Mapletree Industrial Trust

SGX:ME8U

Earnings Call Transcript 2019-Q4

[Hwei Leng Tan, executive]

Good morning, everybody. Thanks for joining us for the briefing and webcast for MIT's 4Q and full year FY '18-'19 financial results. We are seated in MBC, at our headquarters, and we have the management team of MIT with us. We have Kuo Wei, our CEO; Lily, our CFO; Peter, the Head of Investment; Serene, the Head of Asset Management; and Khim, our Head of Marketing. I would like to pass on the mic to Kuo Wei who will share with you our quarter's results.

[Kuo Wei Tham, executive]

Good morning. Thanks very much for joining us this morning for our fourth quarter and full financial year results briefing for financial year '18-'19. Of course, as always, our presentation pack, we have released last evening. And our presentation pack, you will see 5 segments, the usual 5 segments. I'll talk first a little bit about the highlights, then I'll cover the financial performance. I will give an update on the portfolio and some additional update on investments that we have made. And finally, we will close out with outlook strategy and we'll take questions from you after that. Now starting Page 5, that's our highlights. So you would see where we do the comparison on a year-on-year basis. Distributable income, $231.8 million. That's 7.4% growth year-on-year basis. So that gives rise to the 3.5% growth in the DPU from $0.1175 to now $0.1216. For the fourth quarter, we are seeing a similar trend of trajectory. Year-on-year growth, 8%, to distributable income of just a shade below $60 million at $59.9 million. And DPU, of course, is at $0.0308, 4.4% increase year-on-year basis. And of course, as what we have outlined in the main bullet, all this driven by contributions from our projects, the development project and acquisitions that we have made in the financial year. And the portfolio occupancy has shifted up a little, 2 percentage points from 88.2% to 90.2% for the fourth quarter of financial year '18-'19, and it's all driven mainly by improvements in our Hi-Tech Buildings segment's new leases that we have secured that have started contributing. And as far as valuation is concerned, we have seen an increase. If you do a comparison year-on-year basis, 10.4% increase to SGD 4.771 billion as of 31st of March 2019. And of course, a big part of this increase is driven by the acquisitions that we have made, 7 Tai Seng and 18 Tai Seng, in the financial year. The extra valuation so-called change on the portfolio itself putting the acquisition at [ site ] is $30.8 million. So a little bit of growth but not a very significant shift from the valuation gain. Then for the quarter, of course, you would have seen our capital management shifts. We have raised $201 million from a private placement on 11th of February. That's, of course, partly to finance our acquisition 18 Tai Seng. And we have also issued 10-year notes on 26th of March. That's to replace the same amount we have dropping off in markets. So that's $125 million 10-year notes at 3.58%. The aggregate leverage ratio, of course, has shifted down a little partly because of our increase in valuation. Now it's 33.8%. And of course, if you remember, we have some contributions coming from the distribution reinvestment plan in this moderating down of leverage. And as well, we have outlined in the last bullet point, after this [ stark ] period for the balance of the fourth quarter distribution where we'll be applying the distribution reinvestment plan, we are planning to suspend it because I think our leverage level is at a fairly reasonable level and we do not have any significant anticipated kind of uses in the near term. So we decided to suspend it for the time being. So going on to the next page, Page 6. It's just a graphical representation of what we have been delivering. On the right, the most recent set of figures that you -- there you can see our distributable income, $59.9 million and highest ever $0.0308 for the DPU. And going into the next segment, which will be our financial performance, starting on Page 8. We do a comparison year-on-year basis for the fourth quarter. There you'll see the larger increase in revenue, 9.3%, from $90.4 million to $98.8 million. That's, of course, what I mentioned earlier, driven by contributions from our Hi-Tech Buildings and also partly from contributions from Phase 2 of our [ build-to-suit ] project, which was completed 2 years [ ahead ]. Operating expenses, we have kept that well under control. So it's at a 2% increase despite we have larger increase in the revenue. So you can see the operating expenses at $22.97 million compared to $22.5 million 1 year back. As a result, the net property income has increased by 11.7% to $75.9 million. So our borrowing cost is fairly stable, though we have seen an increase partly because of a very larger portfolio and new projects that were completed. And if you look further down the table, the valuation gain, as what we have outlined earlier, $30.8 million, it's a little lower compared to last year, $65.5 million. So that's why you see a lower increase in the net value -- net fair value gain, 53% lower. The joint venture for the data center portfolio, we are seeing a similar kind of profile. You can see the 2 components below. Net profit after tax, that's mainly from the distribution, a little higher than the previous year partly because of slightly lower tax impact and also the rental increase, roughly 2% and that's bringing to the leases. Then the net fair value gain is also a little lower, $9.5 million compared to $17.9 million in the previous year. So in aggregate, you are seeing $13.2 million compared to $21.0 million in the previous year. So you bring all this together, you will see profit for fourth quarter, $100.8 million compared to $138.4 million mainly because of the valuation differential -- valuation gain differential between the 2 years. So amount what's available for distribution after backing all this out because that's a cash basis, that's 8% increase from $55.5 million fourth quarter financial year '17-'18 to $59.9 million for this financial year fourth quarter. So the DPU as a result of that, 4.4% increase from $0.0295 to $0.0308. If you look at the full financial year results on Page 9, a fairly similar profile, but of course, you do not see a large impact from the fourth quarter. And you'll see the revenue increase a little bit more muted, 3.5% from $363.2 million to $376 million. Operating expenses, again, is striking, 3.2% increase from $85.6 million to $88.3 million. As a result, net property income, we are still seeing reasonable growth at 3.7% to $287.8 million. So borrowing cost has gone up as I mentioned earlier. This is, of course, not significant because of the new projects and a slightly larger increase in the interest cost -- interest rates. The share of the joint venture, you will see a similar kind of profile, 20% increase from $21.8 million to $26.1 million. And a rather large part, of course, will be the full year impact of the data center portfolio of -- if we compare year-on-year basis, you see in the box with the details below. And the amount available for distribution, in aggregate, you are seeing a 7.4% increase, which I mentioned earlier, from $215.8 million to $231.8 million. So that gives rise to that 3.5% increase in DPU from $0.1175 to $0.1216. And going on to Page 10 where we compare quarter-on-quarter basis, you'll see, of course, slightly smaller movements in the revenue figures compared to our year-on-year for the fourth quarter. Third quarter to fourth quarter, this is -- the increase in revenue mainly driven by Hi-Tech Buildings segment, contribution from 18 Tai Seng as well. So 5.6% increase from third quarter of $93.6 million to $98.8 million for fourth quarter. And similar kind of observations that you would see for the quarter-to-quarter. But of course, you bring it down to distributable income, the change is not as significant, 2.9% increase for amount available for distribution, $58.3 million to $59.9 million. So that gives you that 0.3% increase in the DPU from $0.0307 to $0.0308. And of course, we have a bit of effect from the placement as well. As you could recall, earlier on we talked about the placement done at $201 million on 11th of February. So going on to the balance sheet on Page 11. As at 31st March 2019 with the revaluation done, we are at net asset value of $1.51 per unit. And that, of course, is an increase of 2% compared to 31st December '18 and also a 2.7% increase compared to exactly 1 year ago, 31st March '18. And on Page 12, we outline the portfolio valuation as at 31st March, which we have recently completed. So in aggregate, you are seeing a $4.771 billion for the entire portfolio. So for the Singapore portfolio, you see that increase from $3.908 billion to $4.336 billion. Of course, a big part of this is driven by the acquisition of 7 Tai Seng and 18 Tai Seng. And for the U.S. portfolio, we're seeing increase has started mainly due to valuation increase, about 2.4% increase. So that gives rise to a slightly higher NAV per unit. Of course, this is what we have outlined in aggregate value. You can look at our individual valuation figures in the release that we have done. You would have found that our valuation for some of the [ financial 3 ] clusters have come down a little partly because of the shorter underlying land tenors. Quite a few of them have crossed that threshold of 20 years, and a couple of them, of course, continue to go down below 20 years. Our Kallang Basins 1 and 2, [ fell by ] 13 years. Then the rest of the Kallang Basin clusters, 3, 4, 5, 6; our Clementi West, our Tiong Bahru, our Redhill, they have all shifted down just below 20 years. So you see a small reduction in the valuation figures. In aggregate for this group, it's about minus 2.8%. So that's where you see the shifts in valuation figures happening on the individual basis. And in aggregate, this is the number that we're seeing, $4.771 billion. So going on to next page, Page 13. Our balance sheet, I think, remains fairly strong. Weighted average tenor of debt have gone up to 4.4 years if you compare that with 31st December, 3.1 years. This is driven mainly by the effect of the $125 million 10-year notes that we have just released on 26th of March, the last bullet point you see on the right. So of course, we have the distribution reinvestment plan that was in place for the last 3 quarters. And as I mentioned earlier, we are suspending it from this quarter on but partly because of a lower leverage level now. As you can see, 33.8% as at 31st March '19. You compare that with 34.7% in the previous quarter even before the completion of our transaction for 18 Tai Seng. And going on to Page 14, that is -- you can see the profile of our expiring debt and bonds, and that's also one of the reasons why we think it's not really necessary for us to take on a lot more equity. It's very well spread out and you are talking about financial year '19-'20, just $75 million due. So we take -- we have a lot of headroom available, and there's no real hurry for us to make too much adjustment to leverage level and debt profile at this point in time. And on Page 15, we have our risk metrics on the fixed and hedge ratios. As at 31st March, 78.6% of our interest had been hedged and average tenor is about 4 years. That, of course, includes the 10-year notes that we have recently issued. And all-in funding cost, 3% for fourth quarter and interest coverage ratio is still fairly strong at 6.5x. And going on to the next segment where we talk about our portfolio, Page 17 is a snapshot of where we are. This, of course, takes into account the updated valuation figures. The rest are fairly static. So portfolio valuation now $4.8 billion, a rounded up figure. The split is still about the same: Singapore, 90.9%; U.S., 9.1%. So if you look at the pie chart at the bottom right, Hi-Tech Buildings certainly takes center stage now. With the acquisition of 18 Tai Seng, we have increased representation now, 43.3% Hi-Tech Buildings. Of course, Hi-Tech Buildings includes our data center space. In due course, we will think of whether we want to have separate category for that segment to make it easier to track the performance. Our Flatted Factories now are 33.1% of our space. The rest are fairly stable. And our Business Park Buildings, it's only about 12.2% of our portfolio; and Stack-up/Ramp-up, just below 10%; Light Industrial Buildings, just 1.5%. So going on to Page 18, we have the portfolio overview. The numbers are relatively static except for the rents and occupancy levels. Rent levels have continued to shift up a little partly because of escalations we have in the leases. That's for the U.S. portfolio, USD 2.06. And for Singapore portfolio, partly because of the new leases for hi-tech space, we have $2.07. So for the occupancy level, we are seeing a shift up for this quarter. The U.S. portfolio is stable, no change, 97.4%. For Singapore, there's a 2.1% increase in occupancy level from 87.7% to 89.8%. So that gives rise to the aggregate 2% increase in the occupancy for the entire portfolio of 88.2% to 90.2%. And if you look at the expiry profile on Page 19, the weighted average is 3.6 years. That's, of course, contributed by Singapore, 3.5 years; and U.S., 5 years. And if you look at the expiry profile for financial year '19-'20, just 18.2% of leases is due for expiry. So this is a business-as-usual kind of year for us. We don't see any significant kind of expiring leases that will affect the portfolio. And on Page 20, our top 10 tenants, you see a new entrant established for this quarter. That's #5, Sivantos. That's the largest tenant that is at 18 Tai Seng where we have recently acquired [ asset for that ]. So in aggregate, you are seeing the largest tenant, that's Hewlett-Packard, 9.2%. And for the top 10 tenants, just around 25% of the rental income. And the trade sector mix on Page 21, I think, still shows a fairly diversified mix across all the different sectors. So we don't see any significant risk in any segments within our portfolio. And going on to Page 22 where we outline the trends for occupancy rates and rental rates. On the right is our most recent set of figures. Occupancy and rent levels going up, $2.07 for rental rate and this 89.8% for occupancy. So this is for the Singapore portfolio. So we think the market is probably stabilizing. Hopefully, this positive trajectory continues on in the next few quarters. And the details on occupancy levels you can see on Page 23. And if you look across the board, except for Business Park Buildings where you see the downshift from 81.5% to 79.4%, all the rest, we are seeing slightly more positive figures, especially for Hi-Tech Buildings as I mentioned earlier, new leases that have started contributing at our Kallang project, 30A Kallang Place. For Business Park Buildings, we had a couple of nonrenewals, the tenants including Fuji Xerox and also Dell that have downsized a little bit of the space. So that contributed to the low occupancy for this segment. And going on to the rental revisions, that's on Page 24. You are still seeing a bit of a pressure on the renewing leases. So for Flatted Factories, you're seeing $0.06 down, about 3.4%. And for business park space, partly because of our push to improve occupancy level, you see the lower renewal rent of $3.94 compared to $4.14. That aside, we are seeing larger, or rather higher rental rate for Hi-Tech Buildings. That's mainly driven by our Kallang Basin facility, which has secured a lot of new leases commencing in the quarter. So you see the $3.49 figure. The rest of the clusters, I think relatively stable. And on Page 25, our retention profile. About 65.2% of our tenants stay very long with us. And on the right, you look at the retention rate, 71.9%. In aggregate, that's within the band that we anticipate. That's normal kind of range. But of course, the lower ones, as I've outlined earlier, Business Park Buildings, 63.8%; and 51.5% for Stack-up/Ramp-up facilities because we have a couple of tenants who did not renew with us in -- the few of the larger ones including Ultra Clean and a laundry company, Systematic Laundry. So going on to the next segment where we talk a little bit about our investments. On Page 27, just to close the loop on acquisition which was done on 1st of February. I think it has been contributing very positively to the portfolio. And the committed occupancy has increased a little. As you may remember, at the time of doing the acquisition, the committed occupancy was 94.3%. So we got additional tenants in, and now it's about 95.1%. And on Page 28, we give an update on 7 Tai Seng Drive. This is on track, as you would have seen in our earlier release in January this year. This will be leased for 25 years by Equinix as a data center. So we are looking at completion around second half of 2019, and that's contributing almost immediately from there. And finally, on the outlook segment on Page 30. The economy, of course, grew 1.3% as what we have outlined. It is not as exciting as the 1.9% in the preceding quarter. So we are seeing some moderation in growth. There's still a lot of challenges in the rest of the world, and we think the continuing supply of the industrial space will continue to be a challenge and we need to overcome. But if we look at the median rent numbers that we have expected from JTC Realis, it's still a good, kind of positive upward shift of multi-user space of $1.80 per square foot per month. That's 1.1% increase quarter-on-quarter. And business park space, I think, continues to see at least stronger demand and growth, $4.37 per square foot per month, which is close to 6% growth. So our focus continues to be the same, keeping the occupancy levels stable while we try to notch the rents up a little. So U.S., I think for the data center space that we're in, we're seeing fairly strong demand. The pick up based on some of the real estate firms' data points. The demand continues to be strong. Absorption is higher in 2018 compared to 2017. So a lot of this, as you could have also read in the news, driven by large hyperscale cloud service providers and also enterprises that are having their own facilities. So we are -- we continue to be positive about the data center demand for the U.S. Of course, finally on Page 31, we talk about the strategies. They remain the same, the strategies. First, keeping our portfolio stable. The occupancy level, I think, is an indication of the improving stability. Our WALE for the U.S. portfolio, of course, is long. It gives us a lot of comfort and resilience. And on the financial flexibility, as I've outlined earlier, our leverage ratio has come down a little, 33.8%. It gives us a fairly significant headroom for any transactions in the future. And our weighted average tenor has also improved quite a lot to 4.4 years. So as I've outlined earlier as well, for growth, 2 acquisitions and developments. We have completed the 18 Tai Seng acquisition. The upgrading of 7 Tai Seng is underway. So we are on the lookout for what else we could do to continue to grow the portfolio, both size and DPU. So I think that ends the presentation for our fourth quarter and full financial year for financial year '18-'19. I'll be happy to take questions.

[Hwei Leng Tan, executive]

We have a mic for the attendees who are present here.

[Kuo Wei Tham, executive]

Yes, David?

[David Lum, analyst]

David Lum from Daiwa. With regards to the improvement in the occupancy rate in the Hi-Tech Buildings, is that coming mainly from like 30A Kallang? Or are there other contributors?

[Kuo Wei Tham, executive]

Well, I would characterize that's mainly 30A Kallang because I think you may remember the previous quarter, we don't have high occupancy rate yet because the building -- the committed leases were progressively starting from end of last year and beginning of 2019. I think the previous quarter when we reported occupancy level, it was 38 point...

[Lily Ler, executive]

38.6%.

[Kuo Wei Tham, executive]

38.6%. And now I think it's 30 -- 85.6%. So that is a very significant driver for the occupancy level.

[David Lum, analyst]

That 85.6%, is it committed or the actual...

[Kuo Wei Tham, executive]

Actual, yes. So that is actual. So I mean when we report the figures for occupancy, those will be actual numbers. So if we wanted to outline what it would have looked like, we will talk about the committed occupancy and the likely so-called commencement date. So now I think our committed occupancy for 30A Kallang is 92.9%, so a little higher. So we see the contribution coming from next quarter onwards.

[David Lum, analyst]

Okay. And my follow-up question has nothing to do with the first question. You mentioned that some of the Flatted Factory remaining lease was running down. What is the strategy for managing that? Are you just going to let it run down? Or is there any way -- anything you're going to do to mitigate that?

[Kuo Wei Tham, executive]

Okay. Well, I think in this situation, we would want to be able to extend the leases, but now might be a bit too early for us to pursue that very aggressively. So we are looking at where we could do some upgrading for some of this so that we could continue to keep them attractive. And that should address some of the declines in the medium term. In the longer term, we are certainly looking at possibilities of us doing extensions of the leases, and we will have to have more conversations with the agencies on that. But at the end of the day, it's also driven by what we do with the facility: whether we have good, productive use; whether we have unutilized GFA where we could maybe work on redevelopment of significant asset enhancement initiatives; and whether we could get good tenants or good kind of operations into the facilities that we would -- where we'll be able to have more productive discussions with the agencies. So for the time being, it's about making sure that the facilities continue to deliver, continue to be relevant and useful.

[Derek Tan, analyst]

Derek from DBS. Just one thing about your WALE rate. Do you mind to comment about the leases expiring this coming financial year? Is it any major tenants that will be expiring? Or is it business as usual?

[Kuo Wei Tham, executive]

Well, as I mentioned -- I think I mentioned 18.2%, if I remember, for the leases that are expiring for this -- yes, that's right, 18.2% for financial '19-'20. And if you look at the bar that we have outlined on Page 19, it's well spread over the various property segments. We don't have any significant tenant that's expiring. One of the larger ones that we have in this is Celestica in our hi-tech facility. But I think the business is doing very well and we are, of course, in regular engagements with the tenant and we hope that they will continue on with us. But certainly, scale and impact, not like what you'll see in the last few years for Johnson & Johnson or HGST, which are a lot larger. So this is what we see business as usual kind of engagement. So it's one of the larger few, but it is not very large in terms of the impact to the portfolio.

[Derek Tan, analyst]

Regarding to the backfilling of space of HGST and J&J, any updates on that?

[Kuo Wei Tham, executive]

HGST, I think we are still looking for replacement tenants. The -- I don't think we have any very large replacement tenants or backfilling done yet. But for Johnson and Johnson, it's slightly more than 50%, about 52% filled and we are talking to a couple of very keen prospects. So we're hoping to close that up so that we won't need to have that nagging worry of the low occupancy level for the Business Park Buildings.

[Derek Tan, analyst]

So just going -- focusing on your U.S. expiries. Just wondering how early would a tenant reach out to you before they decide to either vacate or renew? There's nothing expiring this financial year?

[Kuo Wei Tham, executive]

Yes. So I think certainly not in the current financial year. But usually, we would start the engagement at least a year or 2 before the expiration. And to get an indication of whether they're likely to continue, whether they are able to, say, extend well ahead of time, if possible, that would help us manage our expiry profile. So this is about the time where we would have -- where we certainly have more regular engagements, and hopefully we are able to get some early indication to help us with our planning as well. But our weighted average lease expiry is about 5 years, as you could have seen in the presentation. So nothing for us to jump into now, not the time for us to jump into now, but we will have that regular conversations or engagements.

[Derek Tan, analyst]

So the last question from me regarding your DRP rate. Remember last time you stopped when your [ grade ] was below [ 30 around ] [indiscernible]. So how come you [ stopped ] so fast now?

[Kuo Wei Tham, executive]

Okay. Well, there's no magic formula. The -- at that time, I think we -- that was the first time we're doing it. So we are trying to gauge the response from the investors and the readiness in picking up units and also what we thought we are likely to use the proceeds for. And at the time, as you may remember, we have quite a lot of the asset enhancement and development projects on the way. So we think we would be able to consume the proceeds then. So there's no magic cutoff point on that one. You hit below 30 or near 30, you switch it off. So at that time when it went below 30, we thought, yes, this really low enough, is a case of us then doing the projection on likely so-called projects and utilization rate, and we felt like it's not necessary for us to continue. So right now we are doing the similar kind of exercise, and we look at the kind of demands for these kind of proceeds. If you look at the projects that we have undertaken, mostly done already, the only one is the residual part of 7 Tai Seng, which is just a little bit less. So in view of the current leverage level and also the kind of pipeline that we can envisage, we think it might be a good time just to switch it off. We, of course, could switch it off next quarter just to complete 4 rounds. But I think now is the end of the financial year. Maybe it could be a good month too in terms for us to cut it off. We can always start it again. The only thing that we're trying to avoid is to start [indiscernible].

[Hwei Leng Tan, executive]

We'll just take a question from the webcast. This is from [ James Shah ]. Is MIT looking to expand the DC portfolio outside of U.S. and in Singapore?

[Kuo Wei Tham, executive]

Well, to answer the second part of the question, in Singapore, certainly I think it is our backyard. So if there are good projects for us to get into, certainly we will be very interested. And we are certainly prepared to do broader kind of range and types for data center space. So if it is acquisition, if it is development [indiscernible], we will be happy to do that. For other locations other than U.S., yes. As you could have read in our mandate update in 2017 September, we talk about going in the data center space beyond Singapore. So that means everywhere else. But I think realistically, it will only be the larger cities or the key connection points in -- on a global -- from a global perspective that we'll be interested in. So other than U.S., probably a few key cities in Europe and in Asia, possibly Hong Kong, Japan or Australia. So these are locations we are keeping a lookout for potential transactions, and it is very much driven by whether the investments make sense and also whether we can scale up meaningfully in the locations we go into.

[Donald Chua, analyst]

It's Donald from Merrill. Just following up -- a couple of questions. Just following up on that data center question. Will this year be a suitable year to pick up the full stake in the U.S. data center given the cost of capital now is steady and conducive?

[Kuo Wei Tham, executive]

Well, it is certainly a good window for us to consider. At the end of the day, it very much depends on the parent-sponsor time line because this is a joint venture with a sponsor. They probably have their own timetable. And every now and then when we engage with the parent, we of course signal our readiness. And as you have observed [ recordly ], the market is reasonably conducive, and we probably can get support from Unitholders especially now that we have hit sufficient headroom. The unit price is trading reasonably well. It's a logical consideration for us. So similarly, if the sponsor is ready for such a transaction, we will be happy to work on that. So we are keeping avenues open, and we're continuing to have engagements with the sponsor for that possibility.

[Donald Chua, analyst]

And also to follow up with the Flatted Factory leases, have you guys done any calculation for the sort of potential ballpark cost you have to incur in extending all these leases for the portfolio?

[Kuo Wei Tham, executive]

At this moment, we have not done any detailed analysis because while it is always possible to [ reap off ] from the postal rates or, say, the DC tables to get an indication, at the end of the day, our sense is getting extension right now, probably not likely. And we will probably have to have that conversation later on nearer the expiration date. So we, of course, have not done very detailed analysis, but we anticipate that the extension cost would not be that significant and it will be meaningful for us if that option is given to us for any extensions or any so-called renewal of some of this land tenors.

[Donald Chua, analyst]

And my final question is on occupancy. If you strip off the new acquisition, what would be the same-store occupancy changes on a sequential and year-on-year basis? And what -- how's the leasing environment right now compared to, say, 3 to 6 months ago?

[Kuo Wei Tham, executive]

Okay. I think if you take away the acquisition and say -- I don't know whether you want to take away the 30A Kallang Place, if you take that away, so I will say our occupancy number, instead of at least 87.7%, will probably be just around 88%. So it's not going to move up too significantly because we still have that drag from the Business Park Buildings on the portfolio. So the leasing, I think, continues to be challenging. We certainly have a lot of other landlords out there looking to -- targeting the common pool of prospects. But from our gauge of the responses from prospects and also our existing tenants, we think the market's probably stabilizing, and we see that as fairly encouraging for us. So hopefully, 2019 will be a better year, and we can see -- other than your contributions of new projects or existing same store, we will be able to see that support level and we can gradually match the occupancy level up. So in the medium term, I think we'll be able to hit, say, 95% same-store basis not as easy, if you take away all those contributions from new projects. But we are trying to see whether we can match the existing ones beyond 90% first.

[Hwei Leng Tan, executive]

[ Steve Thatcher ] has a question on whether the suspension of DRP signals that the acquisition of 60% is further than previously expected.

[Kuo Wei Tham, executive]

Well, I won't use that as an indication because if you look at how we have been deploying the DRP, mainly -- they were mainly used to match our development or asset enhancement initiative figures. Those are fairly incremental. Every quarter, maybe a couple of million, $10-or-so million in terms of requirement. So it is more of an indication of whether we have ongoing projects or a reflection of whether we have ongoing projects. So if we were to do any acquisition, then you'll see -- if you look at how we have done transactions in the past, whenever we have a more sizable acquisition, usually we will match that with both debt and equity and equity from placements. Of course, some years back, we did preferential offering as well for a meaningful kind of balance sheet to take on the new projects into the portfolio. So certainly, I won't take the turning off of the distribution reinvestment plan as indication that, well [ the deal ] is not going to happen because if you look at it realistically, every quarter you get maybe $20-plus million if it's a good quarter. If you have lower participation, much lower than 20 -- $10-or-so million. So it's not sufficient by itself to fund some of the larger acquisitions anyway. So I won't take that as an indication or representation.

[Hwei Leng Tan, executive]

I think that's all the questions that we have for today. Thanks for joining us. You know how to reach out to us. Thank you.

[Kuo Wei Tham, executive]

Yes. Thank you. Thanks for joining us this morning. Good day.