Mapletree Industrial Trust

Yes, she seemed very relieved, when she goes to pass it to me. So, okay, the presentation that we released last evening, as usual, we have the five segments which we normally cover.

So let's start on Page 5 on the key highlights. So the growth in the revenue we have outlined driven by the 14 data centers, which we have completed for September.

So there's some loss of revenue from the redevelopment project, as we have already outlined last year when we started that project, we have a one-year decommissioning period. So the completion of the decommissioning was I think on the 9th of July, and with the completion of the decommissioning and the project being move to a project under development status.

We have taken that asset out of our denominator using a lot of our statistics. And of course, the revenue becomes zero.

So in aggregate, from the distributable income perspective, we have seen an increase 14.8% to $72.9 million for the second quarter. Of course, some of this comes from the additional contributions from our 60% stake for one month, 1st September to 30th September.

And part of the increase is from our acquisitions of the other datacenter assets in the beginning of this year and end of last year. In DPU, you can see a 1% dip year-on-year basis, $3.10 for second quarter as you might have read in some of the details that we have outlined.

We did not withhold any distributions for this quarter. But I think the weaker DPU is partly attributed to the additional rebates that we have given to our tenants, especially the small and medium sized enterprises this quarter, despite having slightly higher revenue contribution.

And of course, we have a much larger unit base for this quarter, after the equity fund raise exercise that we did in June. The portfolio occupancy has increased about 1.2 percentage point, 91.1% to 92.3% on a quarter-to-quarter basis for the second quarter.

This is, of course, the mathematical representation. The effect is driven by or this increase is driven by us removing Kolam Ayer 2 Cluster from the denominator, because that cluster has been seeing gradually reduced occupancy.

So now with that being removed, the average naturally goes up. But we are seeing fairly stable occupancy levels across the other segments nonetheless.

And, of course, since the last quarter when we outlined the data center segment as a separate property segment, we have since completed the acquisition of 60% interest, and that has indirectly increased our exposure to this very exciting property class. And we have also in the middle of September announced the acquisition of a data center in Virginia.

So, now we are going through the acquisition process. And hopefully, we will be able to provide a bit more details, once we get a few of these transaction mechanics out of the way.

So, the variable there is between $200 million and $270 million, sort of depending on finally what we arrived at commercially. On the capital management side, the leverage ratio remains fairly healthy 38.1% aggregate leverage level.

And we have, of course, good and strong balance sheet, more than $400 million worth of committed facilities. I think moving on to Page 6 that in a nutshell is our report card for the trust ever since we got listed, on the right of course, the most recent set of figures.

And you can see the share only $2.9 million distributable income for second quarter, and the uptake in terms of DPU $3.10 on the right. That is of course partly because we did not withhold any of the distribution this quarter alive fourth quarter financial year '19 and '20 and first quarter financial year '20 and '21.

If we had not withheld the amounts actually, the distribution for these two quarters would have been higher, even compared to this quarter. We'll share some of these details in financial numbers in the subsequent slides.

Move on. Okay.

Financial performance, what do you see? They can see the slides, right?

Yes. Okay, I see a thumbs up.

So, on Slide 8, we have this comparison for second quarter year-on-year basis. Revenue increased I think due to the data center projects that we have taken on and that is a fact of the consolidation of the data center portfolio, that we completed 1st September.

Net property income as a result of that color had gone up about 2 percentage points from about $80 million to $81.6 million. The share of joint ventures of course, you see a kind of combination of effects because in the previous year, we do not have the second data center portfolio in the set of figures, that was the joint venture that we did for the digital reality trust data center portfolio.

So, as a result, you see this very large increase more than 100% from $4.45 million to $12.3 million. Or you bring the numbers down after taking all these into effect amount available for distribution 14.8% increase from $63.5 million to $72.9 million.

So as a DPU level, as I've outlined earlier, we see a 1% reduction $3.13 to $3.10. On a like-for-like basis, this quarter, of course there have not been any amounts withheld.

So from the same store basis, we have given a little bit more rent rebates to our tenants in Singapore and with a larger unit base, you see a slight decrease in a DPU. Okay, let's move on.

First-half year-on-year basis, similar kind of profile. But of course, the growth rate, not as high, because you account for six months and you finish with them and muted for the one-month impact of a consolidation of the 60% interest.

So, revenue increased 0.5 percentage point to 1.5 to 2.5. MPI level 1.5% increase from $157.9 to $160.3 million.

So you can see a slightly lower increase in the amount available for distribution 13.2% from $126.7 to $143.4 million. The DPU level, you can see a reduction of 4.2% mainly because of the effect of us withholding $0.32 for the first quarter of this financial year.

So, in aggregate, you're seeing that captions of that $0.32 in the distribution that we have declared. So, the reduction is 4.2% from $6.23 to $5.97 for the first-half.

On a quarter-to-quarter basis, of course, you can see more apparently the effect of the contributions from the new, so called the contributions whether from the 60% stake in the data center portfolio 4.3% increase, MPI level similar kind of profile because of any 3.8% from $78.7 million to $81.6 million. But on the amount available for distribution level, you're seeing a similar increase 3.3% from $70.6 million to $72.9 million.

On a DPU level. This is of course, not as meaningful a kind of comparison.

You see an 8% increase, mainly because we held $0.32 in the previous quarter, if we had not withheld that amount, which was incidentally equivalent to about 10% of our distributing or DPU for that quarter. It would have been 3.19 and compare that with 3.10 you'll be minus 2.8%.

So, that is essentially the effect of us completing some of these rent rebates and assistance. Moving on to our financial position that's on Slide 11, partly because of a transaction that we completed in the quarter.

The NAV per unit has shifted up 4.3%, now we are $1.69 for 30th September. Moving on, on the balance sheet side, I think there's some consolidation effect, when we outline the set of numbers on the total debt.

So, it has moved up to $1.55 billion to $2.0 billion, and the weighted average can have that shifted down from 3.9 years to 3.2 years, mainly because the gaps that we have for the U.S. portfolio on shore relatively shorter.

So, mathematically, you'll see that figure averaging down by the aggregate leverage ratio remains fairly healthy at 38.1%, in fact drop by 7 percentage point from previous quarter. So, this is our debt maturity profile that's on Slide 13.

We have nothing due in financial year 2021. So, we will be keeping an eye on what to do with the amounts that we need to refinance in subsequent to financial UCC certainly followed by us, if you compare this with our previous expiry profile, because this comes from the consolidation of the U.S.

debt. And this U.S.

debt actually slightly higher interest rate basis because we took them on about two to three years back. So, we think there's some room for us to gradually average down some of the interest rates for these debts that are due.

And that's on the risk management part, we outlined some of these parameters on Slide 14. Most of our debt have been fixed maybe 3.8%-ish higher compared to the previous quarter, because a lot of our UN debt has already been hedged.

And weighted average hedge tenure is also 3.2 years, similar to our weighted average debt tenure. And this is essentially an effect of the consolidation of the U.S.

debt. So, all in cost still remains fairly low at 2.7%, interest coverage ratio seven times and for the trailing 12 months 7.3 times.

And you can see the bullet point at the bottom, slightly more than half of our income stream for the coming quarter has already been hedged. So, we are doing that progressively to make sure our income is stable.

Moving on to the portfolio update. With the completion of the acquisition of the [technical difficulty] on the left close to 39% data centers, and now reach North America 32%, Singapore of course balanced 6.5%.

The Hi-Tech Buildings has come down mainly because we have carved out the data centers on the Hi-Tech Buildings property segments for more granular information on a portfolio to be given. So Hi-Tech now is 21%.

And in terms of countries split is roughly one-third two-third split Singapore about 67.8% and a balance of a 2% North America mainly U.S. And on the slide, I can see the number 17, because that cursor was on that page number.

Anyway, this is the portfolio update. The numbers are usually quite static in terms of the number of assets.

By this quarter, we had a reduction of three properties in Singapore portfolio because that's column A to which we have taken out from these kind of figures is project under development. So, the three buildings are almost fully demolished, so they're no longer accounted for.

So, instead of 87 now, we have 84 properties. So, occupancy level you would have seen the increase for the Singapore portfolio 91.5% from 90.2%, and that one is a mathematical effect.

And let me explain, Flatted Factories essentially you see an increasing look at the details at the bottom at 85.4 to 88.1 and that is essentially due to the column A to cluster effect. If we had removed the cluster from this set of data points, previous quarter 85.4 will be 88 and this quarter itself 88.1 will be 88.4, so that on our like for like basis for the rest of the Flatted Factories you would have seen a reduction in the occupancy level.

So this one is a magic show, when we removed column A from the calculations, but I think the takeaway is that this do some pressure in the multitenant space. For the U.S.

portfolio, you would have seen a corresponding reduction as well. Key reason is because the data center portfolio which we recently completed where we took on the balance 60% occupancy was 97.4% then when we took over, so when we take a larger stake over and consolidate 100% mathematically that average comes down.

Okay, let's move on to the lease expiry profile. You can see the speed up there in Singapore portfolio because of the multi tenanted kind of component in our portfolio.

3.4 years weighted average, North American portfolio 6.6 million so we never get to see a 4.2 year kind of weighted average figure. For the balance of this financial year, we don't think there's anything remarkable to talk about just 6.5% of the leases that are due for renewal.

And most of our listeners do even see the toolbar on the right 38.2%. There are due financial year '24, '25 and beyond, four, five years from now.

So it'd be quite some time before, we need to be worried about this. But we're already working on engaging some of the larger tenants on maybe for four as far as possible.

So on Page 19, we have our top 10 tenants. As we grow our data center part of our portfolio, you can see higher representation.

In this chart, we have just two colors down here, Hi-Tech Buildings and data centers. Hi-Tech Buildings represented by the yellow orangey bars.

So, the number one tenant 7.5%, HP, the reserved tenant has gradually come down from 10% now it is about 7.5%, as we increased the size of our portfolio. Other than Sivantos, which is an 18%, the rest are data center tenants.

And the second largest now is AT&T, in terms of representation of top 10, 6.6% mainly because of the consolidation of the interest in 60%. So, this is on Slide 20, our trade sector mix.

For the first time, I was reminded yesterday, we have large representation in the telecoms segment, which essentially is very powerful our data center tenants, so at the bottom you can see 28% InfoComm Telecoms, 22% in the previous. I think, three, four years, the bigger representation has always been in manufacturing and position engineering machinery and of course, a big part accounted for by Hewlett Packard and Dell.

So on Slide 21, we have the Singapore portfolio performance figures. While our occupancy has gone up mathematically, you can see on the right 90.2% to 91.5%, partly because of the mathematical effect of us taking out Kolam Ayer 2.

Rents have come down mainly because of the rebates that we have given and also the negative renovations of some of their leases. So, 2.2 in the previous quarter, 2.3% in the second quarter.

If we look at the aggregate numbers, we are back to around the second quarter financial '19 and '20 kind of run level on average basis. And on Page 22, we have our rent revisions chart.

We think the performance is relatively stable. But please do not get too excited about some of these large increases, like Hi-Tech Buildings this year 301 figure for new leases.

That's mainly because of the retail related leases we have 18 Tai Seng. So, on a relative basis, you see higher rents down there.

But that aside, the renewals at a still a fairly stable kind of level before after no change to 2.29, 2.29 for the Hi-Tech space. This is for buildings, you can see a slightly higher, positive and revision.

We would also caution that we shouldn't read too much into this increase, the key reason is because we had a tenant that was on a five-year lease, I think then that was on a slightly lower rent, fairly significant amount of space, relative basis. So, with the renewal we have managed to adjust the rents back up a little.

So, it is certainly helpful but we don't think it is a clear indication that we are seeing an uptick, a strong uptick in this case for business topline. So, I think we are looking at some good level of stability.

But the key thing to notice renewal rents and the new rents shape both our passing rent which is represented by the purple diamond and I think that's encouraging. So, the weaker part remains Flatted factories, you can see that in the chart in middle, the new rents, I think are relatively lower 155 compared to our renewal rent on 72 and this due in degree revision of slightly below 2% for some of the leases that we deal with.

So we continue to see more pressure on our small and medium sized enterprises. And this gets manifested in some of this grand levels that we're seeing.

Similar observations for Stack-up/Ramp-up facilities where we do have many smaller size tenants down there as well. So you can see the minus $0.05 and the minus $0.07, relative to the original rents for renewal rents and the new rents coming, so we continue to experience some pressure in this space.

Let's move on. The tenant retention level, I think relatively healthy.

Most of our tenants stay with us long-term. For this quarter the figure is 64.8%, more than four years.

But the more interesting chart on the right, the retention level 77% is still relatively healthy. But I think part of the reason is because unless necessary the tenants will probably not want to take on capital expenditure shift out of premises, and especially now when they may be able to get some rent assistance or relief either from landlords or from the government.

So they tend not to make big decisions on moving and some of them are just bear with remaining in the existing premises. So we won't know whether this kind of behavior will continue, but this is still a fairly healthy retention rate, as far as we can see.

And looking at the other parts of our portfolio, that's what we have outlined on Slide 25. We continue to look at rebalancing the portfolio.

On the left, I think, of course is the better 60% that was done. So that has increased our exposure for the North America, U.S.

part. And on the right, I think there's a most recent acquisition that we have announced.

So this one pending completion around first quarter of 2021, calendar quarter. So we shouldn't be able to move our AUM closer to $7 billion.

And that would also increase our data center, as well as non-Singapore exposure to say about 34%, 35%. So this is helpful in de-balancing our portfolio for more resilient and stable kind of performance.

Moving on to the next slide on Page 26, the divestment of 26A Ayer Rajah Crescent1. This one is still on track.

We are still waiting for the paperwork to be done by GTC as far as we are concerned, just going through the process. And we think, we'll probably be able to get all these completed towards December of this year.

And the next of course is our development project Kolam Ayer 2. As I mentioned earlier, we have almost completed taking down existing structures.

So we are about to start on the construction of the three buildings in the new high-tech precinct. So now we are going through the tender submissions from the construction companies.

And we are already seeing some increase in the construction costs, mainly because of the COVID-19 pandemic. Additional so called the safe distancing measures, additional PPE required and additional kind of constraints on working on site in construction sites, so all these we anticipate to have impact on the construction costs.

And we are now doing our final evaluation, but certainly that would have a material impact on the final project time of value. And we think it is still meaningful for us to continue, because despite this cost increase is still a meaningful redevelopment project that allows us to increase our product ratio by another one time.

And the leasing demand I think continues to be encouraging, especially for some of the Hi-Tech users in this space. So we will probably commence the works in this quarter, once we get the construction kind of bps evaluated and finally decide on the approach and a scheme to go for.

So finally, I think when we talk about the outlook, in Singapore, I think it's still challenging as we have outlined. Economic kind of declined 7% for the quarter.

Of course, if you compare that with the previous quarter, it is less negative, but it is still something to be concerned about. Business sentiment actually had improved for the fourth quarter.

So hopefully the environment continues to normalize a little and that certainly will be helpful for our portfolio. For our Singapore portfolio, we of course, continue to see the pressure being faced by our smaller tenants and a lot of the businesses are affected.

And the rent relief that we have given so far, first quarter and second quarter in aggregate, $7.1 million. We have earlier estimated that we need roughly $20 million, and that's one of the reasons why we have done the withholding of the distributions in the previous two quarters.

So we think the amount that will require should be in the same level of $20 million that we have anticipated earlier. So, we think there's no need to withhold more, but certainly we would have more of this kind of relief being crystallized in third quarter, mainly maybe some spilling over to fourth quarter financial this financial year, because some of these reliefs are still pending, confirmation from the government agencies.

And arrears, as of 30 September, I think still not alarming. We are talking about 1.4% of previous 12 months cost revenue suddenly it's higher than what we have been seeing traditionally.

But as in view of the pandemic situation and condition of the market, it is still a very, very low level. And we think it is a manageable level for us.

Many of our tenants, I think, are working with us fairly closely on their payments. And there are some that they have asked for rent deferment or restructuring, but not that many.

It's still a fairly manageable number, less than a 100 tenants have asked for some of these rent deferment or restructuring. So as a result of that when we think the situation is more or less under control, so we think there's no need for us to continue withholding income for this quarter.

So I think moving on to the U.S. or North American portfolio, it is very resilient property segment.

So there continues to be very strong demand for data center space, and partly driven by this pandemic as well. There's increasing demand for off-site working then the digital connectivity becomes more important.

There's a lot more e-commerce usage as well. So that has been a very good driver for data center kind of needs.

So we think this remains resilient. So in summary, that's our, I think final chart.

We certainly strive to keep the portfolio diversified and we want to keep it vigilant as well. And we have fairly good financial flexibility and we certainly continue to look at the growth through acquisitions and development quite well we have always been doing.

So I think that sums up what we have for the second quarter. I'll be happy to take questions.

Hi, this is Mervin Song, JP Morgan?

Hi, Mervin.

Maybe I think Kuo Wei touched on some of the rental trends, but maybe some color on your expectations going forward. I presume it can be well challenging still, but any green shoots you want to highlight and potential stabilization in terms of timing.

You're talking about the outlook for the rents in the coming quarters. So yes, I think it's not easy to read, but the figures that we are seeing in the Hi-Tech space and business park space certainly a bit more encouraging.

These two properties I think would probably be the first that would see that reverse in terms of the negative rent treasures. My read is that we will get to some level of stability, probably middle of 2021.

So around May June time, because it is too difficult for us to save the company out of the woods, even for some of the stronger assets, a lot of our tenants are still cautious. And we may see certain industry segments that seeing a return of demand return of kind of business activities.

A lot of them are still taking a wait and see approach. So in terms of rent levels, we'll probably be seeing flat kind of profile.

If we are hoping to see any meaningful positive revisions, it can only be second-half calendar year 2021and beyond. That is mainly for the strongest segments like your Hi-Tech space and BP.

BP, maybe we can see some spill over effect from the commercial space in some of the commercial office users looking for slightly more attractively priced alternatives. So that might spur some demand.

And our worry remains on the Flatted Factories and stack up ramp up facility which are all multi-talented kind of facilities. So we think the negative revisions on the rent is going to continue on, at least to say the second-half of 2021, maybe by say September or October next year, which is about a year from now, we'll probably see that leveling off so the weakness is going to continue on for some time, especially when we have a lot of medium sized enterprises in this space.

And some of these companies are being supported by a lot of these government measures, and that cannot go on indefinitely. So if the business environment doesn't improve meaningfully by next year some of these companies can, may really, consider downsizing significantly or going out of business.

So, that would have an impact on our rent and occupancy levels for the multi tenanted space.

Thanks very much.

Hi. Good morning, Kuo Wei.

This is Derek from DBS. Just a few questions from me just follow-up one moment in the past.

I'm looking at your occupancies, and I'm just curious whether you think that your SMEs are supported by liquidity provided by the government in first-half of the year? Just curious whether should we expect some form of weakness moving to the second-half?

Yes, there is a worry, as I think you have mentioned, the government support is actually quite important and is critical for the survival of some of these companies. So, the rental rebase and release had been helpful, more directly from the real estate kind of landlord perspective, and the job support scheme in no government offsetting some of the wage costs.

And also the moratoriums from the financial institutions and banks have been helpful, and that has helped the companies especially smaller ones in managing the liquidity and cash flow. So, as you may have seen in a couple of these speeches and government kind of statements, this kind of system cannot go on forever, and for all industries.

So we see that support probably being kind of wean off towards the end of this year. And some of the tenants may find that they will not be able to continue meaningfully, without this kind of support on the interface.

So, we think there's a risk of us seeing lower occupancies and lower rent levels, especially for the Flatted Factories space.

Okay. So does it mean that job, the big guidance of 20 billion is likely to be utilized, given that you only used about $7 million so far?

Yes, the things is the $20 million, of course, we made some gauge earlier on around the same time when the government had the fortitude budget or supplementary budget. And the rent relief, as a fairly well-defined framework now, out of our 87 properties, of course, 87 because we included the three Kolam Ayer 2.

Now we have 84 plus 387, out of 87 properties we have only received the notifications on the relief details and quantum for 47 of them. Five other eligible either single tenant or dependencies.

So, we have a balance of 45 multi tenanted properties that are done that are assessed by IRS for property tax on a global basis. So, the kind of relief details are still pending the confirmation from IRS, but we are very certain based on the indications that we have received for the 37 buildings that are really are processed.

Most of the smaller size companies will get some form of relief. And we think we'll probably utilize most of the 20 million that is anticipated.

And if you look at the amount that we have set aside $6.6 million from the fourth quarter, $7.1 million in the first quarter, $13.7 million and of course in the first two quarters of the financial year, we have really used $7.1 million. So we think the balance $6 million or so will probably be utilized.

And some of the effects will be manifested in slightly lower pain of revenue collected for either third quarter or fourth quarter. So, that kind of balancing kind of outcome will probably be seen in third or fourth quarter.

So, at the end of the day, we're looking at a fairly, even kind of distribution profile for the rest of the financial year, without us needing to set aside more income.

Okay, sound good. So, last question for me.

I noticed that you mentioned earlier in the quarter that your interest cost is expected to drop a little bit. I also noticed that your hedge ratio is quite high this year, whether are you looking to go towards more floating when the hedges come due?

Well, in short, yes. I think when the debts due in the next year or two, we will probably look at refinancing certainly them and then try to match the interest rate down a little as the interest rate environment is fairly conducive.

But I think we want to be able to do it in a prudent manner because some of these debts and in some of the interest rate hedges are really in place. If we are buying is just weighing them now it's just a case of us crystallizing the differential in a loss.

So, we will look at the expiration in the next one, two years. And then of course, try to take advantage of the current low interest rate environment to adjust the run rather the interest rate down.

And that of course would have an impact on our profile, whether it's more fixed or more floating, but I think in all likelihood, we will probably still have a reasonably high level of fix debt because of the nature of our portfolio, but there's a good likelihood of us moderating that ratio down later.

Okay, sounds really good. All right.

Thank you very much.

Hey, hi. Yes.

Can I just ask a couple of questions, just on the Kolam Ayer 2, right? Can you give us a bit more details on how much construction costs you see rising?

And what's the impact on your initially guided year on call?

I see, a finger sign pointed at me. So, we are putting a big question around there.

So we, of course, running a tender now, and is probably better. Not for me not to outline that range.

Because I don't want some of these contractors who are bidding for the job to anticipate and manage the negotiations. But it's a small increase.

If it is a $3 million to $5 million increase, I think I'll tell you upfront is not small, because the contractors across the board faced with this additional kind of measures they have to bear. And some of these costs have very real.

So, we were trying our best to find ways to structure the construction contract and then manage the impact. But as what I've outlined earlier, we think this is still a meaningful project for us to take on and the additional GFA that we are creating is very significant, especially when we are not needing to pay for the additional land, so to speak, for additional GFA that we are able to utilize.

So, the value creation is fairly significant. So, we think the project is able to accommodate the construction costs increase.

So, our focus now is just to try to mitigate and manage the quantum of increase. And suddenly, once we have those contracts locked away, we will outline the revised set of figures.

But right now, as I said seems we are in very close negotiations and discussions as some of the bidders I think I'd rather not posture any kind of range hit.

Okay. Does it actually - I mean we bought it because in rising construction costs, right, that we kind of change a decision on a couple of the AEIs that I think you were previously guiding for like the one at [indiscernible]?

Of course, we would have to take this into consideration. The [Indiscernible] is a fairly significant redevelopment, if we were to embark on it, about double the size of the [Indiscernible].

So it's not something that we have planned to anyway, to start immediately. And we want to look at the leasing momentum and the level of demand, and where the demand is coming from for the new space that we are creating now.

So practically, even with or without the COVID backdrop, that project will come on early as maybe two years from now when we near completion of Kolam Aye 2 and we have a greater clarity on the level of commitment. And also, we have to keep our eye on the impact of the portfolio when we take down operating costs that's contributing income effectively.

Kolam Aye rather the [indiscernible] cluster is larger, quite a lot larger than the Kolam Aye 2 cluster. So the revenue impact is significant and we have to keep an eye on the development headroom as well.

Now that our portfolio size is a little larger, we are a little less constrained along that front, but this is something that we have keep an eye on, so that we don't use up the available headroom. So we would certainly be more careful.

And we'll be a bit more conservative in our assessment, especially on the construction costs and timeline impact. For sure, this will be the new norm unless the world convincingly shakes the disease off.

But I think, we might have a good chance of seeing that you look at it practically we only start the detailed planning and execution probably two years from now. So if two years from now, you and I are still talking about COVID it must be really a dire situation.

Then of course if the economics do work, see if we can still find certain segments of the industries that would one well specked facilities and in those few select locations. Economically, it may still be meaningful for us to push ahead with a project, but we will be more sensitive to the timeframe and the costs in overall assessment two years from now.

Okay, all right. Thanks a lot Kuo Wei.

That's all for me. Thanks.

This is Donald from BofA.

Hi, question on the deferment. You mentioned that there were 100 tenants so far.

What's the trend line for the deferment say for the first quarter versus second quarter of the 100? Was there an increase or was that or has it started to come off?

The number is about the same. In terms of the number of tenants asking for deferment, I think the first quarter we talked about 105 and this quarter was a 94.

Okay. So in total or per quarter?

At any one time. So we have slightly fewer that have asked for kind of deferment, but I think that kind of number difference probably not so significant.

So, you saw reference of 100 tenants, any onetime that have asked for some form of deferment.

Okay. And this is as a percentage of revenue so far, any guidance on it?

That was about 6.9% of monthly NPI for the Singapore portfolio.

6.9% of monthly NPI.

Yes.

Okay. And how many of these is hiding under the COVID view?

And we're supposed to unofficial?

We will not say that they are hiding, they are just some of them availing themselves to this ex, about one-third.

Yes, about one-third. It's equivalent about just 290 of monthly rent or about 1.1% of NPI.

Okay. One quick follow up on the rebates question earlier.

I think I missed it. How much is being really was released this quarter?

What is in total for the half? Is it $13.7 million, or what was the number?

Okay. In total for the first two quarters we released $7.1 million.

Okay. And you're expecting you're providing for '20.

Yes, we're looking at around '20. So we think there will be more than $7 million certainly more than that in third quarter and fourth quarter financial year.

As I've outlined earlier, some of the notices that were already processed by IRS for the 37 buildings, and some of these have of course MNCs and larger companies, who are not eligible for the additional relief. And that's why the kind of crystallization or relieving, it'll lower in the second quarter.

But third quarter, we'll anticipate that most of the multi-tenant buildings will be processed and assessed by IRS, and most will get crystallized this quarter. So we take this is whether a third quarter will probably be the quarter where we would release some of the amounts with help to balance of the impact of when released that we will need to give.

So we will calibrate that and see. But generally, we would expect everything to get even now for the financial year.

Most will be in third quarter, there'll probably be some spillover or residual type of rebates going into fourth quarter of the financial year, but that should be all.

Okay. So it's assuming you release the entire $20 million.

The remaining $13 million will be spread in the next two quarters in the fiscal year?

Yes. That is how we see it.

And of course, we would use the amount that we have earlier to then try to offset the effect over the third quarter and the fourth quarter. Depending on finally, how much gets confirmed by IRS within a quarter.

Thank you so much.

Hi.

Yes. Sorry.

David, you can go ahead.

Thank you. Thanks.

For the Ayer Rajah Crescent divestment, is it necessary to distribute the $19 million in profits over three years? Shouldn't you just reinvest everything into the Virginia data center?

It's something that we can do. But at the end of the day, we would look at the effect on the portfolio and where we get additional funding from.

So, yes, suddenly, a bigger part of the proceeds was reminded of course, this one was $125 million. A bigger part of our proceeds would be recycled.

This $19 million is essentially just the profits that we are distributing. So there's no kind of standard guide on this.

But I think our original intent then was to of course, distribute the profits, especially when this is a fairly meaningful quantum to unit holders.

Okay. Got it.

And the Virginia data center, can you provide some guidance in terms of the yield that you're going to acquire?

Not at this stage, because that vendor is extremely careful about this the confidential information. And we want to lock away all the commercial and financial perimeters first before we outline anything this is unfortunately, is the nature of some of these type of transaction.

So in terms of I think profile quite similar to what you would normally expect for data centers with this quality of tenants and then release in place that. But please do bear with us.

We, of course, would very much like to review a little more about that. The other party is a little sensitive about the information being released way ahead of time.

So, we will probably be able to provide a little bit more details in the subsequent engagements of proposition.

Okay, great. Thank you.

Got it.

Hi, it's [Indiscernible] from UBS.

Hi, good morning Kuo Wei. Just to follow-up on your comments on rental outlook.

For Flatted Factories, you mentioned negative reversion likely until September next year. May I know, what is the pace you are expecting?

I think previously you guided around 2% to 3% negative reversion. Has that changed?

The 2% to 3%, I think, when we look at the overall kind of portfolio on a lease by lease basis, I think probably minus 5% is the kind of range around minus 5% level is what we anticipate.

For Flatted Factories?

Yes, for Flatted Factories. Okay.

Secondly, on your Ayer Rajah divestment, are you able to share what drove Equinix to exercise their option? And so do you have any other buildings with such option?

Okay, the second question is very easy to answer, no. So that is the only asset that we have with this kind of option.

So we certainly try not to embed these kind of option in because we want our portfolio to give us the stability. We do not want the portfolio size or string can expand radically over time, especially when this kind of structure is in the form of an option, which may not be something that we have control in terms of the timeline and exercise kind of flexibility.

So from what we understand, Equinix had the kind of balanced approach in their own portfolio management. We want to have ownership in some of the key nodes or key hubs, and it's also prepared to lease space in other premises.

So we do have Equinix as a tenant, even in Singapore. So what I think we did that upgrading project and for the entire building for Equinix.

It's also in our facility in the U.S. at 180 Peachtree.

So it has a kind of hybrid model, need not all, and it is prepared to lease even in some of the key datacenter locations as well. So for this case, because it is one of the key connection point for Equinix, there was a reason at that time when we had this project being initiated it wanted the option to purchase to do in not negotiable point than when it was looking for the developers they hold up with.

So it's a same condition, it has putting across to auto bidders for this project then. So, it was a deal breaker condition then, and we have considered long and hard.

And at that time, of course, we were still trying to build-up our capability and track record in this space. And we thought, okay, finally to say something that we could take on, we have worked out all the financial impact in economics, still, of course, financially meaningful for us, at that time when we did a transaction.

So, there was one other consideration this Equinix had then. And that was our commercial gauge at that time.

Of course, we are very careful in this kind of options, because suddenly would resist giving any of these options as far as possible.

Yes. Thanks.

Sorry, just one last one. On data centers, have you seen any carrier compression, since you last bought your first U.S.

portfolio a few months back?

Since that first one, certainly, I think that one, where we bought it, there was just a shape below 7% about 6.9%. And I think now if you are looking at equivalent kind of assets, you'll probably be looking 6.5% to 6% and for hyperscale facilities or it'd be even lower.

And as you might have seen in the transactions, being done now a lot of investors are still putting in a lot of money in this space. So, for some of the key markets U.S., I think if you're talking about pure coin show to probably be trending below 6% already in terms of coverage even for simpler kind of essential portfolio.

If we're talking about very established tenants or very strong tenants and in several of these key locations, you may even be pushing the 5% level in terms of coverage.

Thank you very much.

Hi, Kuo Wei. This is [indiscernible] here.

Hi [indiscernible].

Can you share a bit more about where this new leasing demand in Singapore coming from?

New leasing demand, I will be hard pressed to really identify certain bright spots, really the market. I think maybe the description is which one is less weak.

So, I have Khim with me, she is facing these kind of questions on a daily basis. And then I'll let her give you a bit more color from our perspective in engagement of the prospects from the different industry sectors.

Good morning. This is Khim.

Returns, like policy returns achieved less weaker, because the new demand or we don't really see. We see still a little bit more and musical chairs than the industry that is still doing okay is still the biomedical companies, the precision engineering and the semiconductor industries.

So, those that is supporting the hospitality on the retail, the wholesale trade, those are hard pressed. So, this is some color I can give you.

How we could attract more people? Seriously, we really have to try to find that niche for our property.

I hope that answers your question.

Yes, it is. If I can follow-up, if it's more than musical chair, how low are you willing to sort of lower rents in order to attract location demand?

Okay, I think that is the era that we actually want to play in, we would want to be doing a price war. So, what we are trying to find is those customers or companies that find our place suitable maybe because of the locations not so much of the specs, but sometimes it's really the location and then the usage pertaining to that trip.

So, we are trying to comfort this niche instead of going to the price war.

Okay. Got it.

Thank you. And my second question is on data center, can you share how is the acquisition landscape in like both in U.S.

and outside? And should we be expecting more acquisition in the same year in the near-term?

If you're talking about acquisitions, I think we would, of course look at the potential acquisition of the balance 50% of the sponsor for the portfolio that we acquired from digital. That one was very much depends on the sponsors' timeframe.

But it's something that we could work on. Other than that, we are still looking for opportunities in a key market, and nothing that we are able to really crystallize at this moment.

Nothing that is near kind of mature level where we are able to transform into a workable deal, a lot of this RFPs being done in the market. So we are continuing to look, nothing yet.

In Singapore it's even more difficult, as some of you might have seen that moratorium being put in place by the government agency. So it's very difficult to get new data center developments being approved.

So while the demand continues to be very strong, in Singapore, the likelihood of us being able to crystallize and other due to suit, in the very near term is quite low, because you can't even get the agencies to give the core hit. So I think the market may only open up in 2021, probably from mid-2021 and beyond, not immediately.

And then if I can just last one, what you mentioned about overseas data center assets. Is it due to lack of asset output sale?

Or is due to disagreement on price deals that are coming due?

I think the deals are still sufficient once in a while. I will characterize it as a lack of transaction or lack of opportunities.

I think, in terms of availability may not be as many as what we see in the last two or three years. But it's still transactions being done and opportunities being surfaced every now and then.

But I think the bigger challenge for us is actually price, very sharp cap rates. So we find that the some of these transactions will be a bit difficult for us to do.

And then for the deals that are done may not be done in the market now may not be something that we will be able to price competitively.

Thank you all for your questions this morning. I think they have some questions online as well.

Maybe I just read out once before we end the session. From Fraser Smith, how much of the $7.1 million went to the relief in 2Q versus 1Q?

1Q was $2.5 million. So the balance, of course, about $4.6 million $4.7 million in the second quarter.

I think we can end the session. And if there are any follow-on questions please send that to myself and Hwei Leng.

For the webcast questions, we'll try to get back to you. We'll drop you an email, I'll contact you.

Thank you, everyone. Stay safe.

Yes. Thank you very much for joining us.

Thank you.

Thank you. Bye-bye.

Okay. Thank you.