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Mapletree Logistics Trust
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Ladies and gentlemen, thank you for standing by, and welcome to the Mapletree Logistics Trust Fourth Quarter and Full Year FY '19/'20 Financial Results. [Operator Instructions] Please be advised that today's call is being recorded.
I'd now like to hand the conference over to your first speaker today, CFO, Ms. Charmaine Lum. Thank you. Please go ahead.
Good morning, everyone. I'll take you through the results for the fourth quarter FY '19/'20 as well as the full year FY '19/'20.
For 4Q FY '19/'20, our DI for the quarter increased by 6.2% year-on-year to $77.8 million. We are pleased to report a DPU of $0.02048. That's a year-on-year increase of 1.2% from last year's 4Q. The improved results are mainly driven by higher contribution from existing properties as well as accretive acquisitions in the year, partly offset by absence of contribution from the 6 properties divested during the year.
For the full year, DPU increased by 2.5% year-on-year to $0.08142. Our portfolio remains resilient. During these tough times with portfolio occupancy improving to 98%, WALE of 4.3 years and positive average rental reversion of about 2% for the quarter.
A recap of our portfolio rejuvenation in FY '19/'20. We acquired 9 modern specs logistic facilities during the year with a value of about $753 million, entered into a forward purchase contract for an Australian property and recycled $251 million of capital from divestment of 6 (sic) [ 5 ] assets.
Capital management-wise, we've hedged 77% of our total debt into fixed rates, 82% of income stream for the next 12 months. Gearing as of 31 March 2020 is 39.3%; and average debt duration, 4.1 years. We do not foresee any refinancing risk in the coming year as we have $700 million of available committed facilities on hand, which is more than sufficient to meet our refinancing requirements of $242 million debt due -- debt maturing in the coming year.
Full year results. Gross revenue has increased by 8%, mainly due to higher contribution from existing properties and acquisitions during the last and this financial year. Borrowing costs increased accordingly because of more debt taken to fund the acquisitions. Contribution from joint venture is higher mainly due to our share of investment -- uplift in investment properties in the 15 JV assets in China. DPU, $0.08142 versus last year's $0.07941. Balance sheet-wise, our NAV has increased from $1.17 to $1.21, uplift in NAV mainly due to revaluation gains for the year.
On capital management. Our total debt increased mainly due to debt taken to fund -- partially fund the acquisitions made during the year. Aggregate leverage ratio, 39.3%; interest cover, 4.9x. As you can see, our debt maturity is well staggered, with only 6% of our debt coming due in the coming 1 year. We have $700 million of available credit facilities on hand, and these facilities are committed to refinance our requirement of $242 million coming due this year. Debt maturity is 4.1 years. Interest rate-wise, as mentioned previously, 77% has been hedged to fixed rate drawn in Singapore dollars and 82% income stream hedged.
I'll cover on the portfolio highlights. In terms of the occupancy level, this quarter, we have improved to 98% versus last quarter of 97.7%. This is mainly coming from Hong Kong, from 99.2% to 99.9%; from our asset in Grandtech Centre as well as improvement in occupancy in our China assets from 95% to 96.3%. The improvement is mainly coming out from our Jadeite portfolio, primarily our assets in Wuxi, Zhenjiang and Nantong.
The decline -- the improvement is offset by the decline in Japan and South Korea, primarily due to the acquisitions of Kobe and Hobeob 2, which had some vacancies. And then for the rest of the countries, Singapore, Australia, Malaysia, Vietnam, it's held steady this quarter.
In terms of the lease expiry profile, our WALE by NLA is at 4.3% (sic) [ 4.3 years ]. For this coming FY '20/'21, the lease expiry is 22.8%, of which 3.1% is coming out from SUA. This is mainly coming from 5 SUAs in a few countries, in Malaysia, Japan, Korea and one in China. So based on current discussions, we -- the team, based on current visibility, I think the 3 SUAs, we are confident to renew it. So we are looking at probably 1% based on current visibility. And as for the MTBs, it's coming up mainly from Singapore, China and Malaysia. And based on the current negotiation status, we are looking at probably closing another 4%. So for the FY '20, we are looking at about 16% expiry based on current status.
The next one, on the top 10 tenants by gross revenue, the top 10 tenants, which account for 27% of gross revenue remains unchanged. So as for CWT, in terms of their operations, it is largely remained stable. And in terms of payments, rentals, it has still good, it is prompt. And just to share a little bit, in terms of -- they had $100 million medium-term loan due in March, and they have fully repaid their amount.
The next one on the tenant trade sectors. We remain largely diversified with tenant account of close to 700 customers with majority, 75%, serving the domestic consumption sectors. So just to share a little bit color for this COVID impact, I think we are seeing some challenges from trade coming up from like our F&B, retail tenants, some from fashion as well as from the aerospace. This is about 10%, roughly. And for those that has a higher volume growth as a result of this COVID, we are seeing it's coming out from our tenants like our F&B tenants like our Coles and Woolworths, our consumers' staples, our Amazon guys and Hong Kong TV as well as our health care tenants. They are all doing pretty strong at this moment.
In terms of SUA, MTB, remains largely the same with concentration of MTB about 60% and SUA about 40%.
Geographical diversification. Largely, our exposure is still on developed markets with Singapore, Hong Kong, Japan remains our top 3 core markets for our portfolio.
On the FY '19-'20 acquisitions, we have done 9 acquisitions across in Malaysia, Vietnam, China, South Korea and Japan and as well as we have entered into a forward purchase of a modern logistic properties in Australia with a total AUM of about -- close to about $8 million.
Portfolio rejuvenation on the Ouluo Phase 2 for it, we are looking at completion in May '20. And then divestment, it's our divestment of the Japan as well as the 1 in Waigaoqiao in Shanghai.
On portfolio valuation. For the MLT assets, we are looking at last year of $7.7 million (sic) [ $7.7 billion ] increased to this year of $8.4 billion in terms of value. So Singapore, in terms of the cap rates, it's held the same. And you will notice that there's a bit of slight decline. It's primarily due to some of the shortening land lease of JTC, primarily those with less than 20 years. For Hong Kong, we have some uplift. In terms -- the uplift is mainly coming out from the moderate rental growth that we have seen across our -- all our 9 Hong Kong properties. Cap rates remain the same.
For Japan, there is some decline primarily due to the divestment of our -- some of our Japan assets and is offset by our acquisition of Kobe. For China, slight decline due to the divestment of Waigaoqiao property. And then for Australia, improvement due to cap rate compression as well as some rental growth across our assets primarily in New South Wales and Victoria. For Malaysia, primarily due to the acquisition of Shah Alam 2; and South Korea, acquisition of Hobeob 2; and for Vietnam, the improvement is coming out from acquisitions of our assets in Bac Ninh 2 as well as MLPP1.
So on the JV properties, so we are looking at from a -- about $300 million. The valuation this year looking about close to $400 million. Overall MLT portfolio, including JV properties, increased from about $8 billion to about $8.8 billion.
So I think in terms of the outlook, most of our tenants across the MLT markets remain operational, and especially in our top 3 core markets. Our tenants in Hong Kong and Japan, they are largely operational, while a small percentage, 5% of the Singapore tenant base is affected by the COVID. This is mostly smaller end users coming out from the construction and furniture-related trade industry that is closed for the moment due to the circuit breaker. And as I explained earlier, we are seeing those tenants that are coming out from this aerospace industry, retail industries, that is a bit affected by COVID, whereas we have people like Woolworths, Coles, they are actually experiencing a much higher level of volume and business activity due to the social distancing measures.
So I will leave it to Kiat to add on.
Yes. Hello, everyone. I hope everyone is keeping well. Thank you for joining this call. So I think logistics sector is, fortunately, I would say, one of the least affected. So -- and the good part about MLT is that we are diversified. So I mean to put it very bluntly, we have China closing and Singapore was still open. And then now we have Singapore closing, and then China is reopening. So I think that diversification is providing us with a good resilient level of buffer, yes. And then, of course, the other thing that we have done actively over the last 5 years is actually to reposition the portfolio a lot away from SUA, single users, to multi-tenanted. And then with that change, you have seen the trade sector being a lot more diversified. So we have the e-commerce guys. We have the end users like the supermarket guys. So -- and then, of course, we have the other extreme like guys like the retail and fashion that is more affected. So I think the -- looking at that, we have about 5% that is -- the sector in terms of retail and aviation, that is more affected. But thankfully, the rest of the portfolio is holding up.
In the other -- I think to refer back to the top 10 tenants. Sheryl, can you get that top 10 tenants?
So you can see that we have, again, a very diversified group across countries. So out of this top 10, you have your Coles, your Equinix, Equinix and data center, Coles' and supermarkets. So -- and then you have the Japanese boys that are still doing very, very stable business. So if you look at this list, adidas is the one that's more exposed to retail. And -- but they have done a rent extension with us of 5 years. And the rental escalations we are putting in is about 2.3%. So the good thing is that we have been talking to them since the Hong Kong unrest. So already, there were rents, so-called help that we have given them during the unrest period. So right now, they are actually in a better position. And then of course, we have the big guys like the 3PLs, XPOs and, of course, the local -- one of the largest 3PLs in Singapore, CWT. So the ability for them to quickly replace the weaker clients with stronger ones, and that's what we are seeing.
The COVID situation has led to quite a fair bit of temporary request for stockpiling. So like in Singapore, we have SSW that does the national rice stockpile. So they have taken additional space from us on a 6 plus 6 basis, 6 months plus 6 months. So I think the challenge is you see that our occupancy is at 98%. And then when we have tenants coming into us to ask for temporary space, we have the flexibility to quickly talk to our whole portfolio of tenants, shift their allocation of space and then release this temporary space very quickly, make it available for them to do their stockpile. So I think that is one of the inherent quality strengths that the MLT team has.
Okay. I'm happy to take questions now.
[Operator Instructions] Our first question is from Mervin Song from JPMorgan.
First, in terms of the results itself, could you maybe strip out the capital distributions, we've been down in the fourth quarter and flattish for a full year basis. Maybe if you could run through the reasons for that.
And then my second question in terms of performance of occupancy, it is obviously resilient with e-commerce and people stockpiling. But do you expect something similar during GFC whereby occupancies was fine, so 6, 9 months that people stockpile and then the full economic impact hits, and then the occupancy drops off?
Charmaine, you take the first one.
Sorry, I didn't really get your question. The first one on DPU?
Yes. If you strip out the capital distributions, the fourth quarter DPU would have been down about slightly over 2%; and on a full year basis, would have been flat. I'm just trying to get understanding what was the reason for that.
Yes. I think the -- one of the key reason is, I think, capital distribution is a structure that we put in place, especially for our overseas properties because to maximize the efficiency to bring back cash to Singapore for distribution. So it is not going to be fair to remove capital distribution when you look at MLT. We are in 8 countries. There is no way that we can bring everything via dividend. So it has to be via capital distributions. So that's the answer to the first question.
So the second question is on the occupancy. I think the GFC is very different from what we are seeing now. They -- right now, it is a health situation. It is a public, I would say, world pandemic. So the banks are in a very different position from what they were during the GFC. Liquidity continues to be very different now from what it was back then. So we still see the strength in the banks. We still see the strength in the liquidity. So like, for ourselves, we have $730 million of committed lines. Are the banks going to go bust? I think that's not the case. So having said that, the -- and then right now, we also have seen different sectors of the economies holding up and certain sectors coming down. I'm not saying that we expect to see economic recovery very quickly. I'm not saying that MLT will not go through some negative growth position in some of our markets. What I'm saying is it is a very different situation. We are looking at the stockpiling. We are seeing strength in certain sectors that we think are going to be sustained. I mean not growth, but at least sustain. So I think that's how we're looking at the occupancies.
I kind of tend to agree as well. So -- but I was wondering, just what are your thoughts. I'll just join the rest of the queue and let other people ask questions...
Yes. I tell you, if we depend on capital distribution, there's no way we're going to be in countries like China and Vietnam and all this. So they -- so when you look at MLT, you have to look at it in totality, right? Yes. So that's why if you look at what we have put out in the outlook so far -- okay, the fear that I have is you have now the earthquake, meaning you have the pandemic. Will the tsunami come? And that will be whether the economic deterioration will come. So we are all watching very closely whether the tsunami will come and whether it will hit the logistics sector. So my feel is it will. The question is when and how much. So as far as MLT is concerned, we are positioning ourselves, getting ourselves ready for the tsunami.
Okay. I just hope the tsunami isn't that big.
Yes. I hope so, too. Yes. So yes. So I think that's why in our outlook, we maintain a very cautious position. The good thing is we are also -- we -- again, the diversification comes in. So for example, our 3 top markets is Singapore, Japan, Hong Kong, right? So I mean put it in a very perverse way, the unrest in Hong Kong happened earlier. Thank God for that. So that -- at that point, we actually were already working with our Hong Kong tenants, providing them with relief. So for instance, lower rental escalations, giving them periods of rent-free during their most difficult times. So we have already gone in last year to reposition. That is why you saw our last year DPU. If we had pushed the pedal harder, the DPU will have grown much faster. But we have really taken that off to help the tenants. And then thank goodness for the trade war, we have seen China moving their production to Vietnam. So at that point, a lot of 3PLs were grappling with creating an alternative supply chain. So we have seen that happen before the pandemic. So that is why Vietnam now is still going along. We have seen the Apple iPhones production, Samsung production, closing in Foxconn in China. But in Vietnam, they have shifted, and they have requested for more space. And the production has been ramped up in Vietnam. So I think thank goodness for the timing of the different events that come in that allow us time to prepare ourselves. So right now, I think with Singapore coming in, so we are watching CWT very closely, but again, they have a good mix. They have Shopee, they have Qoo10 as their end users. They have the ExxonMobil guys that are still there. I mean we have Vopak in our Pulau Sebarok, right, which is providing this big-use tankers for oil storage. And now because of the glut, there is a lot more oil storage. So I think it's difficult to explain, but the resilience is going to be there.
Our next question in queue is from Donald Chua from Bank of America.
A couple of questions from me. First is you saw a lot of your peers, albeit in the other sectors, retaining cash, cutting dividends for -- to prepare for assistant packages. Is MLT looking to do some package for at least 5% of the 10 in Singapore that's being affected, overall 10%? This then will the dividends be retained? That is the first question.
The second question is on the stockpiling that you mentioned. How much percent of revenue is from this increase in temporary demand for stockpiling within your portfolio?
And the third question that I have is, what is the appetite for acquisitions and recycling of assets at this point. Is this at a back burner? Or are you now looking more because of the increase in LTV by MAS?
Okay. I think your first question is whether we will look to cash conservation. So basically, whether, eventually, we will need to withhold some of our distributable income. I think the situation is very fluid, Donald. So at this point, I don't see the necessity, but over the 3 months, things are very volatile. If we see more of our tenants, like, right now, you see, as of March, our arrears is about 1-point-something. So meaning 98% of our tenants are still paying. And as of today, about 99% of our tenants are still paying for the month of April. So the cash position of MLT is still strong at this moment. But because of the very volatile situation, I would want to give you a conservative answer, meaning that it depends very much on what happens over the next 3 months. So I'm sorry, I can't give you a definite answer, but definitely looking at a strong balance sheet, having a strong cash position is something that MLT will be focusing on in this very volatile time.
Sure. But the 5% of the tenants that you mean -- in Singapore, they have not asked for any deferment yet, right? Any official request?
They -- we have been engaging them even before the announcement of the deferment. So what we have is in our lease structure, there has always been some forms of rent freeze after a certain period of time where they perform well in terms of covenants. That means after a year, if they have been paying on time and they have not breached any covenants, we will tend to grant them a certain support. So we are able to shift that. So the rent-deferment part, yes, we are in discussion, but no one -- none of our tenants as of today has told us, they can't pay. So I think that is where we are. But whether it gets worse over the month of May, that's something that we will have to monitor.
I think on your last question, I think the stockpile right now because these are on short term, and we are -- our occupancy is quite high. So we're actually creating space moving tenants around, a bit like co-sharing kind of concept. So we -- right now, we've seen about 1.2% of that stockpiling, yes. Of course, we have our existing tenants that they increase their usage of the warehouse. Those are not included.
Okay. So on the last point, which is appetite for acquisition and divestment, we will continue to rejuvenate our portfolio. So we have always approached divestment in a manner where we don't just decide that, oh, this asset is something that we don't want, and we just put it out to sale. No, you can see from our Waigaoqiao's divestment in December. The usage of that property as a warehouse is not appealing, but it can be very quickly converted to a data center. So that process of talking to authorities on the possibility of change of use is something that we were doing before we actually put it out for divestment. And it, again, was a very targeted divestment. We scanned the market, and then that is the highest use. And therefore, it was a sector that we actively engage the different buyers. And again, this buyer is someone who has already got data centers in Waigaoqiao itself. So these are the whole process that we are doing. We will continue with that. And the moment we find that there is a buyer who is able to give us that premium on that property, that's where we will divest. And the reason why we're doing that is if you look at our occupancies, these assets are not sitting there idle. They are actually contributing. They have -- actually, some of them has got very healthy occupancies of high 90s, 100%. So I think that's where we are. So we will continue. Of course, right now, the pool of buyers, the appetite of the buyers may be different, will be different in -- especially those with tighter liquidity position. So the question is, do we wait on all this. So these are all the things that we will consider.
Acquisitions. We are on the lookout for attractive acquisitions at this point, meaning that we hope to get some acquisitions at more attractive pricing than what we would have in the normal circumstance. So that is what we are looking at.
So sponsor is not willing to give you a better -- more attractive price at this point in time?
Sorry?
Your sponsor is not willing to give a better, more attractive price at this time?
The sponsor is even bluer chip than us. Their cash position is even stronger than us. So they are definitely not looking to do any 5-year sale, if that's what the question is, yes. But -- yes. So -- but acquisition will continue. It'd be something that we will look at. But -- or in short, basically, in the periods of uncertainty, definitely, you will see acquisition and divestment happening at a slower pace in MLT.
Our next telephone question is from Brandon Lee from Citi.
I just have about 3 questions. I think the first one is, I think, there's been some talk about Singapore government trying to perhaps move some last-mile delivery like back to Singapore. Do you see MLT benefiting from that? And does it stop you from further divesting some of these older warehouses in Singapore? That's my first question.
The second question is, I think, there's been quite a bit of sale of redevelopment sites in Hong Kong in the first quarter. Is that something that you may be looking at going forward?
And the third question is, can you also share more updates on how some of your third-party logistic players and freight forwarders are doing, not just for CWT, but also in your other markets? Yes.
Okay. So the first question, again, Brandon? I'm getting old.
Yes. I think there's been a bit of talk about the government here trying to look at shifting some last-mile delivery items, I think mainly food back to Singapore. So does MLT going to be participating in that? And will it kind of stop you from divesting more of your older ones like what you've been doing, I think, over the past few years?
Okay. I think, Brandon, the shifting of food stuff focusing on Singapore, we are not participating in an active way, meaning that we are going to go to the government and say, "Look, we have got this. We're going to offer you very attractive rents." No. We are going to be looking to help in that situation by offering whatever available space we have and at the pricing that we think it is fair. So I think we are not going to provide any government assistance, if that's what you are trying to get to.
On the e-commerce side, right, the -- we know that, for example, Amazon has seen 5x their volume during this period, right? And they have been calling an RFP. So they are actually working with us to see whether they're alternative sites, not just in Singapore, but in Malaysia. So the -- Causeway is closed, but the seaports are still open. The airports in Johor are still open. So these are some of the alternative routes that we have seen our tenants use. Of course, the activity has dropped. That's no denial, but that is what we are seeing.
Okay. Okay. And how about the last question on Hong Kong? I think in terms of...
Okay. On Hong Kong, the -- they were look -- you are looking at conversion to commercial. Is that what you are saying that are we looking to sell our sites? Or you're looking at us -- asking the question of whether we are going to acquire...
Acquire?
Acquire. Yes, we will be very keen to acquire in Hong Kong. What we have done in Hong Kong on 2 fronts. We have gone for land bids with the sponsor or using the sponsor's balance sheet, to put it in a better way. We will be active in that sector. The other one is acquiring current properties and converting them. That's something that we are keen on. The challenge we always face in Hong Kong is the pricing. So I think we are looking at vertical integration -- vertical expansion for our properties there. So you know that some of the properties we own, not 100% of the building. So if there are opportunities for us to acquire the whole building, yes, we will begin.
I think Donald had one question, which, I think, I did not answer, is that your question is whether we will be looking to use the increased gearing headroom that is now mixed -- I would say, approved by MAS up to 50%. Is that the question that Donald had earlier? No?
Yes, Kiat.
Yes. Yes. Right. So I think we have always been prudent in our capital management, especially in this what we call very uncertain times, the visibility. If you look at how MLT has been doing our acquisitions and how we have repositioning ourselves, the fortunate and unfortunate thing is we have always stressed on looking at the visibility over the next 12 to -- 12 months in terms of our cash flow and also, of course, on the investment side, a longer horizon on the prospect of that proposed acquisition. But the cash flow position, the liquidity position over the next 12 to 24 months have always been one consideration. So right now, because of the visibility is a lot less, so we will be more cautious. Will we go up to 40, 41? There is a possibility. Will we go up to 50? The answer is no.
Our next question is from Su Tye Chua from Maybank.
I'm actually surprised nobody has asked the question yet on rental reversions just across the different markets. If you can give us an update on that. That's the first question.
Second question is possibly on the security deposits or guarantees that you have. What is it right now? Maybe you can update us, whether it's by tenant mix or the different markets that you have.
And the final one is actually, I wanted to follow up on Donald's question on acquisitions, which is in which markets right now you think possibly some of the cap rates have actually changed such that it looks still appealing for you to buy assets.
Su Tye, I'll take the first question on reversion. So this quarter, 2%, it's coming up okay. From Singapore, it's 0.9%; Hong Kong, 3.7%; South Korea, 0.6%; Malaysia, 4.5%; China, 1.1%; Vietnam, 3.9%; Australia, 1.3%.
On the security deposit, we have about 4 months of -- 4 months of security deposits on hand. Bulk of it, Singapore, Hong Kong and Japan -- no. Sorry, Korea.
Su Tye, does that answer your question?
Yes. On the acquisition side in terms of the market?
Fion?
Yes. So on acquisition, so far, like what Kiat has mentioned, we have not seen any buy or sale going on in any of the markets. Having said so, there are some lower expectations on the seller side. So particularly in Australia, while the big portfolios like the recent German Aldi 700 million deal, still going ahead at tight cap rates. In fact, on the smaller deals, we expect less competitive bidding in that sense. So we'll be very selective. We'll be very disciplined. But we'll continue to look at markets like Australia as well as South Korea.
I think, Su Tye, the discipline that we have tried to keep to, which is making accretive acquisitions over the last 5 years or so. I think that's a discipline that we want to continue to have. So the debate will come do -- if there is a deal. And then because the market situation is not going to be accretive, will we still go ahead. So right now, my inclination is to still stick to that discipline, so meaning that you won't see us just grabbing any cheap deals just because it is cheap. It has to be accretive. It has to be adding value to the portfolio.
Our next telephone question is from Mr. Derek Tan from DBS.
Just 2 questions from me. Firstly, could you give us some color on your SUAs? I'm just curious whether given that most of them actually sublease their space, right, could you give us a sense of our financial metrics? Just want to get some color whether there's a risk of a preterm, given that over the next couple of years.
Then my next question is on acquisitions, I think one of my favorite questions. But just wondering whether this COVID situation, are you telling your team to have a, say, permanent increase in hurdle rates? And given the way you are seeing currently, what opportunities are there? Or even, let's say, it's a good opportunity previously, you're happy to do, say, 5 halves, but now you want to do 6, given where potentially you see tightening liquidity environment going forward.
Okay. I'll take your second question first. Jean will take your first question. On the acquisition, yes, I think all of us, we want to see whether we can -- like what the Chinese say, [Foreign Language]. So basically, in this volatile times, are we able to grab some of these acquisitions at cheaper pricing? So the answer is, yes, we would want to push the team and also the potential seller to give us more attractive cap rates. Having said that, I think what we will see in terms of pace of acquisitions will definitely slow down, at least for the next 3 to 6 months now. Yes.
Derek, okay, in terms of the SUAs, just want to share a little bit about [ Level 5 ], just to give you a bit more background. For FY '20, initially, we started with about 11 SUAs, and these are spread across a few countries. And to date, we have already done about 4, and then these are coming up from SUA tenants, like in Singapore, we had Netcool. Basically, their business is still pretty good. And that's why we have actually secured a renewal of about 5 years with them earlier this year. And we are also seeing stable operations from tenants like in Japan, like our Noda Centre. And as well as like in Malaysia, we have tenants like Celestica. So basically, all these tenants, they are still holding on pretty well at the moment.
Yes. I think, Sheryl, can you bring us to the chart? Yes. So I think, Derek, if we look at the SUA chart that we have here, Japan, Australia, Hong Kong SUAs, these 3 countries, the SUAs, we are -- we have high confidence in terms of stability, in terms of them able to pay us even the rental escalations that we have, right? And then the country that, I would say, will be more of a concern right at this moment will be Singapore and Malaysia. These are the 2 countries that has got quite a lot of uncertainty in terms of when operations can start because when you -- when there is no certainty of when operations can resume and at what level, we're not even talking about 100%, people can't plan. And when people can't plan -- because logistics always have to be 10 steps ahead of the final product, right? So when people have visibility, they can plan. So I think if the governments keep on shifting the reopening dates, that's where the logistic planning for our tenants will be difficult. And that is where they will be under the pressure of uncertainty. So I think Singapore, a small percentage and then maybe Malaysia. Vietnam, we're very confident. Then you have -- China is coming back, so no issue there. So basically, I think on this chart, I hope you can see the chart. Can you see the chart, Derek? Yes.
Yes. I'm looking at it now, yes.
Yes. So if you look at -- can we see the chart, Sheryl? Yes. So if you look at the SUA, right, I think at risk here of concern will be Singapore and Malaysia. Until we get certainty when the government is going to open, clearly, that is where logistic planning can happen. And then when logistic planning can happen, people make decisions, and that's where landlords like us have certainty.
I see. Sorry, just a quick one on this one. For Singapore, Malaysia, let's say, an SUA was doing well, I'm sure they will be asking you for some rent relief. Are you just telling them to go away?
Okay. I think we have always taken the approach of long-term relationships. And over the last 5 or 6 years, I think we have always wanted to ensure that our properties do not end up in an over-rented position. So a lot of our properties, the rents right now are not over-rented. That means even with this crisis, it is not in one of the top brands in a particular location. So having -- that's why a lot of these tenants, they appreciate the fact that back then, when we could have gotten $0.10, $0.20 more, we didn't do it. So I think that long-term relationship stays. And the other part that we have been doing, like what we mentioned earlier, we were able to move or create relief space from some of these tenants to house those who needed extra space. So this collaboration has been going on, and then it has intensified. So to answer your question, we do not tell them to go away. We work something out with them. And we -- of course, we are not going to -- there are going to be tenants who are going to use this opportunity and say that, "Look, I just can't, right?" But so far, I think none of them have taken that very brazen approach. So it has always been very collaborative because they know that the rents that they had were not the highest when we could have pushed them for it.
Okay. Sounds good. MLT is a landlord with a heart. Sounds good.
I think heart with the dollar sign. Unless you can convince the investors to say that, I can completely do charity during this period, then we'll take a different approach. But I think we will do a heart with the dollar sign.
Our next telephone question comes from Mervin Song from JPMorgan.
Kiat, just one follow-up in terms of the tenants a bit more suffering. Thank you for disclosing in terms of the sectors. But in terms of SME tenants, is there a number that you can guide us to?
So you are asking about those who have asked for help. Is that...
No. What percentage is SME -- [ has this part of ] SME within your portfolio?
Sheryl, what's the question?
Percentage of portfolio in SME.
Mervin, so in terms of the SME exposure for the MLT portfolio, it's roughly about 20% to 25%.
And that is calculated -- sorry, is that calculated based on that $200 million or less? Or is it based on Australia's classification of SME?
Based on revenue, Mervin.
Revenue. So the $200 million or less Singapore-type classification.
No. Are you talking about Singapore or overall?
Overall, and maybe Singapore, yes.
Okay. So I'll give you a breakdown. Overall, we are about 20% to 25%. So if you take 22%, 23%, that's where we -- you'll be okay. And then out of these whole list, the SMEs major -- the highest percentage is actually in Korea and Singapore. So Singapore, we have about 30% to 35% SMEs. It's the nature of the -- the GDP of Singapore, 60% are contributed by SMEs or more. So basically, Singapore, we have a high percentage. In Korea, the logistics sector over there is -- has got 2 very distinct segments. One is chaebol-controlled. The other one are the nonchaebols. So because of the nature, the chaebol controls like LG, for example, they have their own Pantos, which is a 3PL. Pantos takes space from us as well. So that one, we don't consider as SME. But in those tenants that we have they are not linked to chaebol, they will take space from third party or they will appoint smaller SMEs. So Korea is the other country that we see a higher percentage.
Okay. What would the percentage be for the Korean portfolio?
About 50%, 60%.
And is -- I'm not that familiar with Korea, but are they seeing a similar pressure to what we're seeing in Singapore in terms of SME tenants or they're doing fine because it's, I guess, ahead of this...
I think for Korea, they are stable. Again, it was quite interesting. We are more stable now than when they had the Korean-Japan spec for our SMEs. There was this tension between Japan and Korea, right? So what we had back then was some of the smaller SMEs that were in the business of storage of Japanese sake. The Koreans like to drink, right, and they were storing Japanese liquor. And because of that tension, there was this period where the demand actually came down quite substantially. So that is where we had some issues. But right now actually, we're seeing it more stable than back then.
Just turning to Australia, I noticed that NPI was down year-on-year, even if I adjust for the Aussie dollar. Is that an effect from the JobKeeper program? Or is there something else that we should be aware of?
No. It's not due to that. It's primary because we have worked with one of the tenants in Australia for a long lease extension of about 8 years. So we actually structured some incentive to sign them longer and as well as there were some ForEx weakness.
Yes. Okay. And this slightly longer lease, would that -- on an average basis, would it -- should be a positive rental reversion?
The -- usually, what we do is we will give rent free. One, usually, the typical process is 1 month rent-free for 1-year extension. So if you're looking at this guy, he is extending for 8 years, yes. So logically, we would have given them -- I don't have the exact details on me now but basically, we'd logically given them 8 months rent-free in their lease.
Yes. Got a couple of more questions in terms of the supply chain shifts globally. Obviously, Vietnam is benefiting at this point in time. But are you seeing any shifts to, let's say, from China to Korea or China to Malaysia, for example?
And my other question would be, I guess, countries around the world are trying to have a bit more security over supplies. Maybe the U.S. is moving -- moves out from China. Will the U.S. market be something interesting for you in the medium term? I mean your sponsor has a fund set up now. So you may start going to Vietnam and this may bypass Vietnam, and go straight back to U.S.
Okay. The supply chain shift -- I'll take your first question first, Mervin. The supply chain shift from China, we have seen, of course, to Vietnam, and we have seen to Malaysia. Not so much to Korea. So I'm not sure if that's the answer, but that's the general trend. We have not seen it moving to Korea. Largely, the -- it has been Vietnam and Malaysia. So to answer your question, I think MLT has been active in Asia Pacific. We have managed to build up a very strong tenant relationship in Asia Pacific. And when we talk to our 3PLs, when we talk to our end users, and the 3PLs, we're talking about guys out from Europe like Schenker. We talk -- when we talk about the American guys, we are talking about guys like Amazon. We're talking about XPO and then DHL, of course, is from this -- Europe. What we hear is their interest is actually in Asia Pacific. They view that the highest growth rates will come from Asia Pacific. So for MLT, if -- of course, if we have limitless liquidity, we can look at everything. But for every dollar that we have, China is going to grow. It's now the second largest economy. It has the potential to overtake U.S. We still have India and Indonesia, which has got huge population. Domestic consumption growth rates are going to be higher. Our positioning, the way we have structured our network is we have moved away from export- and import-oriented warehouses. We have got -- we have moved away from large regional DCs. We are now looking at building a network of smaller, generic, efficient warehouses that can reach X million of people in X number of hours because that's something that cannot be replaced. And with that, you look at Indonesia and India, the ability of our warehouse, and that's what we have seen in China, and that's what we have seen in Vietnam. Today, it is storing shampoo, soap, very basic items. Right now, our warehouses in Vietnam, in China, are storing pharmaceuticals. Same location. The ability for us to go in, do the CapEx, reposition it, go into a pharmaceutical warehouse, we will be able to command higher rents. So I think the excitement, both from dollar standpoint, both from growth standpoint, will be at Asia Pacific. And we have already spent so much time and effort to build up the network here. It is something that I think we want to grow and strengthen, and we are not there yet. We want to be one of the market leaders in Asia Pacific.
Okay. It looks like that we had discussions that you're the influencer last quarter. So it looks that you're continuing to do that. Just finally, in terms of the Singapore supply situation on warehousing -- warehouses, sorry, some buildings are not committed yet. What are you seeing in terms of the landlord activity? Are they cutting rents? Or you're very confident in you will throw up this space?
In terms of the current supply situation, there's still buckets of space here and there. I think, especially, we are seeing those coming up from the end users themselves, meaning that they actually get the land from JTC and they build it. So it was meant for their own use, but then if there was some surplus capacity, definitely, I think to meet their financial obligations, they would be trying to keep the rents competitive. But if you look at the supply over the next 3 years, comparing with the average supply versus the average 5-year demand, I think it should be holding on steady for the next few years, provided there is no new supply being thrown to the market by JTC.
[Operator Instructions]
I think we have a question. The -- I think there are some questions on the different trade sectors. What is the activity or rather the -- yes. So Jean, would you like to take the chance?
I think on the query about the color on the oil and gas, right now if you look at our tenant trade sector, it's about 4%. And half of it come out from the oil and gas. So if you look at the oil and gas, our tenants are mainly coming up from our Sebarok Island, and the biggest tenant is actually players like Vopak, SPC and Cleanseas. Yes.
And looking at the current oil crisis. I think what is happening now is that the oil prices are coming down, largely also because there's lack of storage capacity globally. So for our tenant Vopak, actually, they have told us that they are actually -- in terms of their capacity globally, they have some in Singapore, they have in Rotterdam and some other global countries. It's actually operating at very full capacity. So I think for oil and gas in terms of the exposure, it's minimally affected right now from our chain of tenants.
On the automotive sector, which is currently about 4%, one of the largest key tenant is our tenant in Singapore, which is Cogent. So they are still with us. They recently renewed the lease, and they are looking at -- they are continuing as a car storage. Of course, I think overall, in terms of the car volume, it has come down. But I think it still remains that they need some space to store their cars.
For fashion and apparels, one of the largest one is coming out from adidas. I think Kiat has explained earlier that arising from the social unrest, we have actually already worked with them in advance to secure some forward lease structuring by putting in place some incentive. And the other one, it's coming out for Workman, it is from our recent acquisition of our Kobe. So Workman, in fact, we -- our understanding with them is that they are doing pretty well. Their apparels and outdoor wear is actually getting increasingly popular, not just among from the workers' population, but it's among the ordinary folks like us.
So I think we have covered the sectors that are, what we call more, vulnerable. I think, Jean, you should talk a bit more about the SMB.
Okay. So SMB, we have split that, okay, 19%, of which 4% is the one that's a little bit exposed. The balance, 15%, are coming out from some of our supermarket guys, primarily from Coles in our New South Wales as well as Brisbane, Woolworths in Wodonga and Nippon Express in Hiroshima. So what we are hearing from the ground is that they are actually experiencing an unprecedented surge in terms of the volume or activities. For example, Coles and Woolworths, they were sharing with us, in fact, the current COVID season has caused a lot of increase in demand. And in terms of the truck movements, they are looking at 3x more than what they experienced during their peak season, say, in the Christmas season period. Yes.
We have a question from the telephone line of Mervin Song.
Yes, sorry. Just back to the SME question. I think your answer was comprehensive. But in terms of rental relief if they're in trouble, should we benchmark it -- benchmark your support to your sister REIT, MIT, in terms of [ half of month ]?
I think you are asking what is the -- what you should -- or what we should put aside. Is that what you are saying?
I guess how much you are -- you would give as support, yes.
Okay. The reason why I'm hesitating is because we don't want to put a number out, and then our tenants start calling us, right? And then -- or we get some very upset tenants or some very unhappy tenants. So basically, based on what we are estimating, 1% to 2% of our gross revenue, which is about $500 million. So if you look at 1% to 2%, you're talking about $5 million, $10 million.
Yes. Sure. And then my question in terms of going to the U.S. Is that -- can I say it's off the table? Or...
Personally, ask me, I'm not keen. Yes. But there are greater forces at work than me. I think you know that.
I guess it comes down to opportunities, if there's the right opportunity. But I guess you have a lot of things to do in Asia Pac.
Yes. Yes. I think Asia -- you can see the American companies coming. You can see the European companies are coming here. So I think Asia Pac is where the next phase of high growth -- higher growth is going to be. So I think since we are here, we have rebuilt up our infrastructure, both human as well as hard infrastructure. So I think the intention is to really leverage on that and build our market leadership here. Our view is, it is better to be a market leader where we are the first call that any tenant would like to make when they need space. So I think that in itself is more valuable for us, both in terms of occupancy, both in terms of rentals, both in terms of, at the end of the day, DPU.
Yes. And in terms of -- I mean your share price will be covered, but I guess with the tight cap rates, some markets are still rather tough to make it accretive. In terms of forward purchases that you did recently in Australia, are you seeing more of those type of opportunities to get and achieve a higher yield?
Yes. I think we have taken an approach that, in my view, more involved -- that involves more risk, meaning that we take, like what you mentioned, forward purchases, there is no tenant or rental guarantee. We actually have to be the one to fill it up. So I think as MLT's balance sheet and AUM gets bigger and our market presence in this -- and network in these countries get stronger, that's something that we will be cautiously prepared to take up, to increase that pace, yes.
Is that more Australia and Japan? Or is there any specific markets that you think there's...
I think the Hong Kong, those where we think that there is larger differential in premium or in cap rates that we have to pay when you get a long -- when you get a tenant. So for example, in Australia, you have very tight cap rates when you have a very long WALE and a very good tenant. So I think -- so in those markets, we will be more aggressive. But in places like Vietnam, where we are able to do -- buy, basically complete buildings, let's say, from the sponsor, from Unilever, so these are the ones that we will buy based on completed basis with tenants.
In terms of stabilized assets, do you -- I don't think cap rates will expand, but do you think it will compress from here?
I think the view is if you look at what we have for the valuations, maybe, Jean, you start with that.
Okay. In terms of the cap rates for Singapore, Hong Kong and Malaysia, it's held steady, and we are seeing some compression coming up in Japan because a lot of our assets are still in a pretty well-located routes along Route 16 in Greater Tokyo. And then we are also seeing some compression across our China portfolio of assets, mainly coming out from the Tier 2 cities from Zedai and as well as Korea. There's also about 25 bps to -- 10 to 25 bps of compression. Similarly, Vietnam, it's about 50 basis points and as well as Australia.
So I think on a general basis, we think cap rates will stay stable. There could be cap rate compression for very prime -- so that means it's not going to be by country. It's not going to be by city even. It will be very much by specific locations. So there could be cap rate compression for very prime locations. And -- but in terms of cap rate expansion, that is the part that we are hoping to see. But so far, we have not seen a significant level.
And we have another question on the telephone, if you wish to take it, from Xuan Tan from CLSA.
I just want to check with you on the rental relief. Did I get it correctly that it's around $5 million to $10 million? Is this what you are buffering in for the future? Or has it been -- already been dispersed?
Yes. What we are buffering. We have already given some already inside your numbers, but we are buffering another $5 million, $10 million in future. But we are not -- yes, but we are not going to -- we're not going out there to say, "We got $5 million, $10 million. Please come and grab it." Yes, yes. It's not like we're going to be MCT or MIT that goes out and say, "Look, we've got $18 million. Please, all tenants, please write in, and we're going to give it to you." We're taking a very different approach.
Understood. Can you share a bit more about the approach? And how would you assess tenants? And which countries are these more allocated for?
I think, again, it will be a case-by-case basis. The justification, obviously, has to be that there is true delay or true decline in their business activity. So I have got a tenant that's storing beer in Malaysia, right? That is Tiger Beer, Heinekens and all this. So because of the shutdown, they claim that, that is down, and therefore, they're asking. But our point to them is Heineken and Anchor Beer and everything are still paying you, right? So why do you need a relief from us? You're not in a true need of relief. In fact, you need more space because your beers are not moving. So I think that is how we are assessing the situation. That gives you a flavor of how we negotiate with tenants. We must be able to understand their underlying business, and we must have the ability to make a few phone calls, to check whether Heineken is not paying them for storing their beers. So I think the -- so I think that is where the long-term relationship comes in. So I think if you're asking how you want to put in that possibility, I think it's very difficult to generalize. It has to be on a case-by-case basis. And I think from here, you can see that we're actually very hard negotiators.
Agree. And then what about in terms of country then? Any -- which countries are more affected?
Singapore, because of the high percentage of SMEs and because of the government focus on these SMEs to ensure that they get extra protection at this point in time.
And would you also be able to quantify tenants that might need to go under the deferment bill?
Sorry, say that again?
The Singapore bill that allows tenants to defer rent for 6 months. What is your current assessment of that to your portfolio?
I think the -- based on what Jean is telling me, it is more construction-related companies that have approached her.
Roughly, how big of that is your portfolio?
I think if you look at the chart -- Sheryl, they can see it, right? So if you look at the chart, this does not just -- this 4% at the bottom of the pie chart. This 4% does not apply just to Singapore. It actually applies throughout. So I think less than half will be, yes, 1% to 2% probably from Singapore.
Got it. That's very helpful. And just one last question on valuation. Why was this valuation down? And given things -- how have things panned out post the valuation? What are your thoughts on the cap rate and how they should trend going forward?
In terms of the valuations, it's done in January, February this year. So I mean definitely, the valuers have taken into account our current situation, the current rental information, tenancy schedule that we are having. So taking into account all the information that we have given them as well as they are also taking the view that in terms of the impact of COVID on the logistics sector, it is actually less impacted as compared to other industries like retail and hospitality. So that's why in terms of the values, it's largely remained steady. And cap rates as well, we are not seeing any expansion. Only Singapore, Hong Kong and Malaysia, it held steady. The rest of the countries, we are seeing some slight compression.
Would you think it's fair to say that given that governments such as Singapore and Australia have taken policies that's more in favor of tenants, does valuers would they take into account that value relationship theoretically flow down?
I think if you look at the valuation cap rates that have been applied by the valuers, it is usually within a range, right? And they think it's -- so unless the situation moves drastically such that, that particular cap rate falls out of that range. So basically, valuation is -- usually, the approach is, yes, they take a number to put in, but it is usually within a range. So we are not going to see just because there is 1-month rent deferment for a small SME that impacts a small percentage, then, therefore, they will shift the cap rate. So it doesn't work like that. And the other part is unless the valuers, which, in our case, based on our discussion with them, is that they have not taken the tighter range, meaning that any deterioration in revenue, immediately, the cap rates will change.
Yes. What I'm saying is if you have a property that is very large that suddenly -- like Coles, suddenly goes bankrupt, yes, then you're going to lose your revenue because the lease is more signed like for a 10-year, then you will have that. But if you're talking about an SME that's going to have a rent deferment for 1 month, it is unlikely to change the valuation cap rate so quickly unless the guys like our business are bankrupt. Okay?
Got it.
But I think having said that, everyone, the point that I cannot overemphasize is this period is very, very uncertain. Things are very volatile. Our visibility is definitely not at the high level like what we had a couple of months back. So logistics sector, fortunately, has not been as affected. And the situation is still very volatile, so we cannot say that it won't be affected.
And our final question is from Krishna Guha from Jefferies.
Just a small question. You have the cash on balance sheet of about, I think, $150-odd million. And then you have these other payables. I think that includes your security deposit, if I include that. So I want to know how much is your sort of unrestricted cash, if you can give some color on that. I know it is -- I mean these are not issues for MLT, but just want to get a picture on how much is the unrestricted cash. That's just 1 simple question.
And just you mentioned about this last-mile logistics and smaller deals. Does it need for your deal team to be a lot more present on the ground? Because these things, I mean, sourcing them, doing the duty and all is a bit more than just going and do some larger acquisitions in the gateway cities. What are your thoughts on that?
Krishna, let us get the number 3.
Yes, sure.
And you have a second question after that?
No. I think those are the 2. One is the cash, and then the last-mile logistics acquisition because I think these are smaller deals and needs to be present on the ground and also some significant due diligence. So I mean how are you planning to acquire versus what you have done that is like gateway cities, 1.5 hours from the CBD, that kind of assets?
Okay. The -- sorry, they -- because we are all on calls. So sometimes the reception is not very good. So I think your second question is for last-mile delivery. What the -- what is the time or -- that we are looking at. Is that what you're saying?
Yes. I mean -- correct. I mean in terms of like what you have done so far is like larger warehouses situated 1 to 1.5 hours from CBD versus what you're talking about is last mile. I mean these are typically smaller deals. I don't -- I mean due diligence and all may take a bit more of time. So how are you planning to do that in terms of that?
Okay. I think the path that we have is -- this answer will be different for different countries. So for example, in Singapore, because we are small, and for example, our 5B Toh Guan, we are able to reach 99% of the households in Singapore with under 4 hours. And that is why you see in Toh Guan area, you have your Amazon, you have your Shopee, you have your Qoo10. So that is the situation. But if the day Alibaba comes in and say that I'm going to compete and based on 2 hours, again, the radius of delivery change drastically. So the -- so right now for last mile, per se, in Singapore, we are able to do it directly out from our standard warehouses.
If we go out to countries like China, like, for example, Beijing, Shanghai or Shenzhen or even some of the second-tier cities, the last-mile delivery, like what you said, Krishna, absolutely correct. Because they are competing on much tighter time frames, not 4 hours, much tighter time frames. They are going to be renting very, very small storage place. We're not going to even call it a warehouse. It's going to be more like a shop, and then it's not going to have high racking and -- because the velocity of goods have to be very, very fast. So these kind of facilities are not what MLT is currently focusing on. So for some countries, we can participate in last mile. In some cities, we can, but like, for example, China, we are not participating in last mile because the configuration of this last-mile storage, we won't call it a warehouse, it's actually very different. And we feel that that's not much value-add that we're bringing in. And so we are going to be the warehouse that will support the delivery into this last mile. Does it -- Krishna?
Yes. That's very clear.
Yes. Okay. Let me try to get Charmaine. Charmaine, are you on the line? Can you...
Krishna, you're asking how much free cash we have on hand, right, of the...
Yes, the unrestricted cash.
Yes. We have about $40 million cash flow. We don't really reserve cash aside for security deposits, mainly because we have lines. So should something come to you, we would just draw on the lines. That's more active cash management.
So I think to add on to Charmaine's point is, we do quite active cash management. Any excess cash, we pay down loans. And when we need cash, we draw on them. And that is why you see us having a [ $720 million ] committed facility. Yes. So I think we take a very tight cash flow management style. Having said that, we are -- like I mentioned, this is very, very uncertain times. Will we want to hold cash on hand? That's something that we will be monitoring, that means whether we want to hold more cash on hand. But right now the situation is whatever excess cash, pay down loans. When we need cash, we draw.
Okay. And this cash is all in Singapore or it is in various geographies? Because you will have some cash straps across geographies.
It's various countries. Yes. In terms of the cash straps, right, I think it's related to something -- a question the previous person has asked. It comes back by way of the capital distribution.
There are no further questions at this time. I'd like to hand the call back to the speakers for any closing remarks. Please continue.
Okay. We have a few questions from the webcast audience. First question from Michael. His question is, "Kiat, which are the markets which you are more optimistic about where you see more opportunities? And which markets are you concerned with?"
And second question is percentage of portfolio that serves e-commerce.
Michael, I think, Jean, you can talk about the e-commerce.
For e-commerce, we are looking at about 25%, yes, with e-commerce exposure. It's about 25% to 30%.
Okay. I think, the way -- Michael, I hope I understand your question correctly, is which countries are we most optimistic about and which countries are we most concerned about. I think from the revenue standpoint, right, at this moment, we are more confident about Japan, Hong Kong, Australia, Vietnam, even South Korea. The countries that we are more concerned about will be pockets of Singapore and Malaysia. China recovery is what we are seeing now. The tenants have moved back in operational, and they have been very, I would say, optimistic when they come back to us, meaning that based on the volumes that they are moving and all that, they're saying that it is very quickly going back to the levels that they have seen before. So China, we are watching a bit. But if you ask me overall, Japan is the most secure. Hong Kong, Vietnam, South Korea, China and maybe some pockets of -- so sorry, some pockets of Singapore and a little bit of Malaysia.
Okay. The next question is from Nicholas Teh. "Can you share more on the types of tenants that are asking for more space in this current environment?"
Nicholas, I will get Jean to answer.
Okay. Nicholas, okay, right now we are seeing more demand for temporary stockpile. So there are requests coming in like for storage of essentials. We are looking at sanitizers, toilet papers as well as fresh groceries across some countries like Singapore, Hong Kong and Australia as well as Vietnam.
To add on, Nicholas, of course, we have the government initiatives. Like, for example, in Singapore, we have requests for more stockpile for rice. We also have that coming out from Malaysia because some small part of our warehouse is actually doing stockpiling on the national level.
Okay. The final question is from Cho Jun Jie. MLT doesn't seem to be impacted by COVID-19 now. Any guidance on when is the likely breaking point or turning point should COVID and the economic issues persist? Is it 3 months, 6 months? Or is -- at least from a fund?.
Okay. Jun Jie, is it? Sorry. The -- it's a very difficult question to answer. I hope I have the answer. But they -- it very much depends on how this COVID situation evolves. So right now it is Singapore and Malaysia. That is what we call on the logistics front, more lockdown than the others. So the challenge we have is if more and more countries need to be further locked down or go to a second wave of lockdown, and that is where the pressure on logistics will be there. The good part is we are diversified. So we do not foresee a situation where all the 8 countries will get locked down at all the same time. That's one. And the other thing is the diversification of our tenant base. There will be those that are able to benefit from this situation. So I think the next 3 months will be very critical for us. And I think, hopefully, in June or July, I have a better answer for you. But right now it's very difficult for me to answer that question.
Okay. Operator, do we have any more persons in the queue?
Currently, there's no further questions, I believe, at this current time.
I'm sorry?
No further questions at this time.
Okay. With that, I think we will end the session. It's been -- already been running for 1.5 hours. So thank you.
Yes. I think everyone, thank you very much for your interest, and thank you for taking time to be with us today. Keep well, and we'll talk again. But anytime if you need -- because it's so volatile. At any point in time, if you need to find out more, you like to discuss more, please contact Yuen May or Sheryl by e-mail or call, and then I'm prepared to call you from my home. Okay. So everybody, keep well. Thank you very much.
Ladies and gentlemen, that does conclude the call for today. Thank you for all participating. You may all disconnect. Goodbye.