staggered with a debt duration of 3.6 years.

Approximately 76% of total debt has been hedged into fixed rates and about 76% of MLT's income stream for the next 12 months has been hedged into Singapore dollars. In addition to the proposed acquisition of nine Changi [indiscernible] REIT in Singapore that we had announced at the end of last quarter, we have also announced a proposed acquisition of one facility in Melbourne, Australia for AUD 43 million, Mapletree Logistics Hub Tanjung Pelepas in Johor Malaysia for MYR405 and Yeoju Logistics Centre in Yeoju, South Korea for KRW135 billion.

We expect to complete these proposed acquisitions over the next few months. In August Fitch Ratings assigned MLT with a credit rating of BBB+ with a stable outlook.

Moving on to financial review, for 2Q this year MLT started and ended the quarter with 153 properties, 17 additional properties from 146 properties at the end of 2Q last year. Gross revenue increased year-on-year by S$33.2 million mainly due to contributions from the enlarged portfolio, higher revenue from existing properties, and high occupancy from the redeveloped Mapletree Ouluo Logistics Park.

Property expenses grew year-on-year by 58.6% in line with the enlarged portfolio. Consequently NPI increased year-on-year by S$25.6 million.

Borrowing costs increased by S$4.4 million mainly due to incremental borrowings drawn to fund FY20/21 acquisitions. This is partly offset by partly offset by lower interest cost arising from lower average interest rates.

Accordingly, DI is higher S$93.4 million versus S$78.3 million, an increase of S$14.9 million which is 19.2% translating to a DTU of 2.173 cents 5.7% higher than 2.055 cents in 2Q FY20/21 after accounting for an enlarged issue unit base. Included in the amount distributable to unit holders is a divestment gain component of S$1.8 million as compared to S$4.7mi in 2Q last year.

Excluding divestment gains, adjusted DPU would have increased by 10.4% as compared against last year. The trends and reasons behind the variances for first half results are largely similar to 2Q year-on-year results.

Gross revenue increased year-on-year by S$64.6 million. The increase resulted from the enlarged portfolio, higher revenue from existing properties and contribution from Mapletree Ouluo Logistics Park Phase 2.

Property expenses increased year-on-year by S$13.7 million and NPI increased by S$50.9 million. Accordingly DI is higher S$186.1 million versus S$156.1 million, an increase of S$14.9 million translating to a DPU of 4.334 cents, 5.7% higher than 4.1 cents in first half last year after accounting for an enlarged issue unit base.

Quarter-on-quarter we have 153 properties in both quarters, gross revenue increased marginally by S$1.3 million, property expenses marginally higher by S$1 million and NPI marginally higher by S$300,000. Borrowing costs the same as last quarter.

DI is 670 K higher than last quarter and a S$3.4 million, translating to a 0.6% increase in DPU from 2.161 cents in first quarter to 2.170 cents in the second quarter. MLT has a healthy balance sheet.

Total investment properties as of 30th September stood at S$10.8 billion, S$19 million higher than last quarter. Total debt increased by S$4 million mainly due to higher net translated foreign currency loans.

NAV remains the same as last quarter at S$1.32. We remain prudent in our capital management.

Aggregate leverage ratios remains the same as last quarter at 38.2% with weighted average interest rate of 2.2%. Average debt duration and interest cover remained stable from last quarter.

Our debt maturity profile remains well-staggered with an average debt duration of 3.6 years. Debt due for refinancing for the rest of the year is 3% about S$110 million relating to our JPY and CNH [ph] coming due in December.

We have available committed credit facilities of S$604 million on hand. This is sufficient to meet our refinancing requirements for the rest of the year.

To mitigate the impact of interest weighted risk and FX risk and MLT CPU we have hedged 76% of our total debt into fixed rate and 76% of our estimated distributable income for the next 12 months has also hedged either through currency for contracts or new licensing for dollars. I'll now pass on the mike to Jean, who will bring you through portfolio review.

Hi Yuen May, can you hear me?

Yes we can hear loud and clear.

Okay, I'll start on the portfolio review and our key presence across nine geographic markets offers diversification, as well as regional network of quality assets located in key logistic hub and in close proximity to large consumption hub markets. Based on first half FY'21/22 assets under management and gross revenue, the mature developed markets in Singapore, Hong Kong, Japan, Korea and Australia continue to account for the majority at about 70% to 75% of the revenue or AUM, while the faster growing developing markets in China, Vietnam, Malaysia and India account for the balance 25% to 30%.

Incomes of the geographic breakdown at the occupancy levels, our platform occupancy remained healthy at 97.8% as at 30th September 2021. This is due to higher occupancy in Singapore mainly from two assets in [indiscernible] and 10 Changi South and Japan from an improved occupancy at Higashi Hiroshima and lower occupancy in China from properties located in Shenyang, Tianjin [ph], and Chengdu and Hong Kong some transition at downtown at Grandtech Centre.

The rest of the five countries remain stable. On the lease expiry profile, our lease expiry remains well-staggered with a WALE of 3.7 years by NLA.

For FY'21/22 we are left with two SUAs, one in Korea and one in Malaysia and a [indiscernible] renewal this customer with the tenets which are expected to finalize in the coming quarter. Similarly on the MTB leases of 13.9%, renewal discussions are ongoing with the various tenants with high probabilities of renewals.

In FY'22/23 28.5% of our leases by gross revenue are due for expiry with most of the expiries coming from leases in China, Singapore and Korea. We have started negotiations with our tenants nine to 12 months ahead for larger leases and about six or nine months in advance more smaller leases so that we can finalize early renewals or secure replacement tenants early.

The next line on top-10 tenants by gross revenue, our top-10 customers account for about 25% to 22% [ph] of total gross revenue. This quarter we have a new tenant, Hong Kong TV entering into our top-10 tenant chart.

Previously it was Nippon Access Group from Japan. So Hong Kong TV is an e-commerce player in Hong Kong expanded and doubled the space with us by leasing an additional floor in our Changi warehouse.

As a result their contribution to portfolio gross revenue increased to 1.3% as at 30th -- as compared to the last quarter of 27%. Next one on the diversified tenant trade sectors, besides offering a pan APAC network across nine markets, MLT has a resilient portfolio that has a high quality tenant base or 753 customers, from well diversified trade sectors with about three quarters of portfolio serving consumer related sectors such as consumer staples, fashion, apparels, healthcare, F&B products and electronics.

I'll now move on to the investment review. Today we have announced four acquisitions with a total purchase consideration of S$350 million with each property, one in Singapore, one in Australia, one in Malaysia and one in Korea.

So as mentioned earlier by Charmaine for the Changi property in Singapore, this is located in the eastern part where there is limited supply of warehouse and where its location is good for time-sensitive high-value products being in close proximity to the Changi Airport. So this transaction is currently pending JTC [ph] approval.

On the right side of the picture is a cold storage facility that's fully occupied with a long wave of 13 years [ph]. It is located in Laverton North and Inner West Precinct of Melbourne, an established logistics region.

We expect to complete the transaction before end of the calendar year. The next slide, the two acquisitions on the left side is Malaysia, is an acquisition of a 1.4 million square feet grade A warehouse on sponsor located in Tanjung Pelepas, Southern part of Peninsular Malaysia.

The completion is expected to be by quarter four of FY'21/22. On the right side shows the recently announced acquisition located in North Yeoju, South Korea.

This is a 150 million property with an NPI yield of 4.2%. This is in a newly located logistics hub within the Seoul metropolitan area and has excellent connectivity and accessibility to Seoul.

This asset is fully leased with leading online fashion retailer as one of our key tenants. The completion is also expected to be by quarter three of FY’21/22.

The next one, just a quick recap, just a quick summary MLT AUM stands at S$10.8 billion. As I earlier said WALE of 3.7 years by NLA, portfolio occupancy 97.8% having a tenant base of 753 accounts across 163 properties in nine markets.

On the outlook, on our tenants, our tenants continue to operate with minimal disruptions to their business and operational activity. In terms of outlook, the demand for warehouse space is expected to remain resilient with the economic recovery as more countries learn to live with COVID-19 with the easing of restrictions, higher destinations with reopening of the country borders.

In space constrained and developed markets like Hong Kong, Greater Tokyo, Greater Osaka and cities in Sydney where the vacancy is very low, less than 2%, the demand for grade A warehouse continues to be robust. The overall demand is underpinned by recovery in economic and business sentiments and driven by e-commerce and severe demand for warehouse space.

As for the emerging markets like Malaysia, Vietnam, India, China, we are seeing pick up, some pick up in domestic consumption, although it is still below pre-COVID in these countries with the easing of COVID restrictions and increased vaccination rates. Similarly, we expect the logistic demand to remain firm with e-commerce as key drivers of the warehouse demand.

Overall, in terms of the demand for warehouse space is expected to remain resilient with stable rents and occupancy rates. With that I end my presentation, thank you.

Thank you, Charmaine and Jean. We have also James here who will take questions on the operational side.

So, shall we do questions, Yuen May?

Yes, we now open the floor to Q&A. [Operator Instructions].

Can we have the first question, please?

Hello, good evening. This is Derek from DBS, can you hear me?

Yes, hello Derek.

Hi Ng Kiat and team. I've got a few questions.

First one is, could you share the rental reversions by country? I think this quarter number is a slight uptake from Q and Q.

Is there room for some optimism?

Hi, this is James here. Yes, I would like to go through the 2Q rental reversions country-by-country first, before giving you the answer.

Singapore is 1.7% in reversion, Hong Kong 2.6%, China 2.5%, Malaysia 3.0 %, Vietnam 3.0%, Korea 2.0%, Japan 1.5% Australia 1.2%. India, that was new, because there was no renewal done.

So overall it was 2.4%, it was a slight increase from 2.2% in first quarter. So, in most of the countries that we see the high growth emerging markets like Vietnam and Malaysia the remunerations continue to be strong with a high, in the 3% range.

China was still 2.5%. It was increased from 1.7% in 1Q and the other countries remain fairly robust.

So I think Derek to answer your question whether we are seeing a uptick in optimism, I think with the new COVID situation evolving over different countries, the tenants are still cautious, meaning that yes, they are prepared to take up new additional spaces, but as far as rental reversions they are still pretty, I would say, resistant to high levels of reversion rates. So that gives you a flavour.

I think in general, tenants are confident, but they are cautious. So, they would take up additional space, but they are not prepared to give you like a 10% rental reversion or even a 5% rental reversion easily unless there is a straight specific or unique requirement on their part.

I see.

So I think, yes, you have another question, because I know you're going to ask me about acquisition right?

Yes, I would ask you, but before that can I ask you about your China, the occupancy has been moderating a little and you mentioned before the first tier cities are doing better, the inlands one are weak, are we still seeing the same trend? And maybe you can share what kind of demand are we seeing in the soft trade sectors that’s taking up space, specifically on China, if you can?

James?

Yes, for China the slight drop in occupancy in 2Q was loss of about 4000 [ph] square meters. In the scale of things it is not that much, because the team is going to backfill it in the third quarter.

So this is in cities, in Shenyang, [indiscernible] and Chengdu, which are provincial cities in their own right. So, demand will continue to be very strong and robust.

However, in the so called Mid-Western region like in Chengdu there seems to be a slight drop in demand, but we are obviously watching the market, because of the slight increase in supply in the second-tier markets. So, we have been seeing very strong demand still in the provincial cities or in provincial capitals and also of course first-tier cities like Beijing, Guangzhou and Shanghai that we are operating in, but second-tier cities we were monitoring the situation.

Okay thank you. I’ll just ask my last question, I mean something I wish to ask you about.

I'm just thinking aloud that look at our cost of capital all right, so it has been quite stable, but cap rates have been compressing. I'm just wondering how are you thinking about acquisitions and are you relooking your underwriting assumptions?

Okay, I think in terms of acquisitions we are actually seeing quite active pipeline for MLT. And we have also spoken to the sponsor and then the sponsor is also getting quite active to divest some of the properties there.

So, I think in a nutshell, this year our total acquisition value will be quite substantial, yes. So, in other words, I think coming out we are expecting fairly large deal coming out from Japan.

We think that from the sponsor’s side there should be a very large pipeline that's coming as well.

Okay, are you looking to Japan and I thought China has been something that you’ve been looking to acquire quite actively there, so is it more Japan now?

No, China we will get some sponsor, because I think you know that the quality of the warehouses in China third party acquisitions, the quality don’t tend to be grade A. So we will be looking at sponsors for the China grade A warehouses for acquisitions, but for Japan I think we are in, Jean is in the process of hopefully closing a deal soon over the next one month or so and in Japan that should be quite a nice property with a sizable GFE [ph].

Wow, okay this is from third party there?

Yes, third party. So I think the trend will continue.

You will see from the sponsor, the China, Vietnam, Malaysia pipelines that you always see in our charts, so that one will continue. So we expect that to come on-stream and then the other for the third-party acquisitions, we think this Japan has got good visibility of one or two deals coming up, and then we think that maybe Australia and Korea will complement it with one or two other acquisitions.

So I think this year, last year we did acquisitions of how much, 1.6 billion. So I think this year hopefully we can still do something around that range.

Wow, okay. Okay, that's what I have, all right.

Thank you.

Can we have the next question?

Hello this is Tan Shen [ph] here, can you hear me?

Yes, hello Tan Shen [ph].

Hi, I recall last quarter the guidance on acquisition was roughly about S$400 million from third-party and then none from the sponsor. It seems that it has changed materially.

Can you walk us through what has changed since?

Okay, I think what has changed is, we have managed to excite the sponsor into exiting some of their pipeline and give them a nice divestment game. As what Derek has mentioned that our trading yield now is quite put up in a pretty good position.

So, you expect to China, Vietnam coming up, so that is one major change. And then the other is the acquisition coming up from Japan is larger than what we expected, so that one will be again a good addition to our portfolio.

So Tan Shen does that answer your question without me bridging any [indiscernible].

Yes, that is very helpful, thank you.

Hi, this is Donald.

Hi Donald.

Hi, I got some followup questions on the acquisitions. You probably expect quite a large deals coming in, what are the divestments?

Will divestments trend also be in tandem for this year?

We are looking, in fact James has already put out some properties, some of those poorer [ph] specifications, cargo lifts, so they tend to be smaller properties in value. So, James and team has already soft tested some of these properties.

So we hope to be able to push out some of these divestment initiatives hopefully later part of this year or early part of next year.

Okay. Who is buying the poorer aspect type of assets though?

It tends to be end users themselves. So, for example, like in Malaysia it will tend to be a specific end user themselves who probably will not just look at warehousing but also production.

So that is one angle, and then so I think for the poor specification assets we still find like a sweet spot, because these guys they look at a certain size that they are comfortable with. So we're not talking about like a 200 million property that they can take.

So it's probably within the 20-50 kind of range. So and then if we push out a few of these then we will see divestment of maybe S$1 million to S$100 million.

Thank you got it. Yes, I mean can you mention that you are willing to underwrite higher valuations given your cost of capital now that’s why your sponsors are willing to negotiate I mean without disclosing account valuation for the upcoming acquisition.

What sort of -- how has capital compressed for China leading up to...?

Yes, so I think recently Capital Lens [ph] they did some acquisitions, so I think the cap rates have definitely compressed especially for very prime locations. We still get Chinese companies’ scheme to buy in China because there is this restriction of capital that they can bring outside of China.

So, they’re still keen to buy some of these properties. So, I mean a very prime location we get guys still looking at 4% kind of cap rate.

So, I think with the sponsor the negotiations will be that it is going to be slightly more expensive than what we see last year, but it will be cheaper than let’s say we go and try to compete with some Chinese investor to compete to buy a portfolio of grade A buildings.

And just curious also, did you look at the contest due [indiscernible]?

Yes, Donald. We did evaluate that portfolio, but I think unfortunately in terms of that portfolio, it’s very expensive.

I think they are looking at cap rates of about 3.5%, so NPI [ph] we are looking at about 3.3% that kind of range. So, I think that is not something that we are keen to pursue further.

Okay, 3.5 for that kind of property you deem is right.

Yes, correct.

And my last question is for James. Sorry, could you repeat on your reversions breakdown again, I failed to catch up here?

Okay I'll repeat again. Singapore 1.7%, Hong Kong 2.6%, China 2.5%, Malaysia and Vietnam 3.0%, Korea 2.0%, Japan 1.5%, Australia 1.2%.

Australia 1.2, got it. Thank you so much.

That’s all from me.

Yes, hi. Can I ask some questions?

Brandon here.

Hi Brandon. Go ahead.

Yes, hi, yes. Just going back to what you mentioned to Donald on Australia, so if you did look at the quantity doesn’t mean that you’re now actively looking at development opportunities as well?

I think before -- okay before we get excited and think that Mapletree Logistics Trust is going to be a development I think no. I think what we are looking at is the -- what we call asset enhancement.

So, if there is potential for further development on a particular site or there is as part of a portfolio there is some development, we are prepared to do that. So, but if it’s looking at just us going out and buying land, compete on land price and build, no that's not what we going to be doing.

It will have to, yes development will have to be part of a larger portfolio or there’s some value that we see that we would like to capture. So for example, if it’s a property that’s right next to our existing property, will we buy and develop?

Answer is yes. But will we go and find a piece of land somewhere out there and buy?

No. So I'm not sure whether that gives you some clarity, so there’s no intention of turning into a developer at all.

Okay, okay then just want to get some clarity on your Australia strategy. So I mean, you mentioned a few, several months back you seemed [indiscernible] to India right, but and obviously there’s been a lot of our transactions in that market including things like airports and there’s been a stake in [indiscernible] fund, right.

So, can we potentially see you making some changes in the way you expand in the market?

Hello?

Yes, can you hear me?

Yes so, okay Brandon, I didn't quite catch your question, so I don't know whether you can see the slide. So, we did find something in Melbourne at NPIU of 4.3%, right?

So, are you saying that are we still looking at Australia? The answer is yes and but the unfortunate thing is we know that portfolio acquisitions in Australia are getting very, very expensive.

So, we were prepared to go to NPI yield of about 3.8% for the, what you called milestone deal, because it is a sizeable transaction. It gives us a certain immediate -- it gives us a market advantage immediately.

So, I think these are not a trade-off that we will do. So will we be looking at another portfolio?

Yes. If it doesn't offer the kind of so-called strategic value like what the milestone deal has shown, then I don't think we will be willing to compete just based on the cap rate alone.

Okay, okay, all right, thanks. Just one last question, from my end.

Have you been seeing a bit of a vacancy risk in your Asian portfolio given that I think we've been hearing that more and more MNCs are looking to exit some of these low cost manufacturing hubs in Asia?

If you're referring to Asian you're looking at countries like Malaysia and Vietnam, right? So, we do see more demand rather than more vacancy rates, especially demand for good grade A assets, especially in the Klang Valley, Shah Alam area where we are positioned today.

So that's 100% full, Shah Alam 1 and 2 properties. And for Vietnam, all our properties are at 100% occupancy, both in the north and south of Vietnam, in Hanoi, in Binh Duong area and also in the south, in the Bungzung [ph] area.

So, this shows that the demand is still very robust, because we are positioned more for domestic consumption in these two markets. Vietnam to some extent is export driven, but we are not in those port cities in Hai Phong area, so we are less affected.

But nonetheless, we are catering to the urbanization and the growing middle class, growing consumption in Vietnam. So the demand is -- continues to be robust.

All right, that's all. Hey thanks so much James.

Thank you.

Hi, it is Mervin from JP Morgan.

Hi, Marvin.

Hi. Just want to follow up in terms of the acquisitions and maybe capital structure.

I'm just wondering, are you seeing your maximum gearing, because a lot of retail seemed to push towards the low 40s. And for strategic acquisitions like milestone, will you consider acquisitions which are DPU neutral initially before this accretive return, given the significant compression cap rates?

Okay, I think Mervin, I've known you, I think you have been covering us for a long time, so thank you for that. What we have kept to is, if it's a strategic acquisition, meaning that, we are unable to control the timing, but we really would like that portfolio to be added to what we have, then the initial gearing for it to increase beyond the 40% is something that we are prepared to do.

But I think you have seen us come back to the market to raise an EFR whenever we have a sponsor pipeline, and I don't see ourselves changing that, because every year we expect to get a pipeline from the sponsor and we always take the opportunity to reset our gearing for the third-party acquisitions that we are unable to control the timing. So I'm not sure whether that's the answer that you're looking for.

Yes, I was just wondering that, yes because obviously, this cap rate compression, your portfolio is valuable, so followed by across the year end you can push it maybe into low 40s by year end [indiscernible] to 40 or below 40 again, this is what how you, so we would be thinking that way in terms of yes…?

Yes.

Thank you.

We will -- when we do not have the ability to control the timing of the acquisitions that we would like to take, then I think that is where we are prepared to push the gearing more.

Okay, so just had one, to see a temporary increase in gearing [indiscernible]?

Yes. It depends.

Depends on Yes, it will see a temporary increase and then, with the sponsor pipeline coming depending on which one we can push the time line and then we will reset that price fairly quickly.

This was a question from me, just in terms of Australia and India MPI, I mean a smaller again things, but just curious occupancy has been flat q-on-q, but the NPR is actually down q-on-q and this one and what's happening, is that some intensives they get to provide?

Which country again, Mervin sorry?

Australia looks down about 1 million as q-on-q.

I think, there as we renew some of the leases there is one off rental incentives that we give. Yes and also there is the accrued land rent that we have to pay for of course [ph] Brisbane.

Is this similar drives for India as well?

Yes, this is one off rent amortization that the absence of that Charmaine, correct?

Yes. So in the last quarter, it’s -- we made a rental adjustment for -- an accounting adjustment for rental amortization on the straight line and this adjustment, while we affect the MPI it doesn't have any DP [ph] effect.

Okay, thanks very much. All the best on the acquisition front.

Thank you, Mervin.

Hi, it’s Nicholas from Credit Suisse. I just had one question to ask your management fees and units.

And this has crept up sequentially this year as well. Just want to understand as we get more acquisitions and we're able to get more inorganic growth that way, will we think of kind of moving that feed and units back to more cash and hence kind of offset a bit of the accretion?

I think you're asking about the, for the acquisitions from the sponsor, right? So acquisitions from the sponsor, the acquisition fees are in units.

I was referring to just like the normal big 10 performance fee that you get, every year, when I look at the ratio, I think this first half about 70% or so is paid in units. So I'm just wondering if you just say three years ago or so it was below 50%.

So I'm just wondering the ratio, but if you switch back towards a more cash, more cash period for the management fees.

Okay, I think for the management fees, what there is this other dimension, that is, you notice that as we come out to the market to raise EFR the sponsors did get diluted, right? So they basically would like to actually have more exposure or at least maintain and or if not, do not lose so much of the exposure to MLT.

So this ability for them to collect fees in units actually is something that the sponsor will be keen to do. So moving ahead, we do not expect to change it to fees and cash in a substantial way, unless it's some third-party acquisitions that we have some consideration, but other than that, the fees in units that we get from some of these base and performance fees will continue.

Two reasons, one is that we'll continue to at least help the sponsor maintain exposure to MLT and the second is alignment of interest between the manager and the REIT itself.

Okay, cool. Got it.

We are still evaluating on the options with regards to this maturing perpetuals. This includes the possibility of raising new perks to redeem the maturing perks.

Do we have any more questions? Wilson is it, Wilson is that you?

Ah no, Derek from Morgan Stanley.

Derek from Morgan Stanley, go ahead.

Yes, hi. Just I have a question on China, given the exiting China growth, which has affected some industrial tenants, just wondering how your little [ph] tenants are faring?

And do you see any potential impact on those pending operations? And potentially any obstacles may impact that?

Are you referring to the community group? Derek, are you referring to the community group buying?

No, just in general [indiscernible] and the entire pending operations.

I see, okay, under powers, constraints and restrictions, that was more critical before the 1st October, our National Day holidays in China, whereby there were certain constraints and power restrictions, more for the production companies, not so much for the warehousing side. However, in having said that, right, the government is increasing so-called co-production to meet the coming months demand for energy.

And also in our logistics parks we do have backup generators in each of our logistics parks. So that will help provide some backup power when there's a need.

However, our tenants are also when they are required to consume more power, they do rent on their own their own generators. But we do see that this among all logistics parks in operation, the need for our tenants to rent these backup generators themselves is not so great, because there's sufficient power in our logistics parks to run the operations.

So this is what you see at the moment.

All right, so not an issue.

Not at the moment. Yes.

And just I'll just followup, like in the last quarter you mentioned the potential redevelopment of 51, but knowing I guess now has the [indiscernible] will this fuel the -- on parks or [indiscernible]?

No, it is still on track. It's pending [indiscernible] consent and approval for the rezoning to 2.54 ratio by December this year or January early next year.

So it’s still on track.

Is there a dollar amount that you have in mind for this redevelopment?

I couldn't catch you, can you repeat again?

Is there a dollar amount they have in mind for this redevelopment?

S$250 million to the development cost.

All right, got it. Thanks so much.

Thanks, James.

Any final questions?

Okay, if there are no more -- if you have any more questions, you can always reach out to Yuen May and her team. Right?

But thank you for your time and then we hope to bring more news to you soon. Thank you.