Mapletree Commercial Trust

OTC:MPCMF

Earnings Call Transcript 2020-Q4

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to Mapletree Commercial Trust's Fourth Year Quarter (sic) [ Fourth Quarter ] and Full Financial Year ended 31st March 2020. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Ms. Li Yeng. Thank you. Please go ahead.

[Li Yeng Teng, executive]

Good morning, everyone. This is Li, and thank you very much for making time today for MCT's Fourth Quarter and Full Financial Year ended 31st March 2020 Results Briefing. Given the current COVID-19 situation, this is a fully virtual call. For the best quality and experience, may we request that all callers to mute their phones and to avoid taking any incoming calls during this briefing. Thank you.

So on the line today here, we have Ms. Sharon Lim, CEO of MCT; Ms. Janica Tan, CFO of MCT; and Mr. Koh Wee Leong, MCT's Head of Investment and Asset Management. Without further ado, I'll pass the line over to Ms. Janica Tan, who will bring us through the results presentation. Ms. Tan, please?

[Bee Lian Tan, executive]

Good morning, everyone. Hope that you are all keeping well and keeping safe at home. Okay. Let's get started with the key highlights.

Financial performance. For fourth quarter FY '19, MCT reported gross revenue and NPI growth up 12.8% and 12.6%, respectively, from fourth quarter FY '18. This was driven -- mostly driven by the addition of MBC II and in spite of the COVID-19 rental rebates granted to retail tenants. DPU for the quarter, $0.91. This was after capital allowance claims and capital distribution retention. I will go into more detail later.

The acquisition of MBC II provides timely diversification and resilience. MCT's full year gross revenue and NPI grew year-on-year by 8.7 -- 8.8% and 8.7%, respectively. As you may recall, we did a full valuation of our portfolio in August 2019 in connection with the EFR in November. This round, we did a desktop valuation to bring the valuation cycle back to March. The valuation of the portfolio held steady at $8.9 billion.

On portfolio performance, full year's shopper traffic and tenant sales for VivoCity dipped by 6.8% and 3.4%, respectively, largely due to the impact of COVID-19 in fourth quarter FY '19. Portfolio committed occupancy was maintained at 98.7%.

Okay. Due to the outbreak of COVID-19, in February, we announced the first tranche of relief package to eligible retail tenants, which includes the 15% property tax rebate from the government. And in March, we announced the second tranche of relief package, of which April fixed rent shall be deferred. However, in view of the circuit breaker measures, the April fixed rent for the retail -- the eligible retail tenants shall now be waived.

On capital management, we have completed all refinancing -- the refinancing of all our term loans due in FY '20. What is left in FY '20 was $160 million MTN due in August 2020. Financial flexibility-wise, we had $321 million of cash and undrawn committed facility on hand.

Okay. Let's go into more details. Gross revenue was 12.8% higher at $127.3 million for fourth quarter FY '19 compared to fourth quarter FY '18. This was due to fourth quarter contribution by MBC II, adding about $22.7 million and in spite of the rental rebate transferred to eligible retail tenants impacted by the COVID-19.

MCT portfolio-wise, year-on-year contribution from MBC I, Mapletree Anson and MLHF were higher. PSA Building's performance was lower due to lower occupancy. And the performance for VivoCity was affected by the rental rebate granted as well as lower turnover rent, advertising and other revenue, all COVID-19 related. As a result, NPI was up 12.6% to $98.6 million for fourth quarter FY '19.

Net finance costs, $21.7 million, up $24.3 million -- up 24.3% for fourth quarter FY '19 as compared to last year same period, mainly due to interest expense of MBC II and higher commitment fee incurred.

Due to the emergence of COVID-19, MCT has put in place relief packages totaling about $50 million. And coupled with the 6-month relief available under the contractual obligation act and with the uncertainty ahead, we need to be prudent, and we will convert cash by withholding part of the fourth quarter's distribution.

So for fourth quarter, we will claim capital allowance of $42.1 million, retain capital distribution of $1.6 million. And with this, the distributable income for the quarter was $30.1 million. Before claiming the capital allowance and including the capital distribution, DPU for the quarter was $0.022 for fourth quarter and 3 -- $0.0932 for full year.

Okay. Why do we choose the capital allowance route? This is fourth quarter, and this is MCT's -- end of MCT's financial year FY '19. If we did not distribute at least 90% of the taxable distribution income, we will not be able to comply with the tax transparency requirements. So hence, to conserve cash and also meet the tax transparency requirement, we proposed to withhold capital distribution of $1.6 million and to claim capital allowance of up to $42.1 million against our taxable distribution for FY '19. So this effectively brought down the distributable income by $43.7 million to $30.1 million, and by doing so, we are effectively distributing 100% of our distributable income, taxable distributable income, and will be in compliance of the tax transparency requirement.

Next, we move on to FY '20 versus -- FY 2019 versus full period last year. NPI was higher by 8.7% at $377.9 million, offset by higher finance expense, 12.4% higher at $78 million, and higher manager's fee due to the addition of MBC II. Distributable income, $243.2 million, 7.9% lower after claiming capital allowance and retaining capital distribution. DPU for the year, $0.08.

We have set out the performance of existing properties on Slide 9. Revenue and NPI flat due to the rental rebate granted to eligible retail tenants. The rebate granted, which includes the 15% property tax rebate, was $8.8 million recorded in this financial year.

Slide 10 is portfolio valuation. The portfolio valuation held steady at $8.92 billion, and there's no change to the cap rate.

Next, we move on to balance sheet. Total investment property increased from $7 billion to $8.9 billion, a 26.7% increase due to the addition of MBC II and the increase in property value from the independent valuation conducted in March 2019. Net asset rose to $5.8 billion, following the fundraising in October and November. And accordingly, NAV per unit increased by 9.4% from $1.60 as at March 2019 to $1.75 as at March 2020.

On the key financial indicators. As of 31st March 2020, total debt increased from $2.3 billion in March '19 to $3 billion in March '20, mainly due to the $639 million green loans from MBC II and additional $15.2 million of RCF drawn down by MCT for working capital requirements. Approximately 78.9% has been fixed by way of fixed rate debt and interest rate swap. And at 78.9% fixed, every 25 bps change in SOR will have a $0.05 per annum impact to DPU.

Gearing is at 33.3%, and that headroom is about $1.9 billion to the 45% gearing limit or close to $3 billion based on the new regulatory limit of 50%. If I hold total assets steady, unchanged, the debt headroom is about $1.5 billion.

Okay. The 5- to 7-year MBC II loan and the 10-year MTN issue in November for refinancing extended the term to maturity to 4.2 years as at March 2020. All-in cost of debt is now 2.94% per annum. ICR remained healthy at 4.3x. There's no change to credit rating as at 31 March 2020.

The next slide is on the debt maturity profile of MCT. We have completed all refinancing of the term loan due in FY '20. The balance, $160 million MTN, is due in August 2020. Although we have sufficient RCF in place, we are working with the bank on new facilities for refinancing. So debt maturity profile remained well distributed with no more than 17% of debt due for refinancing in any financial year.

Slide 14 summarizes the performance over the year. Gross revenue and NPI, both higher, mainly due to timely addition of MBC II. Distributable income and DPU was down due to the capital allowance claim and the retention of capital distribution.

Next slide is on share price. MCT closed at $1.83 for the financial year. The share price was affected by the sell-down in the submarket in March.

Slide 16, total return to unitholders. Total return is at 187% since IPO.

Last but not least, on the distribution details. DPU fourth quarter, $0.91. Book closure date is 30th April and the payout is 29 May.

So with that, I shall hand over to Wee Leong to cover the portfolio update.

[Wee Leong Koh, executive]

Okay. So good morning, everybody. On Slide 20 (sic) [ Slide 19 ], you can see the portfolio revenue and net property income. So on a full year basis, FY '19, gross revenue is up 8.8%. Net profit income is up 8.7%. The increases in gross revenue and net property income are driven largely by the acquisition of MBC II, which was completed on 1st November 2019. So that's a $37.5 million increase to gross revenue and about a $30.2 million increase in net property income.

If you look only at the existing assets, net property income and gross revenue are relatively flat. If you look on the asset by asset basis, gross revenue for VivoCity was up about $2.5 million. There was -- it was lower in the fourth quarter largely due to the rental rebate we have provided for -- due to the COVID-19 outbreak. We're working over rent, advertising and promotion revenue arising from lower shopper traffic as well as stoppages and closures that we had due to the outbreak. But this was offset by -- partially offset by higher rental income from new and renewed leases achieved throughout the year as well as the asset enhancement initiative, which was completed in the early part of the financial year.

If you look at MBC I. MBC I is up by $5.8 million in terms of gross revenue. And that's largely due to high income from new and renewed leases, the effect of step-ups as well as compensation we have received in the fourth quarter for a tenant that had preterminated a lease and then handed over the unit to a new tenant.

Gross revenue at PSAB, up about $0.4 million. There was rebate we have provided to ARC tenants. There was also slightly lower occupancy, but that's offset by higher rental income from the new leases. Mapletree Anson was the one that we see a slightly larger drop in gross revenue. That's largely due to lower occupancy and higher compensation we had received -- higher compensation we received in the previous year. MLHF is relatively flat, and that is largely due to step-up rents.

Okay. So the next slide, you can see the occupancy for the portfolio. The occupancies for the properties have held up fairly well. Only PSA Building is down slightly due to -- is down slightly. That's largely due to office leases not having been signed as quickly as we have liked, especially in the last quarter.

In terms of impact of COVID-19. So far, we haven't seen that many preterminations. I think partly that is due to the rebates that we have provided, which are helping to support tenants.

So leasing update. This shows the rental update that we had achieved throughout the financial year, so 6.7% for retail and about 0.7% for the Office and Business Parks.

Next slide gives you the lease expiry profile. If you look at the coming financial year, we currently have about 8.1% of the portfolio revenue in the retail side up for renewal and about 10.7% for the office site. Lease expiry -- with the average lease expiries due fairly healthy at 2.6 years.

So if we look at the top -- the mix, few tenants, probably something of interest in this current situation. The -- after the acquisition of MBC II, the top 10 tenants for MCT are now predominantly Office and Business Parks. FairPrice is the only retail tenant that's still in the top 10. In terms of trade mix as well. In the past, MCT was leaned heavily towards the retail sector. F&B used to be our top trade. That has been replaced by IT services and consultancy.

Okay. So the next slide gives you a bit of detail of the shopper traffic and tenant sales at VivoCity on a full year basis and because of financial year extended all the way to 31st of March, the full year shopper traffic is down about 6.8% from 52.2 million to 51.5 million. Tenant sales are down about 3.4% from $939.1 million to $907.1 million. But if you look -- if you reach -- but if you look at the fourth quarter, also we have done by subtracting from our previous quarter's results. Tenant shopper traffic was actually down in the fourth quarter about 21.6%. Tenant sales were down about 12.7%. The decline in the fourth quarter was, of course, largely due to the COVID-19 impact which was felt mostly in February and March.

So the next few slides give you a bit of detail about what we have been doing at the shopping mall as well as the properties to mitigate the impact of COVID-19. Slide 28 gives you an overview of the measures that we put in place so far for retail tenants, not just at VivoCity. So in our first round rebate, our first round of support package that was announced in February, we have provided about 0.5 months of fixed rental rebate for eligible tenants. As the outbreak progressed and continued, we announced the second package on the 26th of March, and that included about 2 months fixed rent rebate for eligible tenants, and this includes both the first and second month that included all of the property tax rebate, which were provided to MCT by the Singapore government. And the circuit breaker was announced. We had also included a third set of support package, support measures, and that included waiver of fixed rental for the month of April for eligible tenants.

So far, in total from about March to about July, which includes all of the support measures we had announced today, tenants will receive about 3.5 months of rental support, which includes the property tax rebate provided to us by the government. So effectively, they pay about 1.5 months of rental for a 5-month period.

Okay. So the next slide just gives you some of the safe distancing measures that have been implemented throughout the mall as well as system that we have been trying to do to encourage safe distancing.

And the next slide just gives you a picture of some of the other mitigating factors, the cautionary measures that are in place now.

Okay. So we won't go through the outlook, and I think we can open the floor for questions.

[Li Yeng Teng, executive]

Thank you, Janica, and we will like now open the floor up to questions. First, we'll take questions from the analysts who have dialed in.

[Operator]

[Operator Instructions] Our first question comes from the line of Brandon from Citi.

[Brandon Lee, analyst]

I think basically just 3 questions for me. Can you walk us through the -- your computation of this $43.7 million that's retained, right? Is it more because of the tax transparency or your expectations of how much tenants are going to defer over the next 3 to 6 months or so? That's my first question.

The second question is what -- so far, has any tenant that you work approached you for the rental deferral? And what's your expectations over the next 3 to 6 months as well for tenants which may apply for deferral?

The last question would be, can you give us a sense of this valuation exercise that you've just done? Do you think that it's a bit more on the positive side, given what we have seen with rentals and occupancies?

[Hwee Li Lim, executive]

Yes. Okay. This is Sharon. So thanks, Brandon, for your question. The cash retention is a combination of claiming the capital allowance and capital distributions. Why are we doing so? Very clearly, if you look at our results, our results, actually, NPI and everything is all increasing. But we are actually taking a very, very prudent approach in terms of the choppy market potentially ahead. So that's where the retention came in.

Why are we retaining? I think it's purely prudent more than anything else or we have not seen major cracks in our business. It's just a matter of being prudent. Yes.

So in terms of the notification from tenants. Officially, we have not received anything. But that doesn't mean that I'm expecting 0. There's a certain process that tenants have to follow according to MinLaw.

So if I look at my office tenants, there are a couple of the small-ish ones that is like that's in the hotel and also the tourism-related trade companies, that I believe they will be going under the bill. Okay. But I have not received any notification from the office tenant.

Coming to retails. I would say, actively, one has only mentioned to us that they may apply for the bill. Beyond that -- but I would say that potentially, there should be a few more. As you can see, sentiments on the ground, there are a few small-ish tenants, more mom-and-pops, who are likely to hold out, and they are the ones that actively go into the media.

So in total, so what is the expectations in terms of the percentage? I would say, it's in order of less than the 10% mark in terms of people who intend or we guess that -- our guesstimate of who will potentially apply to be -- to seek shelter under the bill.

So to your last question in terms of valuation, the valuation methodology applied by the valuers have not changed. They have taken in the rental rebates at what we have advised them, and it's a one-off deduction to the valuation.

So is this optimistic? Pessimistic? I remain guided by the valuers. I think if you understand the valuation process, they will look at market rents. They will look at signing rents, and that will -- and also the cap rates and the discount rate. So these are the 3 -- 4 key things that will drive any valuation.

So if the market rents would come down or if the signing rents would come down, of course, there will be impact to the numbers. In terms of whether the valuers were to change their cap rates and discount rates, that is -- I understand from them that they typically have to -- they are typically guided by transactions in the market before they determine what is a relevant cap rate or discount rate to be applied for investment property. So the process has not changed by the valuers. So it depends on the forward-looking numbers or the actual numbers that come through the following year.

Okay. Brandon, so hopefully, that answers your question.

[Brandon Lee, analyst]

Yes. Yes, it's perfect. I think that's very, very clear.

[Operator]

Our next question comes from the line of Derrick Heng from Macquarie.

[Derrick Heng, analyst]

Three questions from me, please. First, if you look at the total support package of $50 million, can you break that down into what is government's share and what is the landlord's share of this?

The second question is on the total relief of 3.5 months. Can I confirm that this does not include security deposits that is being offsetted?

And last one is the retention sum of $44 million that has been written in the fourth quarter. So with the sizable retention in the last quarter, assuming no further rebates, how should we be thinking about payout ratio for the FY ending March '21?

[Hwee Li Lim, executive]

Okay. The -- thank you, Derrick, for your question. Okay. Maybe to give some color in terms of the rental rebates that we have given for retail, yes, it's a total of 3.5 months. It's broken down by -- for the month of March, we have given average of 0.5 month. Okay. For month of April, because of the circuit breaker, we are also waiving for eligible tenants, yes. So there are some tenants that we have excluded, but I would say majority will enjoy the waiver because of circuit breaker. Come the month of May, mainly, we are passing on the full property tax, except that it's a little bit of pre-funding by the government. As you know, we pay property tax over the year, but for the tenant, because they need help, we -- in a way, we are actually pre-funding the government grant, okay? That will come in full of May. Come June and July, we have shared with the retail tenant 0.5 month and 0.5 month waiver. We are one of the few, I would say, the only one that has given visibility to the market all the way to July from March -- since March. Most -- you may think that 3.5 months is a lot. Are we going too much? If you look at most of my peers, my peers are talking about fishing out rebates to May and -- May -- up to April and May. I'm not seeing anybody talk about June and July. But if you put yourself in this situation as we are today, I don't think we are just giving the tenants a forward view as to their cash flow, so they can better plan as to whether they think that they can sustain and where do they want to close, if they need to.

I don't think the -- I don't think landlords who were given like up to April is the end. Currently, there's still another month of nontrading. Pressure will definitely come on. So if you really want to compare my package, my package has to be compared maybe after 1 more quarter. You look at the rest, and you compare and see whether I have taken a view forward, giving comfort to the tenants, whether that's right or wrong, okay?

So when we look at the 3.5 months, about to 2.5, slightly shy of 2.5 months is coming from our pocket. The balance is property tax funded by the government. The only thing is just cash flow that we are funding the government earlier than what we stand to pay in terms of property tax. Yes. So I think that, hopefully, that answers your question. So not everything 3.5 months comes from my pocket. 2.5 months come from me, about there, and 1 month comes from the government.

[Derrick Heng, analyst]

May I clarify that security deposits have not been touched throughout this whole process?

[Hwee Li Lim, executive]

No. Because when I waived April, my original intention communicated to the tenant was April itself was a deferment. It means, technically, like you can [ all reverse ] or calling on security deposits, same outcome. But with a circuit breaker at the time, we decided that we shall waive it because I think, at the end of the day, pressures will come to waive it either way. Yes. So that's where our tenants were just -- or you hide under the bill, then 6 months later come negotiate with you. So it's a matter of a similar outcome in my view whether we waive or we don't waive. The outcome is going to be the same. You have to waive, okay? That is for the month of April.

[Bee Lian Tan, executive]

So security deposit is intact?

[Hwee Li Lim, executive]

Yes, it's intact. Yes.

[Derrick Heng, analyst]

Got it.

[Hwee Li Lim, executive]

So if you talk about the payout ratio, the payout ratio itself. What we have retained in terms of cash is in our pocket. Okay? It's more prudent, it's more in case we need it. I'm not saying that our business is cracking to the point that we are using it, okay? Now when will we pay out? We are committed about the tax transparency. So the payout ratio, we will take guidance in terms of the collectibility in terms of our revenue, okay? So by year-end, definitely, the tax transparency, that is something that we will make sure that we fulfill because we are of the view that it's unnecessary to pay tax for something that we already have a waiver for if we meet the criteria. So we are very careful to make sure that we are tax transparent and we don't lose that status. So we will make that decision along the way. And by the end of FY, the new FY, we'll make sure that we comply.

[Operator]

Our next question comes from the line of Donald Chua from Bank of America.

[Donald Chua, analyst]

Sharon, this is Donald. Hello?

[Hwee Li Lim, executive]

Hi, Donald. Yes. Hi, Donald.

[Donald Chua, analyst]

A couple of questions, follow-up from me. On your fee that you just mentioned, can I confirm that the $44 million that you retained is fully provided for the 2.5 months from our pocket?

[Hwee Li Lim, executive]

Okay. The -- if you look at our monthly revenue, our monthly revenue for Vivo is about $18 million, yes. So that should -- if you do the math, it's about there.

[Donald Chua, analyst]

Yes. Quite roughly. Okay. So it's -- so it will cover -- it will make good for the 2.5 months that you have guided, assuming that there's no anymore extension or prolonged COVID [ lockdown ].

Okay. My second question is...

[Hwee Li Lim, executive]

No. Sorry. Can I just interrupt? The retention -- the cash retention is just because of the uncertainty ahead, it's prudent to conserve some cash, okay? For the rebate that we are fishing out from our own pocket, our operation-wise, retail is 42% of our book portfolio. And we do have office which make up another half of the portfolio. So operation-wise, we are still managing. Yes, yes.

So if you just want to do a direct comparison as to how much I retain versus how much my rebate, I think that gives you a sense, yes. $18 million is for retail, $25 million is for Office. Yes. So our portfolio is not just purely retail. Our portfolio is about 40% -- slightly shy of 40% retail, yes, thereabout.

So if I just -- yes, you want to go to your second question?

[Donald Chua, analyst]

No. But we are not expecting as much or as many deferment requests and probably not as much rebate for the offseason segment, right, compared to retail.

[Hwee Li Lim, executive]

Yes. The...

[Donald Chua, analyst]

So most of these just been provided for retail.

[Hwee Li Lim, executive]

Correct. I think your statement is correct that the -- definitely, the retail right now looks like it needs more help compared to Office.

[Donald Chua, analyst]

So my follow-up -- or the second question. Any of such requests or pressure from the Business Park tenants?

[Hwee Li Lim, executive]

Okay. The likelihood of one of our tenants, I think you know that is under court moratorium. One, just only one tenant, but that's office. We -- he says that he's likely to -- my guess is he's likely to hide under the bill. But the question is, I think we -- the assessment process is something for us to see. Because the -- they had COVID even before COVID happened.

So anyway, we are also going to be -- we are very curious how the assessors will look at it if we were to deny them the 6-month bill. Yes. So I think this is wait-and-see.

Business Park itself, like I said, no. If you look at our top 10 tenants here, our top 10 tenants actually constitute about 30% of our total revenue. They are very strong name. Okay. You have Google, you have HSBC, you have Merrill Lynch, you have PSA Corp., you have IDA (sic) [ IMDA ], SAP, Unilever, NTUC. I'm pretty confident that this group is not going to fail me. Okay. And that's already 30% of our revenue, yes.

So if you look at -- if you ask me who exactly are they, there will be some like, for example, the tourism-related trade that is parked in our Office -- rather, the Business Park. Our Business Park is looking stronger than the Office -- the field requests are mostly a combination of Office and Business Park but smallish, very small, okay? So that's why I'm saying that it's less than 10% if you ask me to take a stab at who will hide under the bill.

The difficulty for us to ascertain a number is because I'm not familiar as to how exactly they're going to assess. I think anybody can say that they lost a dollar of sales due to COVID. I don't think anybody -- it's hard for anybody to prove that. But how do they take that $1 reduction in sales in determining the number of months that they should pay us if the tenant so decides to go under the bill? So I think we have to wait and see. There seems to be a process of assessment. But the process of assessment, we are not very clear. Is it 10% hit, you pay me 10% less? Or is it 10% hit, you don't pay me for 6 months and owe me first? So I think that is something we have to wait and see. I can't commit. But if I -- based on what I hear that people are likely to hide under the bill is less than 10%. So active receipt of the notification by us is 0 as of today.

[Donald Chua, analyst]

Less than 10% of NLA or total -- your total portfolio, right, not just retail.

[Hwee Li Lim, executive]

Actually, it's about mid-single-digit, yes, our total revenue.

[Donald Chua, analyst]

Total revenue of total portfolio, including Office...

[Hwee Li Lim, executive]

Total revenue. Yes. I'm being very careful in rounding all my numbers up because I seriously do not know how the assessors are going to assess. And I see from the tenant's perspective to pull $1 less sales and blame it on COVID is not difficult. Right? If you sell 1 bread less -- let's say, if you're BreadTalk, you sell 1 piece of bread less, is considered affected by COVID. So how do you take that 1 bread less and equate it to the number of months for the landlord to assess the deferment? I don't know. I'm not sure how they do it. So I'm waiting to see if anybody who contest it and how the assessors will look at it.

[Donald Chua, analyst]

My final question then is for -- maybe it's a bit too early. But for the month of -- in April, has there been any leases -- retail leases being signed, or even the rest of the other sectors that you're in, that suggests that the rent may -- reversions may start to really come down? Do you have to cut rents? And also for the retail, is there more request to restructure to more GTO?

[Hwee Li Lim, executive]

Okay. The -- actually, industry-wide, all the F&B industry-wide, not only me or any particular segment, they have been openly saying in public in terms of once they go 15% gross turnover, right? There has not been any actions I see in the market that people are rolling into that in a very big way.

If you talk about whether there are pressures in terms of restructuring, I will be kidding if I say no, okay, if I'm talking about retail. If you are up for expiry in these next few months, definitely, there will be a bit of pressure for us. How do we look at it? I think most of the tenants can see that we are here on a long-term basis. This is a very -- this is a short-term -- we hope it's a short-term problem that we have to ride through together. And they see our sincerity in giving rental rebates and to guide them as to how much cash flow and pre-planning forward, even in March, we were telling people 4 months ahead, I hope that they can take comfort that the landlord is actually standing behind, and we have to take care of all the stakeholders.

So if you say that we don't have to restructure, I'm a bit kidding you. There's a few that we are looking at, but we are not looking at for the whole entire lease term. There are a couple of them on hand. We are considering, for example, for year 1, I may cut you because -- I may restructure a little bit, but year 2, year 3, you're back to normal. So those are the operational things that we have to do along the way. But I'm not seeing any big numbers as of yet.

Now right now, I think that they are taking comfort from the bill. So let's see when the bill rolls out, what is the extent of the issue. Yes.

[Bee Lian Tan, executive]

Can I just add on? I think some -- a few of them are asking on the 10% that Sharon just mentioned. This is our best guesstimate, and it's about 10% of the portfolio revenue.

[Hwee Li Lim, executive]

Yes. Less than 10%.

[Bee Lian Tan, executive]

Less than 10%, yes.

[Hwee Li Lim, executive]

Yes.

[Operator]

Our next question comes from the line of Nicholas Teh from Crédit Suisse.

[Nicholas Teh, analyst]

Just had a couple of questions. Firstly, just want to understand how the property tax rebate gets booked, i.e., do we assume that for every quarter of the next financial year, basically, we're seeing slightly lower expenses? Hence, what you meant by prefunding the government's relief measures. The other thing I just wanted to ask in terms of your discussions with the tenants following on Donald's question just now. When you're talking about restructuring the leases or even those that you're not restructuring, what kind of impact, i.e., reversions are we looking at for retail? And perhaps any thoughts on Office and Business Park as well?

[Bee Lian Tan, executive]

Okay. I will take the property tax rebate question. In a normal case, in a normal year, we will pay property tax over a period of 12 months. So we book our -- we book into our books on a 12-month basis. We just did not even lease. And we pay over, through installments, also on a 12-month installment. But come property tax rebate, we have informed the tenant that we will be passing down the rebate in the balance 85% in the month of May. So for the month of May, they are not paying me anything. So it's effectively like I'm paying for property tax for a year in the month of May rather than over the period of 12 months. So that's what we meant by prefunding. And this $16 million or whatever million, $16-over million of property tax rebate that we are dishing out to the retail tenant will be booked into our book in the month of May at one fund based on the discussion with our auditor. So the -- accounting-wise, when we pay out the rebate to the tenant, it will be recorded in our book one time. So over the years, you will see there will be a lower property tax expense in our expense line.

Okay. Sharon, you want to...

[Hwee Li Lim, executive]

Okay. I think the -- it's hard for me to put a number as to -- because it's very tenant-specific with regards to any restructuring, yes. I'm not saying that all my leases are going through. I think less than a handful that we are potentially looking at. If you look at our REIT profile, yes, 18% is due, for Vivo, it's about 7.5%. So I think that can actually give us some comfort in terms of the -- any negative that may come through.

Yes. So I won't be able to give you an exact number because it's very, very tenant-specific.

[Nicholas Teh, analyst]

Sure. And would you be expecting the Office and Business Park reversions to start turning negative?

[Hwee Li Lim, executive]

I think everybody will try the allotment, but I don't think -- it's definitely not that I'm seeing.

[Wee Leong Koh, executive]

I mean the -- maybe just to complete the story there. There are a number of reasons where we are -- where the rents are already on a fairly high level, some of these are due to short-term extensions of very large tenants. So negative reversion for those leases is a given. As for other leases that we are currently negotiating for the business partner office sector, like Sharon says, there are -- there will be tenants who will use the situation to the advantage of trying to bring down rentals. We are managing all these negotiations on an ongoing basis. There are tenants who have been very fair to us as well, still paying us the market rentals. So I can't give you a view of how we look like until we conclude most of these.

[Hwee Li Lim, executive]

Yes. Maybe just to share with you, when we first went out to dish out our rental rebates in March, I even have tenant whose sales were increasing, complaining all the way to DPM. So anyway, so I'm just saying that at the end of the day, there are people who may not need it will still come. Okay. So let's leave it to us to manage because we always have better sight of the operations on the ground. So please don't mean it that, okay, and say that. The -- what I actually wanted to take -- to highlight a couple of things is, if you were to just stare through the NPI numbers of MCT, technically, fourth Q FY, we are not doing yet badly, okay. There is an increase on NPI, even without the rental rebates, assuming -- sorry, not rental rebate. Even with the rental rebate, the NPI is higher. And that definitely helped by MBC, the acquisition of MBC II. I would say that it has nicely diversified our portfolio. That's why the retail component has come down to about 40%. So that is a very nice addition and diversification for us.

The other thing is, if you were to remove our retention, because the retention is not spent, yes, the cash retention is still in our pocket. If you were to add that back, actually, our DPU is actually higher than the quarter before. So we are actually comforted that there is no big crack in our operations for fourth Q, okay? We are just taking a very cautious view on the following forward view. So that's why we are keeping some of the cash upfront in the pocket. That will be due to you along the way. If we find that collectibles, there's no issue, and we are just overly careful, that is something that will be distributed out.

Next thing, if you look at our quality of tenants, the top 10 constitute about 30%, and I think they are pretty strong names. You have Google, you have -- myNTUC -- NTUC is there. The banks are all there. So I think our quality of tenants will also help us right through this rough period, yes. Majority of the roughness now in the market is predominantly centered around retail, okay. So the diversification actually helps us.

Now the other question that people may ask, why are you giving so much rental rebate? Like I said before, we are giving a forward view to the tenant up to July. Most of my peers is up to June -- up to May, and that doesn't mean that there may not be coming out further, okay? So we are taking -- if you are taking my total rental rebates and just dividing and saying that, well, there's a lot, but that is a lot because we are giving a forward view all the way to July.

So I hope that you all can see that we are taking a very careful approach. We are taking a very prudent approach with regard to cash flow. Our forecast this year is very clear to make sure that we are cash positive and refinancing is in place, okay?

In any time of crisis, cash flow is always paramount, okay, paramount. Because without cash flow -- without the cash flow, it's instant death for any vehicle. Regardless how beautiful your business is, you don't have cash flow to turn you around, you are dead. So we are very clear that paramount is cash flow. So a lot of times, if you see most of our actions are around preserving cash flow. And where we don't need it, we will definitely distribute it, okay? So I think -- I hope that you'll see a couple. It's not that my fourth Q results are down. That's why my retention is at this level. Yes, because -- yes, it's actually driven more because of an active step for us to do retention rather than anything else.

[Bee Lian Tan, executive]

There are a few questions posted online relating to Page 27 of the slide. So I'd like to take this time to quickly go through again to clear up 3 of these questions posted online.

So if everyone look at Page 27, just to clarify, the first package that we announced in February, $11 million support package, that one include 0.5 month of rental rebate for eligible tenants as well as some A&P support, right? In the second round of rental rebate, it amounts to $18 million. This one is 2 months of fixed rent. So in the first round, there is an additional component of A&P support for example. So therefore, the numbers appear to be a bit different. So altogether, these 3 packages add up to about $50 million, and they will be disbursed over a few months, right? So in the first tranche, much we have already disbursed 0.5 month to retail tenants who are eligible. April, we have announced that we are waiving the rental for retail tenants who are eligible. And the rest will be disbursed 1 month in May, and 0.5 month each in June and July. I hope that answers all these questions posted online. Thank you.

Online. So there's some questions posted. So following up to the questions on valuation, what assumptions had the valuers assumed in terms of rent and occupancy? And did they actually include any falls in rent or as for occupancy?

[Wee Leong Koh, executive]

Okay. So you know that generally, when valuers do valuation, they take in whatever is the market transaction. So in terms of cap rates and discount rates because significant transactions, that has brought down these numbers. There are no changes to our cap rate and discount rate from the assumptions they used in August. If you're looking at rentals and rental assumptions, we are -- for the Office and Business Park, again, because there are no significant transactions bringing down the values, those were kept largely in line with the other 20 valuation assumptions.

On the retail side, the biggest change actually was taking in the rental rebates that we have provided for. And that actually brought down the valuation for what they would have been without the rebates. There were -- we had also -- we had only taken in whatever transactions we had concluded up to that date. In those transactions, there were some where they were slightly lower rentals. So some of rental drops have -- some rental drops have been taken in. But in general, the values have not much shifted their long-term market rent assumptions for the valuations.

[Hwee Li Lim, executive]

Maybe just to add, the valuers is not taking this pandemic as a long-term structural thing. They've taken it as a one-off. So in terms of how they deal with the rebates and the cap rate, they all boil down fundamentally to the -- they are of the view that the pandemic is an issue, but it's not a long-haul embedded issue that will have a long-term impact on the valuation. Okay. So that's where the rental rebates and all the assistance package is taken as a one-off deduction to the total number that they divide based on their standard methodology.

[Operator]

We've got a question from the line from Terence Khi.

[M. Khi, analyst]

Sharon, this is Terence from JPMorgan. Can I ask on some of the tenancies? I understand that there were no tenancy signed over the quarter. Like maybe could you give us a sense of why this was so? And also about the pretermination of the tenant at MBC I?

[Wee Leong Koh, executive]

Terence, maybe -- I think that's just the way we report our numbers. We report our numbers based on the leases expiring the year FY '19-'20. So the reason to FY '19-'20 have all been done already by 31st of March. The leases that are expiring in FY '20-'21, those numbers will come out in our first quarter results in July. So the -- to say, it's not true that we have not signed any leases. It's just that the leases we have signed over the period will be reported in the next quarter.

[Hwee Li Lim, executive]

Preterm.

[M. Khi, analyst]

Okay. What was the MBC I...

[Wee Leong Koh, executive]

So the MBC I, you're talking about the preterm revenue that we have received in the fourth quarter. We had a tenant that gave up a floor, we found them a replacement tenant. So increased normal fit-out conditions, tenants will pay for the fit-out period and fit-out period for the incoming tenant. So that's what the compensations are. What exactly this means is that -- in this particular case, because the fit-out period crosses the financial year, what I mean is that we have effectively taken a little bit of revenue next year into this year as part of the compensations arm.

[M. Khi, analyst]

Okay. Also, can I check, would there be any tax incurred if you decide to pay out the capital allowance retained in the next FY?

[Hwee Li Lim, executive]

Will there be any tax or implication? Capital distribution is not subject to tax. It's capital in nature. There's no capital gain tax in Singapore. So it's not subject to tax.

[M. Khi, analyst]

Okay. And my final question in terms of impact by the sector in the retail side, can you give us a sense of how the different sectors have been impacted, especially for Vivo?

[Hwee Li Lim, executive]

You mean the trade sector?

[M. Khi, analyst]

Yes, the trade sectors.

[Hwee Li Lim, executive]

Actually, after the circuit breaker started, yes, I think it's across the board, consistently the same. The champions will be like NTUC that's doing decent sales, very decent sales. But actually, because of the circuit breaker and stuff, it's very hard for us to do a very good comparison. But if I just look at just January itself, just slightly before the impact of social distancing and whole blowout of this issue, generally will be -- the downs will be things like your cinema, the ups were like your Marks & Spencer and all. So that's generally what we have seen. And certain F&Bs were also up, then the lifestyle was also up. That's for January -- I'm talking about January, yes. Because I think when you come to March, it's totally out of whack already because some are closed -- forced to close. And they can't really track their performance based on sales. So the -- if you look at the impact across the sector, I would say that the F&B and the fashion is definitely about the same. Certain lifestyles are definitely better. And the supermarket, pharmacy are definitely doing better.

Yes. So just back to your preterm income, the preterm thing, yes, it may sound negative, it's called preterm, but we are not suffering, yes. Because when there's a change of our tenant, the outgoing tenant, whatever expenses in terms of fit out and everything, is paid by the outgoing tenant for the incoming tenant. So it's actually -- it's a positive news for us rather than negative, yes.

Yes, yes. Just because people always tend to take the word preterm negative connotation. No, actually no. Sometimes I like it because when we change our tenant, there's always cost to us in terms of the fitting out period and all, yes. So I think just to differentiate that a bit.

[Li Yeng Teng, executive]

I just want to post 1 question from one of the online participants. So the question is from Mr. [ Darren Cuan ]. How much of the percentage of tenants are tourism- and hospitality-related? And also at the same time, we will also address the proportion of shoppers from VivoCity, which are from overseas and non-Singaporean.

[Wee Leong Koh, executive]

Okay. So based on hospitality and tourism related and still tourism related, we've actually added the air transport industry as well. That's actually well within the 10% that Sharon has been talking about. So it's a fairly small percentage of them. It's a very small proportion of that number, so well within the 10%.

If you're talking about the -- in terms of shopper traffic, I mean based on the last survey that we have done, about 2 years back, we're probably talking about 20% of shopper traffic, 20-ish percent of our shopper traffic are coming from tourists. But again, that numbers, that we had about 2 years back. Obviously, very different today.

[Li Yeng Teng, executive]

There are also a few questions from [ Han Sek Li]. So first, why are we cutting the DPU instead of using existing cash and cash equivalents? Second, any plans for M&A? And the third question is -- yes. So he would just like us to reiterate our objective of cutting the DPU this time around.

[Bee Lian Tan, executive]

I think quite, just to reiterate what we have said before. If you look at our results, definitely, it's not a major crack based on fourth Q that we're retaining. Actually, NPI and everything is up. We're just taking a very cautious view going forward, keeping cash.

Why aren't we using all our cash? I think some of our cash are integrated deposits, so integrated deposits that we technically do not touch because it's something that we have to hand back in -- we do have a financial flexibility of about $300-over million of cost, of which $60-over million are cash. And the rest of $200-over million in committed last year. So we are keeping that aside for our financial flexibility. We don't know what is going -- what is ahead of us, that uncertainty.

So just the retaining of cash, retaining of cash is purely for prudency because we just want to be sure that we don't -- when we need some cash or -- it's just to conserve cash. There's nothing in particular.

Retail is about 40% of our business. And the other 50-odd percent is office. We can still fund the operation using the cash collected from the office at this stage. Okay. I don't know what is ahead of us. So the retention is purely prudent. It's just to conserve cash and put it in our pocket. If we need, there is something for us. And if we don't need it, one day, if we don't need it, we can distribute that in the form of return of capital to the tenant because we are cleaning, we are retaining this as a capital allowance, using capital allowance. So come next year or whatever, there's certainty and we don't need the cash, we will return to unitholder in the form of return of capital to the unitholders.

[Hwee Li Lim, executive]

The other question in terms of whether we will look at acquisition. I think the -- right now MAS has relaxed their gearing. There's a lot more that we can borrow. Our debt headroom from $1.9 billion becomes $2.9 billion. I think that gives us a little bit more firepower. But I think in this -- today's market, we got to be very careful as to how you use it. It's business as usual. We will do the assessment. If the investment case stacks up, nothing stops us, but we will be additionally careful in terms of this choppy market. Yes.

So -- and for any deal to happen, like I always said to investors support needs to be dead. We are an entity, which is REIT that we do not sit on any cash. So we must always assess that the capital markets together though if -- the capital markets must be ready for us, coupled with the investment case stacking up before we embark in any acquisition. So we have not gone into that level to see whether the investors are dead. Right now I would say that everybody is being a bit more careful. So that's where we will have to really look at the investment case, coupled with the support from the capital markets before any acquisition will be done.

Yes. So -- but firepower, definitely we have, okay? But it's just how we use it, if we intend to use it. Yes.

[Bee Lian Tan, executive]

There's a question online asking why are we not using the government's temporary relief expansion of the payout by 12 months to meet our tax transparency. Means for March 2020, I can actually delay paying out my taxable distribution by another 12 months to meet my tax transparency.

The reason why we didn't go under that is because at this moment, at this point in time, I do not have any further information on the condition and what I need to do in order to avail myself with that relief. So hence, we chose to go via claiming capital allowance to retain our cash. Yes.

[Li Yeng Teng, executive]

We have actually passed our original time, but we will finish it up in 10 minutes, 10.5. So we would like to just post the questions from the caller from the analyst. Devina, please, can you open up to Derek?

[Operator]

Sure. Derek, you can ask your question now.

[Derek Tan, analyst]

Sharon, just 2 questions. Just wondering, firstly, on your tenant relief package, right, since you have been very forward-thinking in terms of your reliefs, would you be right to say that given the extension of circuit breaker, if a tenant comes to you, ask for more rebate, you will not entertain them?

[Hwee Li Lim, executive]

I think at this moment, nothing to think that 6 months ago, I've given a bit of a forward view already. So I'm not going to entertain for the time being, okay? There's only 2, that decision can be taken later. Okay. To me, we have given you a package. I can recount the package, but the total package of the July is as such. So unlikely to move.

[Bee Lian Tan, executive]

Just to add one. April, we are waiving. For May, we are actually giving out the property tax received from the government. So effectively, they are not paying month -- any rent on May.

[Hwee Li Lim, executive]

Yes. So I'm not going to be like waive May and give them cash for property tax a bit, right? So that's why I'm saying, our package is good enough for this period. Yes. So any decision can be taken later where we have better sight of things. Because every 2 weeks, certain rules change by the government.

[Derek Tan, analyst]

Okay. Okay. My next question would be, just take -- if we take a view that we're going to see a gradual return to our previous lifestyle, would you say that in terms of your tenants at maybe Vivo, ARC, most of the tenants will remain intact. I just want to get a sense what are the segments you are watching closely or any tenants you think may [Foreign Language]. I just want to hear you.

[Hwee Li Lim, executive]

You want me to -- that one we -- I tell you privately. I'd like to say that not -- every tenant would -- all my 350 tenants is going to be there? No. Definitely 1 or 2 is going to suffer without fail. Okay? I'm not saying that all 350 lights are going to go off. But there will be some lights that go off, but it's going to be very nominal. If I look at my sales now, arrears now, I'm still comforted to that level. Okay. My arrears is still in good shape if I look at it. Yes. So I expect a lot of people not to pay me for March, right? But actually, no, the number is very, very low, okay? Very, very low. So that gives me a bit of comfort, yes, if I look arrears.

But that behavior doesn't mean that it will be replicated. That's why I'm a little bit more cautious. Okay. What I can see, I can tell, I feel that it's okay. But that doesn't mean that behavior will be replicated for the future. That's why I always qualify myself, let's be more careful. I do not know what's going to happen tomorrow, okay? But what I see today is my NPI, my arrears, my top 10 are still in order. Okay.

So now are all the lights going to go off, 350? No. Is there going to be 1 or 2? Yes.

[Derek Tan, analyst]

Okay. Okay. Okay. So just my last follow-up, right, would be specifically on O&G exposure. And any sense of any sticky tenants there? And in office demand, right, based on what your team is telling you, are there more downsizing expected, let's say, in the next couple of years...

[Hwee Li Lim, executive]

I think the upsizing, downsizing is everyday affair. Every year, we have different requests, okay? We want more space. We want to give back 1 space. That's why you see we sometimes have preterm income because we match the tenant, yes. Like you want to get out space, we found somebody else. That's how we save our fit-out period and save on agency fee and so on and so forth.

So every year, it's the same. This 1, 2 months is more -- a bit more of dealing with -- because circuit breaker, they cannot do construction, they cannot do fit out. We were dealing more the tenants in that manner as to phasing out, delaying the handover or extending a little bit in terms of the fit out. Those were the things that last month the team was focusing on.

I would say that the Business Park is still relatively strong. Okay. Okay? If you look at the supply and all coming out, what's the good news for this industry is the Office and Business Park sector, the supply is rather contained. So that is a natural support. But I've always been a believer that when the entire economy gets affected, it's not me alone. Entire Singapore, entire Asia, entire whatever, there will be some impact. Okay. But to say that it's only relevant for MCT, no, it's not. I say that if you look at my quality of tenants, I'm very comforted when I look at my top 10, okay? My top category is IT and predominantly, they are people like Google; Medtronic, who manage -- I think, they manufacturer inhalers.

[Bee Lian Tan, executive]

Ventilator.

[Hwee Li Lim, executive]

Ventilators and stuff, they are okay, okay? So if you stay at my top 10, 30% -- more than 30% -- about 30% is coming my top 10 tenants, yes. That should give you an indication of the quality of tenants, yes, of the portfolio.

The focus is a lot on retail, but my retail has now been diversified down to about 40%. So I would say that we are, in a way, the acquisition was very timely. It diversifies our income, and I expect a lot more to -- bigger names.

If any of these top 10 tenants for -- if all these top 10 tenants that I have, the 30% fall, I think the entire Singapore is in trouble, yes. Because most of your companies are there, most of your banks are there.

Yes. I mean just to lighten. You're not dead. Google, Merrill Lynch, HSBC, IDA government, yes. So quite a number of government inside undisclosed also. So if you take my top 10, if they go down, it's quite scary, yes. So that will be the path. I speak to Derek together with a lot, I speak to the banks and the government.

[Wee Leong Koh, executive]

Derek, maybe we can give you more comfort on your question on the oil and gas. If this was 2 or 3 years ago, I will be a lot more worried. But actually, a lot of that -- a lot of oil and gas tenants have already moved out. We already brought that percentage down quite a lot. And especially the diversification of MBC II, that percentage is now actually very -- is actually around the 1-ish percent only.

[Operator]

The next question comes from Brandon.

[Brandon Lee, analyst]

Sharon, I just have just a couple more short questions, right. I just want to get a sense of that. This 10% that you just say, right, do you think that's reasonable? Pessimistic? Or optimistic number?

[Hwee Li Lim, executive]

My number is way below 10%. I round it up to share with you as 10%. So hopefully, that answers your question, Brandon?

[Brandon Lee, analyst]

Okay. Okay.

[Hwee Li Lim, executive]

You know the next round, you're going to hold me to the number, right? So I rounded first. Okay. I give you a chance here. Office is 1%, 2%. Our guess of the people who are likely to send in notification is less than 5. The number of the percentage of rent for the office, it's like maybe 1%, 2% kind of thing, yes. Okay.

[Wee Leong Koh, executive]

Office.

[Hwee Li Lim, executive]

Yes. So if you -- at this point, I'm just rounding a number for you. Yes, together with Wee, I round the number for you, say 10%. I'm not going to be precise 6%, 6.5%, 7% or 8%. I'm just telling you it's less than 10%.

[Brandon Lee, analyst]

Okay. Okay. And can you also share about how many percentage your mall is open now?

[Hwee Li Lim, executive]

We have about 100 tenants. Like I said, don't bank on the 100 tenants because if you -- the core ones are definitely NTUC. Over the period of time, because 2 days ago, they tightened further in terms of what is essential. So all the bubble teas are bye-bye, all the cake shops are bye-bye, but Starbucks is still okay, okay. So -- but at the end of the day, let's be fair to the tenants, are they going to be able to trade the way they did before any social distancing measures and any measures came about? Let's be realistic, no. That's where we say that's not -- we will consider charging them a little bit of security -- sorry, service charge, but not in terms of the rent, because let's be fair, they are never trading at their level, okay? So about 30%, ballpark 100 tenants out of 350 tenants, very small, very smallish tenants here, yes.

[Li Yeng Teng, executive]

We will take the last question from [ Dan Zhuang ] and close this off.

[Operator]

Okay. Our last question comes from the line of [ Dan Zhuang ].

[Unknown Analyst]

Can you share the broad assessment criteria for tenants to qualify under the deroute of circuit breaker support package? And what percent of tenants actually received those?

[Hwee Li Lim, executive]

Okay. We -- first of all, the support package, which is average of 5 months, we -- average, average. We went on applying the medication of who is sick. More sick gets more medicine, less sick gets 0 medicine or lesser. On average, it's 0.5 month. So there were tenants who were getting in a range of, let's say, 0-point nominal, all the way to 0.7, but average is 0.5. We looked at their sales performance in January and February because the rebate was dished out for March. So we took the 2-year -- 2-month period because there was Chinese New Year in different periods from different years. So we want to make sure that we are measuring like-for-like. So we look at sales performance, and that was on an average basis.

Then the second round of package that we talk about, we look at -- there were tenants who were really helping themselves driving sales and we didn't want to penalize them, okay? Because if we went on the sales, people who were pumping a lot of asset in pushing sales will be discriminated against in our package, too. So after we have done package 1, we will then be able to do the standard application of rebate for our retail tenants. And that's where we went on a standard, whether all the tenants are getting the same, which is April, which is we are going to waive and for select, yes, I will talk about that in a while.

May is a full property tax. We have never wanted to keep. We have actually already more than dished out from the first tranche. So second tranche will cover the second budget announcement, which is the 85%. Then come June, July, they are equal and standard, 50%, 50%.

So just the thought process behind our thinking of additional rent and rebate. Number one, the first round, what the government gave me, I look at the -- together with what we are intending. We look at their sales, we apply the medication. Subsequently, we went on the standard so that we do not discriminate against people who are trying to help themselves. So that's where we went on the standard package.

Now who are eligible? Who are not eligible? If you are coming up to expiry, okay? I'll give you property tax all the way to expire because property tax rebate is meant to cover the whole entire period. So we can't be giving you beyond the period of -- for tenants who are expiring, okay?

The next thing. The things like NTUC is doing better -- he's actually okay. That's why he's one of the -- supermarkets and all is a sector that we will pick up as an exclusion. Okay. So that's how we think about who's eligible, who is not eligible. But I would say majority, if you're a fashion or you definitely avail yourself to the package that we've given, yes.

And we actually have 2 conditions within our -- 2 conditions within our rebate. Yes. Number one, you shouldn't have any arrears with us. Number two, if you preterm, I'm going to claw back. Yes. So those are the standard conditions because this is additional help I'm giving. Yes. So that's where -- but property tax rebate is a separate thing because it's a pass-through, it's a pass-through, yes, but that will calculated all the way to the expiry of the tenancy.

[Unknown Analyst]

That's very clear. And for the $50 million of rental rebate, right, does that include industrial office? I'm assuming that, that 30% of property tax waiver should be passed on to them, right?

[Hwee Li Lim, executive]

Yes, the -- we will pass through the property tax for the Office and Business Park. So that's 30%. That's about 0.3 a month. That will be passed through. Same treatment. Whatever government gave me, I have already accounted for in committing to our tenants. So we are not keeping a single cent of whatever the government is giving us. It's going to be passed through to the tenant. We will -- either we have done so or we have already committed to do so. It's just a timing because today, I haven't finished dishing out the 85%, yes, the 85% in May. So that's why I say I'm committed to do so. Yes, so same for Business Park.

[Bee Lian Tan, executive]

We have never intended to keep the property tax rebate.

[Hwee Li Lim, executive]

Yes.

[Bee Lian Tan, executive]

Never, never.

[Unknown Analyst]

Okay. I just want to make sure whether this is included in the $50 million.

[Hwee Li Lim, executive]

No, because it's a pass through. No. We are thinking -- okay. Our thought process is we take care of the retail first. I don't see the Office and Business Park shaking up as -- in this manner of retail because the retail is a little bit more direct, and the impact is greater felt. So that we are spacing out. We are -- like I said, my main focus this year is cash flow. So any help that we give, we are very cognizant of our cash flow, okay? So that's where we are spacing out. Retail comes first, retail tenants come first, then comes the office, okay? Right now there is no big plans in terms of getting into this level for the Office and Business Park, okay? But if we all go into global recession then, it's a different thing, yes. Okay? But I'm just saying, as of today, the view is retail first. And Retail is the most hurt segment of our portfolio.

[Bee Lian Tan, executive]

Yes. Just to add on. The $50 million includes properties -- includes rental rebate that we are dishing out and also other form of A&P support. Not purely rental rebate.

[Hwee Li Lim, executive]

Yes. So when you compare our numbers, okay, all right. We added quite other things inside, okay? For example, beyond the numbers of $11 million, things like pop up, waiver, atrium, we calculated it so that you'll have a sense of what my numbers are. Yes. But technically, my rental rebate is $8 million over. There's always some knock-on effect at the back end that you all don't know. For example, I kill all the events, the money is gone. I give waiver of using the atrium space. Money is gone. I give free car park. Money is gone, yes. So all these things we added up, and that's how we came up with our first round of $11 million, yes. And majority of it is for tenant, which is via tenant rental rebate inclusive of the prop tax.

[Li Yeng Teng, executive]

Okay. So with this, I would like to close the question-and-answer floor. Yes. Sharon will do a quick round up, and then -- we'll just close this session. Thank you very much for attending our briefing today and keep safe, everyone.

[Bee Lian Tan, executive]

Thank you.

[Hwee Li Lim, executive]

Thank you.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.