City Developments Limited (C09) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, friends from the media, analysts and fellow CDL colleagues. My name is Belinda, and I'm the Head of Investor Relations and Corporate Communications at CDL. Now on behalf of CDL and the management, a very warm welcome to CDL's briefing on its unaudited financial results for fourth quarter and full year 2019. Due to COVID-19 situation, as a precautionary measure, we have intentionally kept this briefing in this room to a much smaller scale with just friends from the media and our sell-side analysts. We thank you for your patience in going through the temperature checks outside. And even though the physical meeting today is kept small, we know that many of our bankers, investors, analysts and media have actually joined us on live webcast, and that is probably 4x more than the people in this room. As you came in this morning, you would have noticed a poster with a QR code for you to scan. And the QR code is now flashed on the screen. In line with CDL's commitment to environmental sustainability, we will not be providing printed materials for our briefing. Instead, we encourage you to please scan the QR code on the screen to download and view the following documents that was released to SGX this morning, and they include a detailed financial statement, a press statement, summarizing some of our key highlights of our performance, a presentation that the group Exco will be going through very shortly. Now for all our guests who are joining us on the live webcast, you will similarly be able to download these documents, which are also available on our website. I would like to introduce you to the CDL management panel. In the center is Mr. Kwek Leng Beng, our Executive Chairman; on his right, Mr. Sherman Kwek, our Group CEO; on his left is Mr. Chia Ngiang Hong, our Group General Manager; nearer to Mr. Chia is Mr. Kwek Eik Sheng, our Group Chief Strategy Officer; nearer to me and next to Mr. Sherman Kwek is Ms. Yiong Yim Ming, our Group Chief Financial Officer; and next to Ms. Yiong is Mr. Frank Khoo, our Group Chief Investment Officer. Now the format of today's briefing will be in 2 parts. Our management team will kick off with a presentation of some of the key highlights of our performance, followed later by a Q&A opportunity with the panelists. So without further ado, I would like to invite Mr. Sherman Kwek, CDL Group CEO, to kick start the presentation, please. Mr. Kwek?

Thank you, Belinda. Good morning, everyone. I'm sure you've been through our slides already since it's been uploaded online. So I'll try to keep this brief and leave more time for Q&A. Okay. So just a quick snapshot of our financials for last year. Sorry, I had to angle the way I stand, so I'm in front of the mic. In terms of Q4, we actually had a very credible set of results, despite the environment was pretty challenging. And of course, this was partially helped because we actually had lower impairment costs for hotels. If you all remember, we actually did quite a fair bit of impairment in Q3 before M&C was privatized. And previous year Q4, there was also a high amount of impairment. So low impairment Q4 helped us to really drive a resilient set of numbers. For 2019, unfortunately, the picture isn't as rosy. You will see that especially on the top line we show quite a big drop of close 20% in revenue. And this has obviously affected our bottom line as well. And primarily, I think, this decrease is due to recognition timing for property development. That's one bit of it. And obviously, it's also to do with the fact that we had a lot of strong legacy projects that were completed and that had high margins. So those were in 2018. So if you look at the list there, right? All 4 of those projects were completed, back then, and that was a New Futura, Gramercy Park, Suzhou, Hong Leong City Center as well as Criterion. So in Criterion's case for EC, as you know, we recognized in entirety upon completion like a bullet form. Whereas in contrast in 2019, the 2 main projects that were supporting us throughout the year were The Tapestry and Whistler Grand. Tapestry margin still very strong; Whistler Grand not as big as we would like. And so all this, I think, led us to have a more challenging year in 2019 when we were recognizing the projects that we were developing in the past. And in terms of PATMI, the reason, obviously, it's still a strong and still up as you all remember. I mean we divested and closed out of PPS 2. PPS 2 had the 3 properties inside Central Mall Office Tower, which we bought back from a CDL standpoint. Then we had Manulife Centre which we divested together with the fund. And then we also had Tampines 7 and 9, Tampines Grande. So that was also sold. So that gave us a very, very strong boost to our PATMI. And hence, on the bottom line we're still up. In terms of key -- in terms of other metrics, our NAV per share is up and then obviously, a lot of analysts ask us all the time. What is your true revalued NAV, right? I mean -- and usually, we don't provide it in the past. So everyone goes and calculates their own. But this time, we thought, okay, we'll save you the effort and give you the RNAV, which is $16.46. So we can see our share price is still trading at a very big discount to RNAV. ROE, a little bit disappointing. It's down by 0.2 percentage points. I really feel that I think we need time to improve this metric. I think I have given everyone a commitment that in the long run, I think we'll target towards a 7% to 8% ROE. But we need time to get there as we continue to rejig our portfolio and our income streams. Proposed dividend, we are doing a -- declaring a dividend of $0.20, which will be the same as last year as the year before. And this will give you probably around 33% div (sic) [ dividend ] yield. And of course, on the right side is the share price performance. We were up by around 35% for 2019. So that was pretty good. In terms of property development, we were the most active developer last year. I don't think any other developer launched 6 projects. So it's a very, very busy and tiring year for us. I saw our team go through so much pain, but they were very excited, very motivated, and I think we produce a very credible set of numbers. Last year, there were -- it was a year filled with immense supply. There were 52 projects launched last year. That I'm guessing that must be a historical record in Singapore, so a history in terms of number of projects launched. 52 projects I think equates to around 16,500 units or thereabouts. So big amount of supply that came into the market last year. Of those units that were launched roughly for the whole market, roughly about -- projects that launched in 2019, roughly about -- just over 5,000 units were sold for new projects launched in 2019. The whole market sold were 5,000-plus units. And our group actually accounted for almost 1/5 of those units. We sold just over 1,000 units last year. So I think this was a very, very strong and credible performance. The reason I said just over 1,000 the first slide is because the 1,554 there includes projects that were not launched in 2019, right, so your Tapestry and other projects. So for the year, we sold 1,554 units with $3.3 billion. But I'm just saying that for projects launched last year, these 52 projects that were launched, 5,000 were sold. We accounted for around 1,000 of that. So 1/5 of the new units. So I think that was a very credible performance. Home market ended up selling around 10,000. If you don't include EC, about 10,500 include EC. There were a total number of units moved for all projects, not just those launched last year for 2019. So we had 6 projects that were launched. Boulevard 88 was the first one to go in March. And as you all know, that may have been a very, very high-end luxury project that's priced, also very, very high. But it moved extremely strongly. I think it created a strong value proposition for our most luxurious project to date. And then we have Amber Park that went next in May. Then we had Handy that went in July. Piermont Grand, the only EC launch last year that went in July. And Sengkang Grand Residences that went in -- they started selling in November. Nouvel 18, we put it in gray because as all of you remember, we had divested all the equity in Nouvel 18 into our PPS 3 structure. So it's actually held -- the equities all held by a group of high net worth investors. But we continue to be the sales and managing agent. And -- yes, and so we moved that as well. And so you can see that in total, we launched 2,434 units last year, and we sold around 43% of it in the year. So well, in the year, plus a little bit into this year, January and February. But much of it was done last year. And I will say that's a very, very credible result. I mean, having sold 43% of the units we launched. So moving on, in China, we are thankful to have a strong support from China, although this may be last strong burst from China since our so-called inventory has been dwindling down there. So in Suzhou -- so last year in China we sold 530 units, total sales value of CNY 1.81 billion. Suzhou Hong Leong City Center, HLCC as we call it, contributed strongly. Our 2 JV projects with Vanke, in Chongqing also did very well. Emerald in Chongqing has been setting a very strong record prices in Chongqing, a high market. And then our villa project which has already broken even. I mean we are now left with maybe about 30 units or so. We will just slowly keep that and maybe dribble that out as and when. In Australia. You may remember, we mentioned in a previous announcement we acquired the residential development platform of Abacus Group. Abacus is a listed property developer, they wanted to exit the residential market. So we acquired the platform, which came with a small team as well as 3 land sites. So we launched the first site last year in May, which is The Marker. It's in Melbourne. And we've already sold over 60% of this 195-unit project. So that's a great testament to the fact that we're able to continue executing in Australia, especially after our other project, which was Ivy and Eve in Brisbane. That's a 472-unit project and fully sold, fully paid up, fully handed over already. So that project is all done and dusted. In terms of asset management, we won't go through every property, but you can see we still have a very strong committed occupancy despite office market facing some slight headwinds ahead. But still remains strong I think. And because we did a 70 million AEI, Republic Plaza, we hope you like what you've seen so far. Our big LED screen, it's a real talking piece as well as all -- we changed all the list to a destination control system, DCS. I mean -- and really provide a lot more food and eateries there. So people are really dining strongly at RP. Every day, there are long queues. So I think that really helped us. We have seen positive rental reversion in RP. Rents have definitely continued to trend up after the AEI. And across the office and retail portfolio, occupancies are strong. In terms of overseas, we made 2 big acquisitions in 2018, Aldgate House, 125 Old Broad Street, both in the city of London, that 1-square mile where the most prestigious buildings are. And we are happy to report that in terms of valuation, both are up; in terms of rental, both are also up so this portfolio has certainly made us very proud, and we are certainly looking at certain plans ahead. In terms of our hotel operations, last year was definitely a big milestone for us. In October/November, we finally completed the whole privatization of Millennium & Copthorne. And now certainly, our Chairman can be even more hands-on to help drive a turnaround in that business. And the -- so far, I think in the past, M&C has certainly been plagued by a lot of impairment losses. We see that, that will likely slow down. And of course, last year, we also had taken transaction costs for the privatization, which was not small. And the closure of the Mayfair certainly had a big impact on the year. There was also another hotel that went through a big renovation under CDL Hospitality Trust. So that's the one in Dhevanafushi in Maldives. So that's been repositioned as Raffles Meradhoo. And of course, we refurbished our Orchard Hotel, one of our steady performers in Singapore. So now we just show you at the bottom the pie chart, you can just see we just did a quick breakdown. I mean 156 hotels, 43,500 rooms and what the kind of breakdown looks like. In terms of fund management, Frank, I think, continues to drive forward. We have -- we made a strategic investment in IREIT Global, which arguably was quite sleepy in the past and share price wasn't going anywhere. And since we got involved with them and met up with their team and really worked with them to rejig the strategy, I'm happy to say that our investment has shown fruit as well, has borne fruit as well. Share price of IREIT is up. I think we bought it at $0.75. And now IREIT is around $0.80, $0.81, $0.82 -- maybe, $0.82. And one of the reasons the share price up also is IREIT has started becoming active. IREIT used to own 5 office properties in Germany. They've recently done an acquisition in so-called in Spain where they've acquired another 5 (sic) [ 4 ] office buildings, spread out throughout Spain. So the market took this news very positively -- sorry, 4 buildings in Spain. So this, I think, is great news. And we're certainly on track with our AUM target. I think Frank is looking at a combination of various things, private funds and potentially listed entities as well, so listed format. So I think we have several options open to us. In terms of total assets, we grew CDL Group's total assets by 11.5% last year to $23 billion. We completed SGD 2.3 billion of acquisition investments. Obviously, the biggest one is the $1.3 billion, which is the M&C privatization. And then obviously, we had a few other acquisitions in China, Japan and Australia. This is just our portfolio composition by segment by EBITDA, you can see that property development and investment properties are more or less equal in terms of contribution. And then if you move on to the next slide, this shows you the geographical spread. We still, obviously, have Singapore taking up the chunk of our so-called assets and revenue. And over time, I still see this changing a little bit more as our overseas starts to play more prominence. But right now, certainly, Singapore has been still a very strong performer for us. In terms of sustainability, we thought we will throw in 1 or 2 slides on this simply because sustainability is such a big thing on the global agenda of the world. Last year, we saw activists like Greta Thunberg from Sweden, all that really pushing this issue to the forefront. And I'm surprised it took so long for, I think, the world to stand up and take notice of such a pressing critical issue. But finally, I think we're starting to take climate change more seriously. We have also been able to harness our track record in sustainability and green and use it I think to really benefit CDL's business. So you'll see there that we put in place, we put in place $500 million of green loans. And we've also done a $250 million SDG innovation loan, meaning that the loan is one of its kind where -- first of its kind where the interest rate is pegged to the amount of innovations that you come up with. So if you come up with enough innovations that certified by certain committee, then your interest rate actually goes down. So that's a very, very, I think, creative and great instrument to encourage firms to be more creative, to be more sustainable, sorry. And so in terms of 2019 environmental performance highlights, we saved $28 million across 8 CDL properties over the last 7 years. We have done a 38% reduction in our carbon emissions since 2007. And obviously, we are one of the leaders for the Green Mark certification in Singapore with 110 Green Mark developments. So we continue, I think, to push forward in our sustainable efforts. This is just a slide with all of our accolades. All of them are great, but obviously, the one that I'm really encouraged and proud of is the one on the right-hand side, the Global 100 indices by Corporate Knights. It's a much looked-at list in the sustainability arena. And for the -- we have been ranked there for 11 years. So only Singapore company to rank on this for 11 consecutive years. And this year, we were the top-ranked Singapore company on the list, and the top-ranked developer globally. Okay. So we're the #1 developer in the world in terms of sustainability according to this ranking. And I don't know that really made me feel very proud of CDL and validation of all the efforts that have been put in, not just by us, but much of it also by our predecessors since we started going to sustainability in 1995, which is more than 20 years ago. So -- well, exactly 25 years ago. Operating challenges from COVID-19, I think this has been a big discussion lately. I mean we all know the virus has certainly had an impact on us locally and even more detrimentally to China. It is -- I can only say that it's transient. It's temporary. I mean it won't last forever, eventually, I mean, we will get through this. It's just a question of no one knows how long it will take. And so we've also put in place measures. I know you have just come from another -- most of you have just come from another briefing this morning. So you've heard all the measures they've taken. We don't have as much of an exposure to retail. I mean -- but certainly, retail has been hard hit for us as well, both in Singapore and overseas. But we see the crowds coming back. I think if any of you go out after a weekend, you can see that crowds are coming back. Even the past weekend, if you go to malls, especially for more popular restaurants, lots of queues, right? So -- and if you want to talk about residential sales, hasn't affected us that much, a little bit of effect on the high end because some PRC are no longer able to come to Singapore to view -- to go to our show flats. But still, we've been steadily moving our luxury projects. And as you can see by another developer's launch over the weekend, it certainly didn't keep the crowds away. I would say the biggest effect it's had within our portfolios is on the hospitality side. Our hotels have certainly taken a very, very severe hit from this because of -- again, the cuts in terms of tourism and tourist flow. So we will continue to monitor. I mean we are certainly coming up with a slew of measures as well on the -- like retail side, we are passing through also that 15% property tax rebate from the government. We're passing it through to our tenants. We are coming up with a whole slew of other schemes to help them. So we'll certainly keep a close eye on this. But we believe, I mean, that we will get through this and be stronger than ever. And anyway, I would like to commend that, I think, our local government has done -- Singapore government has done a really good job, I think, containing the situation in our country. Strategic initiatives. This part will be very fast. I'm just going to go through the GET strategy that we came up with 2 years ago. This is the completed acquisitions, investments that we did last year. I've gone through almost all of them. And so you can take a look for yourself. There's Sims Drive there as well. That is a project that our JV partner is running, but will be part of our launch of this year together with Irwell Bank. Yes, speaking about Irwell Bank. This is the site that we won in the first GLS tender, batch tender of the year. Very, very happy to have gotten this site. And for those of you that paid close enough attention, we actually bid for this site at the same per square foot price that we bid for Amber Park, which is $1,515 per square foot, which coincidentally is the same price as also what CapitaLand paid for this 1 per bank for that -- which is $1,515 as well. So it seems like a nice magical number for all of us. Although I don't think I can ever use it again going forward, now that I've said this. And in Amber Park, we were actually about 4% above the next bidder. And here, we were also about 4% above the next bidder. The next bidder was at $1,450. So it was a very, very narrow victory. We're very proud of this site. I think it's going to be fantastic, great location. Many of the research reports, I think written, mentioned that our price was actually below what people thought the site was going to go for. So thank you. I'm glad you think so, too. We love it, and we do think it's going to be great. And obviously, with the Great World MRT station coming up, it's definitely going to enhance the connectivity of the area. Redevelopment of Liang Court, this is obviously a big project in the works. It's a JV between us and CapitaLand. Quite complex structure, so I won't take you through it. Essentially, it involves CDL Hospitality Trust selling us the Novotel Clarke Quay -- or selling it to the consortium, sorry. And eventually we'll redevelop it and deliver back to them a hotel, which is now our Chairman has chosen for it to be branded Moxy. So it's one of the exciting young lifestyle brands in Marriott. And the rest of the development is going to certainly have a -- we're going to have about 700 residential apartments. I mentioned before that if you go there now and go into the Novotel Hotel, right? I mean, the views are stunning in almost every direction, Fort Canning Hill, Clarke Quay, I mean, unblocked views. So I think the resi there is going to be really fantastic. And yes, I mean -- so it's going to be a JV project between us and CapitaLand, and looking forward to this. In terms of recurring income assets, we acquired 4. Frank went shopping in Japan, acquired 4 rental apartments in Osaka. And Osaka, as you know, is the likely contender for the casinos. So I really think there's a lot more upside there. And we also acquired this office project from Sincere, our partner. It's 11 blocks of office and so-called -- it's 9 blocks of office and 2 blocks that became a serviced apartment and basement carpark. We divested -- so we bought back the W last year and as all of you would have read, and then we divested -- we are in the process of divesting it to the REIT Hospitality Trust to our REIT. The REIT had the EOGM last month, approved it overwhelmingly. So nice to see that, and we'll be selling it to the REIT. Price is $1.35 million per key, $324 million. These are the images there. We've already actually been doing an AEI in the hotel. The hotel is getting on with age. So you can see that some of the areas look really fantastic. The one on the right is the new WOOBAR. That's a real-life shot. The one on the left, The Kitchen Table, that's the main dining restaurant that's rendering, but it's going to look great after the renovation. We are taking this chance to also do a renovation for our retail for some of our commercial assets. So especially since, obviously, with the virus there. Anyway, the retail assets are not going to do as well right now, and the crowds are thinner. So we're going to capitalize on this opportunity to start doing some AEI. So here is Palais Renaissance. We are just showing you some renderings. But we think this will really help, I think, to reposition this mall. I think this mall has always suffered anyway from lack of foot traffic so this will start to really drive a stronger visitorship, and we're going to really refresh things through Palais and make it a destination more for people to go to. This is one of our pride and joy. It's in Phuket. Although Phuket has seen an influx of a lot of new retail, more supply in the last few years, but this because of its sheer scale. I mean NLA of this mall is about 770,000 or thereabouts. Okay, it's still one of the largest malls in Phuket and drives strong foot traffic and has 2 Millennium hotels attached to it. So we are just showing you a few visuals. But obviously, we're still fine tuning, but I think this is a great time to start. This mall also depends heavily on PRC visitorship. So unfortunately their numbers are all down quite majorly. They have seen an increase in Indian tourists. But unfortunately, as the mall has conveyed to me, Indian tourists don't spend as much as PRC tourists. So we still need, I think, the PRC numbers to come back, but we are taking this opportunity to really -- this mall has been seeing increase in performance over the last, I think, 15 years and has really been a strong performer for us. We're also taking the chance to do 2 industrial buildings that we wholly own and that are freehold, and that's a City Industrial Building and Cideco Industrial Complex. Not that far from each other. And both buildings, you may say that, oh, they both look alike, but that's because, again, I think we are just trying to -- our asset management team would like to try to imbue these assets with a bit of a common identity. So you kind of look at them and you know they're going to be CDL buildings. And so we're going to uplift -- facelift them to this extent. And I think the planned completion is Q4 this year. And I think this will really help to drive the asset value as well. Industrial sector certainly has continued to be under pressure, but the fact is our rents have been pretty disappointing at these buildings. And the main reasons because of the age. I mean it's very, very old and rundown. So I think it's about time we give it a bit of a boost. Another big renovation we did last year was The Biltmore Hotel, formerly, the Millennium Mayfair. We spent GBP 60 million renovated the hotel. Now it's under Hilton, this affiliation, which is the LXR brand. And we have high hopes that this hotel will perform strongly in the future. It now looks splendid. And lastly, on transformation, my final slide. M&C privatization was one big milestone for us now. Obviously, it's time to take stock of this whole portfolio and really drive performance out of it. We'd be able to see the synergies that we need to see and be able to really drive a turnaround, especially in the U.S. region which has always been quite troubled for them. We also want to be, hopefully, a more active sponsor to our hospitality trust. We sold them W Hotel -- in the process, sorry, of selling the W Hotel, probably complete next quarter. But we hope to be able to see them with even more -- to be able to feed them with even more assets and pipeline. On the right is Sincere. I'm pretty sure there are going to be a lot of questions about what's going on with Sincere. Last year, we announced that we'll be investing in Sincere and taking a 24% stake. We never consummated the transaction, although it's been signed. And right now, because China went through a very tough year last year, and obviously, now it's being hard hit by the COVID-19 virus, we have the opportunity to actually renegotiate the terms on it in our favor. So we are now renegotiating Sincere. I can't share anything more than that, but we will certainly provide the details once -- we will make the announcement once the terms are finalized. And on the right-hand side, as I said, Frank, certainly has his work cut out for him. But he has certainly delivered well, acquiring our office buildings in the U.K. and actively building up a pipeline of assets that we can, as I said, in the future, use for be it for private or public format monetization. And he is building up our fund management track record as well. And we are 50% of the manager of IREIT, as you all know, too. So okay, on this point, I'll hand it over to Yim Ming, who will take you through the financial highlights. Thanks.

Thank you, Sherman. Good morning, ladies and gentlemen. Delighted to share some color on the segment analysis. So I thought this is a -- provides a snapshot of how we have performed for our core segments at PBT level. So for property development first, I think for full year, I think Sherman has elaborated enough, is really because of timing of recognition and the projects that contributed. So I guess I'll just go on to quarter 4 2019. If you look at quarter 4 2019, you will notice that revenue is up but PBT is down. So because that's also due to a few reasons. I think, number one, because the projects have contributed to quarter 4 largely Tapestry and Whistler Grand, which has smaller margins than Q4 2018, which is largely boosted by New Futura. And of course, in 2018, we also have some finalization of cost for main contractor, which is why added favorably to PBT for Q4 2019. Next, we'll go on to hotel operations. So revenue is up, boosted by W Sentosa, which Sherman, I think, mentioned earlier so which we acquired back in April 2019. And so as for this segment, notably, you generate a loss both at PBT level for both quarter as well as for full year. I know many have burning questions on this hotel operations, so I'll leave this challenge for Eik Sheng who will cover the hotel segment later. Next, let's move on to investment properties. So you will have noticed as well where Q4 2019 where revenue is up and PBT is down. So for this, I think, really the increase in revenue is reflective of the acquisition growth that we have made. Lastly, the 2 U.K. properties, Central Mall as well as Le Grove whereas the decline in PBT is really because there was less gains from PPS 2 that's recognized in Q4 2019 versus Q4 2018. The PPS 2 unwinding, we have recognized some gains progressively as we slow down the properties. So this was really more of a timing on quarter-on-quarter difference. So next slide, let's look at really a bar chart of the revenue by segment for Q4. So Q4 2017, you see a -- included Brownstone EC. So you see this over towering green bar on your extreme left. Whereas Q4 2019, Property Development was higher than Q4 2018, much thanks again to Tapestry and Whistler Grand. Hotel segment you can see remains fairly stable. And in investment properties, you see a steady increase over the 3 quarters due to acquisition growth. Next, we move on to PBT by segment for the fourth quarter. So Q4 2017, the tall green bar on the left is due to Gramercy Park and Brownstone EC as well as profit from our sale of Chongqing projects in Vanke in 2017. Then if you look to the right, Q4 2019, PBT for property development is lower than Q4 2018, as mentioned earlier because of the Main Con finalizations in Q4 '18. So next, we move on to hotel operations. Yes, it is indeed scary. If you look at Q4 2018, you see it made a loss of $53 million and a smaller loss in 2019 about $8 million. For investment properties, this segment has a varying amount of one-offs for PPS 2 gains recognized progressively as we unwind. So included in Q4 2018, we also have one-off from First Sponsor that was not repeated this year. So notwithstanding for investment property segment, if we were to isolate the, so to speak, one-offs, it has shown a small and steady increase over the 3 quarters. Sorry. Okay. On EBITDA, so we then delivered a strong EBITDA of about $1 billion a year. So this year, we achieved about $1.13 billion. Okay. On PBT, again, the property development is due to the timing of recognition, as we mentioned earlier. So we are pretty glad that with our quarterly reporting that there will have meetings a little bit better as well. So hotel operations not looking as impressive, looking at the trending down of the blue bar over the years, especially laden with impairment losses. So this year, particularly, I think the hotel operations was in a loss position largely because of privatization costs and losses from the refurbishment of hotels. So the Biltmore Mayfair particularly contributed about $21 million of operating loss for full year 2019 due to preopening costs and higher depreciation. So the other one you probably noticed is the huge orange bar on your right. So the PPS 2 gains boosted this segment for investment properties for FY 2019. So you can see the orange bar almost matching the green bar representing property development. For the Other segment, the higher contribution for FY 2019 was due to interest income from our loan extended to Sincere, which more than offset exchange losses and mark-to-market losses from equity counters. Next, let's move on to our financial metrics. The group continued to exercise discipline in capital management. So including the fair value gains on investment properties, our gearing now stands at 43% and interest cover at 14x. So average borrowing cost is 2.4%. I think a big thank you to the bankers who are not in this room but online today. In terms of cash position, the group remained robust. So we still hold about $3.1 billion in cash as of 31st December 2019 and a net borrowing position of about $6.8 billion. So the increase in net borrowings was indicative of the expansion and the acquisition growth that was carried out. So lastly, in terms of capital management, we are happy to inform that we have a balanced debt expiry profile as well as the currency mix. So we are not exposed to any particular currency significantly. And in terms of financing, I think we are also continuously looking at green financing. We started with green bonds earlier in 2017. And of course, the SDG innovation loan that entered in 2019, and we continue to push our envelope on that. So with this, I end my presentation, and I'll hand over to Mr. Chia.

Thank you, Yim Ming. Okay, I go into the Singapore market. As you can see, the property prices has gone up 0.5% in Q4. For the whole year, it's 2.7%, but this is much lesser than the 2018 with 7.9%, notwithstanding the cooling measures. Most of the sales side, as you can see from this outside Central area. The central area is the dark blue column, which is quite low, actually, it's quite low. And then the sub -- sales are strong. The mid and the mass market are strong. Total sales for the year, like Sherman mentioned earlier, about 10,000. We had 9,912 after adjusting for some of the figures you already put up. Our sales has done well, as mentioned earlier. In fact, the sales value are 50% up, 3-point -- about $3.3 billion actually is quite incredible number. And the sales units, of course, are 40% increase, which is also very [ heartening. ] These are the projected launched in 2018. In fact, the sales percentage are high. Futura is fully sold. Tapestry, about 82% sold already; and then Whistler's about 2/3 sold while South Beach are 70% sold. So they have done, I must say, pretty well for the project launch in 2018. For those launched in 2019, as you can see Boulevard 88 very well received 91 units sold of the 154 and the sales value is over $750 million. Sales price is also very good at about $3,800 per square foot, which is much higher than our earlier anticipated numbers. Surprisingly, Singapore buyers are high. Singaporean buyers are high, about 30%, the rest are foreigners. Whereas in other high-end project, normally, the foreigners are much higher than the Singaporean. So in this case, Singaporean buyers are coming back quite strongly for the good properties in the market. There are unique design features. I mean, as you can see, I think my Chairman is very impressed with [ the CapEx ] in the project, which I think many of the market buyers are very selective on the type of facilities we have and our costs. It is on top of the additional hotel, which is part of the Marriott Group. Next is Amber Park. We have sold more than 1/3 of the project. And of course, the location is very good, near East Coast. Most of you are very familiar with the site. And the unique features is that it has a 600-meter jogging track, 235 feet above the ground, which is quite unique. From there, you can see the sea view, and that's where all the activities are, the East Coast activities are. Haus on Handy. We're quite excited, recently, the government announced the extension with [ East Amber ] Park, which should link all the way to the other botanic gardens. And I think this being next to the [ East Amber ] will do well in the time to come. It's a very exciting new scheme that [ we are putting in for the whole project in green W car, opposite East Amber. ] So we are confident that this one will continue to attract interest, especially as the schemes are being developed. It is opposite the triple line, triple station, the Dhoby Ghaut station and location. I would say, is one of a very, very good location in Singapore. As mentioned earlier, Nouvel 18 is the part of the PPS 3, where we sold 27 units, mostly are the bigger units. And many of the units are tenanted, and we are quite confident that interest will continue to come in, and we'll sell it progressively over the years. Piermont Grand EC, very good location where the Punggol Digital District is located. And I think it's attracting a lot of younger crowds, younger buyers who want to be in the Punggol area where there are exciting facilities and also the district where the business park and the research institutions are all located. Sales is healthy at Punggol, about 484 units already sold. Sengkang Grand JV with CapitaLand. We sold 237 units. And this is an integrated project, bus station, MRT station, hawker center, community space, retail mall and very well-located and a short distance from the Sengkang Center. We are quite confident that this will continue to attract interest. This is our inventory. As you can see, not very much. Our attributable share is 1,500 units. Total in the group about 2002, this are for project launch and still available for sale. These are the 2 projects likely to be considered for launch this year or early next year. Sims Drive, I think Sherman mentioned earlier which is -- we acquired at a very reasonable price, $732 per plot. And of course, Irwell Bank Road is a very -- we call it [Foreign Language], very, very good, and we are very confident that we will receive a lot of interest. Next, I go to the commercial side. Office came down a bit. The price down about a few percentage points. And the retail surprisingly was up 1.8%, whereas the office index down by 0.5%, sorry, yes. Rental, as you can see, also down a bit for the office. This is a moderation of the past years' increases. It is down about 3.2%, whereas the retail is up 2.3%. So retail seems to be quite resilient before the COVID-19. This is our portfolio. Office, about 90% occupied. For retail, about 95%. And the rental reversion [ of the property ] is spread over 3 years usually about 3 years. And in fact, those are expiring this year already in the process of being renewed certain percentage. So we are confident that when the renewal comes on board, we should be able to handle well. This is just for information, the dynamics for office is quite diversified, well spread out. No particular tenant that become a worrying factor when they start to move out. So it's well diversified. For retail, of course, the bar is F&B and which is quite typical on the retail mall. And so far, as I mentioned earlier, our retail is doing well, and as Sherman mentioned, we had good broad schemes to help our tenants do right through this difficult period. So with this, thank you. I hand over to Frank.

Okay, good morning, everyone. So we start with Australia first. So like Sherman mentioned, we acquired Abacus and the development team last year in April. I think our timing was probably almost perfect because in May, liberal government retained power. In June, they started to cut interest rate. And so far, they have cut interest rate twice, 25 basis points each, and then they started loosening up the credit. So based on that, we then launched a market which Sherman said. Within 6 months, we have actually sold 60%. On the back of the good results, we then acquired a new site in Melbourne, North Melbourne. So I think that would help us maintain our inventory. What we'll do next year is that -- or this year, sorry, we would -- in the first half, we will launch the project in Brisbane. And then in the second half, we will launch the North Melbourne site. Sherman touched quite a fair bit on the residential portfolio in China. I just -- I would just touch on the commercial one. End of last year, we acquired the site Hongqiao Sincere Centre. And so that is -- comprises of office and service apartment. So far, the service apartment is running at about 70% occupancy and the office is running at about 50%. So we are slowly trying to ramp up the occupancy on the office site. Then at the bottom, you see the Hong Leong Plaza Hongqiao, also in Hongqiao. That one, there's 5 office blocks, and we have leased out 3 and their occupancy now is currently running at 71%. Sherman also touched a bit on our -- and what we have acquired in Japan. So in Japan, we continue to focus on residential. The reason is that in a low interest rate, low growth, low inflation environment, you want to be an asset class that has low volatility. So on the residential, actually gives you the lowest volatility. So we acquired 4 residential blocks. Horie Lux, which is the one down there. That one is running at about 94% occupancy. The next one is Joto. That one is running at 100%. So we acquired this 2 last year, we took possession [ of Beprok ] early this year, and then we will take possession of the last 1 in April this year as well. And then finally, to London, I think in London, really for us is a tale of 2 cities. I think residential, the rest -- our residential portfolio is still facing quite a lot of headwinds. But on the commercial side, is going strong, with Brexit and showing a bit more clarity. We think that the 2 asset class you go should perform better moving forward. So I'll now pass to Eik Sheng.

Thanks, Frank. Okay, for 2020, the hotel operations revenues was up by 1.5%, again, due to the acquisition of W Sentosa. And PBT was down by $6.6 million. And a few reasons for that. One was the one-off costs of $26 million for the privatization exercise. The closure of both the Biltmore Mayfair throughout the year until September, and the property that became the Raffles, [ amount is Meidao ] and their corresponding preopening expenses. We also took some impairments on the hotels in New York, SOHO and some in the REIT portfolio. EBITDA was also down by 7%. If we look at the trading performance by region, Singapore had a RevPAR growth of 10%. But if you strip out the effect of the acquisition of W, it's more like 3%, again, due to a very strong second half last year. But the first half was a bit weaker. So overall, it's still up by 3%. Asia was a mixed performance. Some better results in Seoul and Manila. But Beijing, Hong Kong and Indonesia were far worse. New Zealand was on par with the previous year. London also saw a credible performance of 7% RevPAR growth. But if you strip out the Mayfair, which opened in September, RevPAR will still be up by about 4.7%. The weaker pound really helped U.K., even if the uncertainty of Brexit, which resulted in some business travelers and events being shifted around. For the rest of Europe, we saw a decline in Paris and Rome. Paris was also hit by the transport strikes in December. For New York, we also faced a slight decline. 1 Millennium Hilton One UN Plaza did better, but the other 3 hotels didn't perform as well. So overall, the group RevPAR went up by a slight 0.8%. For 2020, M&C is looking at a CapEx program of about $140 million, of which the major one is going to be the Millennium Hilton New York downtown. That's projected at about USD 37 million or SGD 50 million over the next 2 years. We're expecting to commence that towards the second half of this year and complete some time mid of next year. We've also started on Phase 1 of the Gloucester in London. That's already the rooms done for the first few floors and the remaining floors and the conference facilities will also commence this year. Paris Opera is underway as well, and we expect to complete that next quarter. In Singapore, Copthorne King's has also commenced, and we expect to complete that this year, along with plans for Grand Copthorne Waterfront and Studio M. CDLHT is quite similar in that revenues were down, again, because of the closure of Orchard Hotel and the property in Maldives. NOI took a hit more because of the absence of one-off gains back in 2018 when they divested 2 hotels in Brisbane, also hit by currency exchange losses and higher interest expenses. Yes. I just wanted to highlight as well, again, that they have EOGM earlier this -- last month and both deals to divest the Novotel Clarke Quay and the acquired W Singapore were approved as well. Okay. With that, I'll hand back to Belinda. Yes.

Thank you very much, Eik Sheng and the executive team for the comprehensive presentation. We would like to move to the second part of today's briefing, which is the Q&A. Please feel free to ask any questions that you may have. My colleagues are standing around the room with a microphone. And if you have any queries, just raise your hands, and they will come to you. And for those joining us on the webcast, you may also post your questions by clicking on the question button on your screen. Now before asking your questions, may we please request that you introduce yourself and the organization that you represent. I'll just open the floor. Yes, Mervin?

Mervin from JPMorgan. Just maybe start off with the resi side. I guess you've done quite well, but maybe focus on a couple of projects, Haus on Handy, Amber, is starting okay but I guess slower than the rest. But just wondering what your strategy is. I guess maybe it's too early to cut prices. In terms of marketing, where you plan to go, do ahead? In terms of land banking, thought process on that. Thoughts on whether you want to tap the CBD incentive scheme. And I guess the third question would be in terms of COVID-19, on the hotel business specifically, how bad is it at this point in time? What's the occupancy levels, what's the breakeven level that we should be looking at?

Mervin, your first question about our strategy, be it Amber or other projects, I mean I think we're still maintaining the same strategy. So far, as mentioned earlier, I mean specifically with regards to the virus, we haven't seen that much of an effect other than slightly on our high-end, on our luxury end. But I mean for Amber, we had a great percentage of buyers that were Singaporeans. So we continue, I think, to drive forward with our strategy. I mean this year will be a tougher year because there's a lot of new supply coming in. But we remain confident. I think our projects, each of our projects have their own unique selling propositions and really great locational attributes. So we'll continue driving that forward. And in terms of land banking, we have recently done an exercise internally because I wanted to kind of know what would be an optimal number to keep our so-called unlaunched land bank in the future. So we have that number in mind, and I think we will continue to replenish and keep our land bank at a certain amount, at a certain level. And obviously, this means we are -- this level needs be a balanced level where you don't have an excessive land bank. I think at our peak, back then we approached close to 4,000 units, right, in our land bank. And right after the cooling measures were announced in July, that's when our share price will slant the most because we're seen as having, I think, the second largest exposure to Singapore back then. So I don't think you want it to balloon up to too large and unwieldy amount. But at the same time, you do need to have enough inventory because I think Singapore is a market we know best. It's where we execute almost close to perfection. I mean so we would like to, I think, continue to ensure that we have enough supply within this market. In terms of the CBD incentive scheme, as you all have read earlier, I think that the 2 buildings of ours, the main 2 buildings that fall into the scheme are City House and Fuji Xerox Towers. It is unlikely that we will so-called do the scheme for City House only because of the nature of the leases in the building. And now actually, we have -- we work in the building as well. That occupies 5 floors, and there's quite a long lease too, and it's a good one for -- and there's no effect there despite some of the global issues we would -- may have faced. We have not experienced anything negative on the ground. But for Fuji Xerox Towers, that's certainly a possibility. So if we make use of the CBD incentive scheme, I think we could get as much as maybe a 25% uplift in GFA. I think it certainly makes the numbers very attractive. So we are studying and looking at that in very deep detail, and we will share more when we're able to. In terms of the hotels and the effects by the virus, I don't know whether Chairman or Eik Sheng would like to talk about this.

Yes. On the hotels, I would say the impact is quite -- the RevPAR is going to be very volatile in the regions which have been affected. So far it's been Singapore, of course, it's impacted China and Taiwan, Korea now. So it's hard to predict the final impact. But I think for Singapore, we're looking at about 40% to 50% occupancies. I think that's in line with the rest of the market as well. And Europe is a little bit more limited. I think in U.K., it's still quite stable. But now with Italy, I think we're still -- it's still quite early days for us to see the impact there. In North America, not too much impact at the moment, they're actually doing fairly well in New York, better than the previous year. But we have also taken steps in a way to mitigate the costs, so that during this period, we are able to tighten through as well. I mean we're also looking at the asset enhancement plans that I mentioned earlier, whether we can accelerate some of them during this period.

I'd like to add that we have worked out, what is the breakeven cost for our hotel in Singapore. I think it varies from 30%. But one good thing is that we have not borrowed a lot. Those hotels who borrow a lot, they may face a collapse without any help. Nobody knows when this COVID-19 when will it be over. So my guess -- best guess is that, I think by July, August, maybe we can see a better sign. Right now, it's good to know that Singapore discharged more than 50% of those who was quarantined. And I think it's also good to know that Singapore has no death compared with other places like Korea, even in Japan and so on and so forth. So some of our hotels are doing quite well within the range of 40%, 50%. Some -- one, maybe one is below 40%, which I'm pushing them hard. There are 2 things to do. One is to take out cost, and the other one is to grow revenue. If you can achieve both, that it will be the best. On the one hand, you take out as much cost as possible. On the other hand, you find new market. It doesn't mean that because of these virus, there's no market. I would also like to push my competitive sense. Some of the customer because not every customer is happy with every hotel. So I have some strategy, but it comes with implementation, whether our people is fast enough. We already started the cost-cutting already quite some time. We got specialists here, specialists there. And I'm driving them mad every day because I want the result, I want the result. Some of them think I'm a nasty fellow, they don't think I want to survive. Okay?

Okay? Okay, maybe I'll take Donald, then I'll go to David.

Donald from Bank of America. I have 3 questions. First is on M&C. It seems like the COVID-19 impact will last for quite a few more months at least. But in the meantime, is management open to recycling some assets within the hotel portfolio or lighten the portfolio at this point, given that there's a lot of hotels in M&C but some are not performing, have not been performing for a considerable period of time already. I just want to have your thoughts on that. That is the first question. Second is on Sincere. I know now it's under renegotiation and details cannot be shared. But what -- is there a likelihood that CDL completely walks away from this deal? And if the option is open for CDL, is this something that you will consider? Or will you be looking to do a smaller portion in terms of acquiring this platform? This is the second question. Third is for Frank on the U.K. portfolio. There are plans for a public or private platform. What's the preference at this point? Will it be more -- if it's a public platform through a REIT, will there be a new REIT that you're considering or through IREIT?

Maybe Eik Sheng, you want to do the -- Eik Sheng you can do the...

Okay. I'll take the first question, on the recycling of assets. In fact, we completed the divestment of Cincinnati. We announced that earlier on, and we'll be recognizing the profit for that this quarter. Whether we have more of that in the portfolio, we have reviewed, there are some assets we can -- at this point, we can either choose to divest or reposition. So there are some targeted assets. But generally, our -- prefer still to retain assets. These are very good locations. There's potential in the mid to long term. So if they have that kind of criteria, I think we'll prefer to retain those assets. Another angle is of course we would like to be a bit more active sponsor to the REIT. So if there are assets that may fit the right REIT criteria, that's something we'll also look at.

I think recycling of asset, we already started the borrowing, but how soon, how fast, we cannot be just sell off asset. We've got to understand where is the position of the asset. Do bear in mind that we have a lot of unvalued asset in U.S. We have also bought all of these in the best location, in London and so on and so forth. For us to sell any of these, you cannot just repeat again to do this kind of exercise that you are able to get in the best of location. So I think recycling of asset, you have to give us time. We cannot just simply say just sell off this site. I was disappointed, although we have made some money, my Cincinnati -- my independent director just sell it off. I was waiting to have him and say you cannot decide because you are -- in City, you are [ weighing ] 1/2 M&C. So these independent directors, some of them are good, some of them are not so good. So those who can exert influence, they sell it off.

Chairman, to better clarify, that's the M&C Board.

The M&C Board, yes.

Before it's privatized.

Before it's privatized. Yes, that's right. So it is -- we have to study. We want to make sure we focus on the recurring income of the hotels, and that will take time because it's not so easy to do it. In hotel trade, you have a lot of issues. But unfortunately, issue comes also with a reward if you know how to do it. It takes time. Thank you.

Thanks, Chairman. So Chairman was, as he mentioned, referring to the M&C Board pre-privatization. I think, certainly, it was a very, very independent Board. And there were some challenges. So Frank, it's not a tale of 2 cities, a tale of 2 IDs. We have some good ones and some not good ones. So and moving on to Sincere, which was Donald's question, don't know if you would prefer for us to walk away. But hate to disappoint you, but the truth is it's unlikely. There may exist the possibility, but at this stage, I would say very unlikely. I mean you've seen the results that we presented just now, right? And I was quite candid also. I mean we had a much fatter, a fatter -- a much more fat, heftier margins back then. In 2018, your New Futura, your Gramercy Park. Of course, we still have a so-called legacy project that we're selling now, Boulevard 88. These margins are getting thinner. Like it or not, I mean that -- the cost of land in Singapore has gone up tremendously, and these are still hotly contested government land tenders, GLS tenders. So you have to have a certain amount of diversification in your core business and you need more growth catalysts. And I still -- have always been a big China bull. I mean it is the most populous nation in the world, 1.4 billion people, ignore it at your own peril. I mean this is a market that's going to still continue to show a lot of strong growth, I mean after they get through this virus episode. And you cannot deny that housing demand is extremely strong in China. Even last year, during a difficult year, look at all the results that all the developers have released. And like it or not, I mean Sincere is still a -- I would consider big player in China. I mean it's top 100, right now, ranked around 90 in terms of contracted sales. That's how they rank developers in China. So it's ranked 90 out of 100. And in case everyone thinks that's a small feat, it is no small feat to be in the top 100. There are 90,000 developers in China. So top 100 means you're a pretty big guy. So this is to ensure the sustainable future of our group as well and ensure a proper diversification. As I've always said, a company nowadays I think needs to be well diversified and globalized in order to remain healthy and resistant to market fluctuations and shocks, right? If we were just all -- concentrated all our eggs in one basket in Singapore, I think we would be under tremendous pressure when the market -- if the market were to turn south or if policies were to change. So the last one, I'll hand it over to Frank, private versus public.

So I think if you look at the last few years, what is really selling now in the market is obviously the REITS. I think, in a low interest rate environment, both retail investors and high net worth are hungry for you. So I think, for us, we prefer a perpetual vehicle which is, to your question, a REIT rather than a private fund. And most likely, it would be -- it will be a new REIT. It won't be IREIT.

Okay. David, I'll let you have the question, and then I will follow on with some of the web questions. So David, maybe you...

David Lum from Daiwa. I have 3 fairly straightforward questions. The first one is with regard to your CapEx budget of $140 million for the hotels. How is the $140 million in relation to what you've done in recent years? Is it higher or lower? And should we regard this as a sustainable level? Because I assume you want to try to refresh your portfolio. So that's the first question. The second question is your resi pipeline for this year. I don't see Liang Court on the launch schedule. So is there a reason for that? And finally, for your office occupancy, it seems like the level is a little lower than previous quarters. Is there some new vacant space in the portfolio that was created recently?

I'll take the CapEx question first. So last year, M&C had a higher CapEx budget spent significantly because of the Biltmore. So it does vary from year-to-year. I think we're looking at a similar amount for next 2 years being planned. And that's roughly about 8% to 10% of the group hotel revenue. So we think that is a sustainable amount, and I think it also reflects that there was probably a little bit insufficient spending than the previous years. So there's a little bit of a catch-up as well. But yes, I think we look in line with the revenues and the spending as well.

The Liang Court?

Okay, David. Yes, Liang Court is one of them, but most likely to be the year after -- commence next year because it's a big project, complicated 3, 4 components. And of course, we want to come out with the best design. We shouldn't go too many rounds to make sure get that we get the best design with a quite famous architect. And we are quite confident that by probably first half of next year. Yes, thank you.

Occupancy -- office occupancy being a bit softer.

Office occupancy, as you can see, we have average of 90% which is -- that's the average of our -- slightly below us. And of course, there are some vacant space here and there, but it's quite normal. Normally, there's some, we call it, float space for tenants moving about. For example, this tenant want to move to a bigger premise, want to be able to move to bigger premises, but in need of a few months before they can start renovating. So there's always a float space. Anyway, my AM team, asset management team are working very hard to make sure that we're trying to bring up the occupancy to a few more percentage points up in this year. Yes, thanks.

[Inaudible]

Okay, I will. Fuji Xerox, we have not announced officially that we were proceeding with the development. But of course, when this news leaked out, all the tenants are a bit concerned. When it comes to renewal, when it comes to new tenants looking for space, they are always very careful. For example, one of the buildings nearby is being vacated for the redevelopment. When it comes to Fuji Xerox, very, very keen. But they only sign long lease, which you can see. So in a way, it constrained our -- this leasing end of Central Mall. So we are also looking at something. And these are the 2 reasons why these buildings are not well occupied as it should be. Yes, thank you.

Okay. I'll take some questions from the -- those that are joining us on the web. Derrick Heng from Macquarie. He has a few questions. The first is which will be posed to perhaps CFO. Interesting additional disclosure on our NAV. Can you talk about the key assumptions behind this? Then, of course, the second one is -- the second question is on COVID-19 is clearly affecting hospitality. What are your thoughts around the RevPAR movements for 2020? And the third one, I think, is the easiest which is, can I clarify that Amber Park is no longer at risk of QC penalties following the change in the QC measures? Maybe CFO.

I will start. So I think this time around, I think we have had, of course, many analysts and reports setting different RNAV for CDL. So as we know, we keep our investment properties at cost policy vis-a-vis the fair value model. And we have been showing our gearing based on the fair value model. So we decided it's probably better to be more certain. And we showed the RNAV including the fair value surpluses on investment properties. So please be mindful that this only take into account the fair value on investment properties. I still have a chunk of assets, which is all my hotels as well as, of course, my development properties. All this continue to be at cost. So using our hotels as an example, right, hotels as at 31st December takes up about -- the PPE is about 24% of my total assets of 23 B. And these hotels are still at historical cost, yes.

Mr. Chia, talk about the QC perhaps.

QC, I think my Chairman is very, very passionate. He's been arguing the case for 20 over years. So finally, it came out. Well, most of the lease developers were happy anyway. And I -- we are working hard on now to make sure that we can get exemption for Amber Park. And I think that the chances have been quite good. We will do our best because they are certain criteria to be fulfilled.

Okay. I think you got asked this question just now. But I think RevPAR will continue to be very volatile. And again, the different regions are affected differently. Singapore, we're expecting about 40%, 50% currently, occupancy rates. Europe, a bit limited in U.K., but -- and in North America, not so much, actually. So it's quite limited as well.

Okay, I'll take another one from the webcast, Vijay from RHB. The first question is, can you elaborate a bit more on the fund management growth plans? What is your current AUM? And what are the markets and asset class that you will be focusing on to achieve your 5B annuity target AUM?

Okay, so currently, our AUM is just slightly under SGD 1 billion. We will continue to grow the AUM. So one of the things that we are exploring is, obviously, monetizing some of the assets that we have in the U.K. by putting it into a REIT. And then subsequently, once we have a REIT running, we might then go up the risk spectrum to do something that is more value-add in a private fund format.

Okay. The next one is actually also from Jason Yeoh, joining us on from Goldman Sachs, joining us from webcast. Can you give more color on how you plan to turn things around for M&C? And are there any low-hanging fruits that you can execute on? And in terms of capital deployment, the second one, in terms of capital deployment, which markets look attractive now? So maybe we just talk about the hotels first.

Yes, turnaround strategy, as I said earlier, you need to look at the cost. To grow as much as possible, you need to grow the revenue. And of course, I think you need to go and attack your competitive set of customer. Find new customers. You cannot have the Chinese, you find the Indians. You cannot find the Indians, you find other nationalities, okay? So I think turning around is not difficult but it's difficult in the sense that if you turn around without the right person, you cannot turn around. You can have the vision, but you cannot turn around without the right person to implement it. And the turnover, that can be improved a lot. But if you cannot improve, please take out cost. That is most important. I think hotel will go from bad to worse before become better. That's my view. It will take at least a few months. Maybe 4 to 6 months.