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Good morning, everyone. Thank you for dialing in to FCT's Second Quarter 2020 Financial Results Briefing. The materials relating to FCT's second quarter 2020 results are available on the SGXNET and FCT's website. Richard Ng, the CEO of Frasers Centrepoint Asset Management, will lead us through the presentation of FCT's results, and the Q&A session will follow. Hwee Pio, our CFO; and Alex Chia, our Vice President for Asset Management, will then be on hand for the Q&A. So without further ado, let me now hand over to Richard to kick off the presentation. Richard, please?
Yes. Hi. Good morning, everyone. It's not a very good weather this morning. Fortunately, we are doing this via call. Otherwise, we will have to arrange a pass for you guys to move from MCT to FCT presentation again. All right. Let's run through very quickly the deck that we have. And from there, we can then move on to Q&A after that. I think that will be more meaningful for everybody. Okay. A quick summary. As you can see on this, I guess, the result for 3Q, most of you would have seen it. We did better than last year, even the -- for the fact that we have an enlarged base this year. However, we are going into more details, line-by-line item. Okay. Maybe Fung Leng, move on to the next one. Okay. As you can see here, gross revenue for this quarter actually increased by almost 1%. However, property expense has also grown by 6.9%, and we will touch on a little bit more about why this component has increased. Usually, if you look at quarter-on-quarter, most of the time it's because, for example, you have a certain event that happened like for tax rebate and that, kind of account for some of these lumpiness and distortion. For NPI, dropped slightly for the quarter. Income available for distribution. If you look at the amount there, it's $36 million, which is 25% higher than same period last year. However, for this quarter, we are distributing only 50% of that, which is $18 million, or a DPU of $0.0161. And I think in current situation, current condition, we would like to be a little bit more prudent. Currently, the visibility is still very short so we want to be a little bit more cautious and we will retain 50% of our income available for distribution for this quarter. Let's move on. Okay. For the first half, I think it's largely the same story. We actually had income available for distribution of $71 million. And if you look at in terms of the asset performance, we are better off in gross revenue, we are better off in NPI. Again, in terms of distribution, this is reflective of what we just discussed just now that we are keeping some of the distribution currently in view of the uncertainty going forward. The other thing I would like to highlight is, actually, if you look at our results, both first quarter and second quarter, the mix of the first half, it came in much better than last year. It's unfortunate that because of COVID, we are in a situation whereby there's a lot of uncertainty. Even during the first quarter, the performance of the malls were still pretty much resilient, despite the fact that the COVID situation started in early February. So we could still see performance coming in, in February and even in March, okay? So this is where, I guess, the suburban portfolio resistance in nature come to fruition. Let's go on to the next slide. Okay. These are all the general asset-by-asset breakdown that would give you guys a little bit more clarity in terms of the performance at the individual asset level. So as mentioned just now on this quarter, close to 1% higher. Some of the key highlights here is 2 things. I think Changi City Point, the drop mainly due to lower turnover. And of course, for Anchorpoint, if you recall, in past years, we actually undertake the car park management, meaning that we took a master lease on a car park. We collect the revenue, but we also pay the expenses. So we have stopped doing that, and that's a result of the drop in revenue. So the drop in revenue is largely contributed by the car park income that we are no longer receiving. On the other hand, you'll see later on at the expense level, the expenses for Anchorpoint has already dropped because we stopped paying for the master lease. Next slide. Okay. This is a combination of the 2 quarters. Again, Anchorpoint picked up because of the same reason I mentioned just now. There's no longer income from the car park. Other than that, you can see that the performance of the rest of the assets are actually better than same period last year. Next slide, please. Property expenses. Okay, this is where the increase in property expenses in most of the malls. And as you can see, the explanation is that most of them are actually due to writeback provision and also some of them as a result of some higher security cleaning costs as a result of the COVID-19 situation that started in February. Instances where if we have cases whereby, suspect cases that came to the mall, to the clinic, we have to do a thorough cleaning, et cetera. And also, we had to increase security and guards during this period to manage the traffic that goes into the mall due to the various measures that have been implemented by the authorities over time. This is where -- if you look at Anchorpoint, this is where the reduction in expenses, as I mentioned just now, and this is partly driven by the fact that we no longer pay for the master lease. Okay, next slide, please. This is the same story reflective of the combination of the 2 quarters. I don't think we need to go through this in detail. Okay. Next slide, please. Okay, NPI. As a result of the expense -- the increase in expenses I've just shared with you, so you see a drop in Causeway Point, drop in Changi City, YewTee Point. And that resulted in a 1.3% drop for this quarter. However, if you look at the next slide, on a half yearly basis, there's actually an increase of close to 0.6%. So this is reflective of the fact that, as I mentioned, some expenses are a little bit lumpy over the quarter. So usually, under normal circumstances, we actually look at this in a full year basis so that it kind of smoothen up. Okay next slide, please. Okay. For financial position, I will ask Hwee Pio, our CFO, to run through with you.
Thank you, Richard. Okay. Good morning. I hope you are all keeping well. Turning to Slide 24. FCT's gearing ratio as of end March stood at 37.4%, which is higher than 33.2% last quarter. This is mainly due to a drawdown of a $19 million RCF, which is revolving credit facilities, to refinance a tranche of bonds which is due on 3rd of April. Post redemption of the bond, the gearing would be around 33.3%. The all-in cost of borrowing for the quarter ended March was 2.44%, down from the previous quarter's 2.57%. Interest coverage ratio based on EBIT over interest expense for this quarter remained strong at 6.4x. The weighted average debt maturity was at 2.3 years. And at this point in time, FCT has 50% of its total borrowings on fixed or hedged to fixed interest rates. I would like to add that with the uncertainty brought by the pandemic situation, both Moody's and S&P Global has downgraded FCT's credit rating by 1 notch on 25th of March and 13th of April, respectively, on concerns relating to the credit metrics erosion that resulted from the negative impact on retail sector. S&P's rating for FCT was changed from BBB+ to BBB, and Moody's rating was changed from Baa1 to Baa2. Both agencies have a negative outlook on the rating. Next slide, please. This slide shows the key covenant -- or the key loan covenants, which we had in our loan procurements. As of to date, we are all in compliance with the financial covenants. And particularly on the ICR, we are at 6.4x, which is much higher than the requirement of 1.5x. And what does it take to trigger to 1.5x? It would take our NPI to go down by about 73% from our current level to reach 1.5x of interest coverage. And also, the loan-to-value ratio for the secured borrowings, we still got a fair bit of headroom. And of course, at this point in time, any -- the potential impact on the valuation of investment properties remains to be seen. Okay. I would also want to highlight at this point in time that the credit metrics imposed by the rating agencies are certainly more stringent than the loan covenants we have with the banks. Next slide. Okay. This is our balance sheet -- FCT's balance sheet as of March 31 as compared to last quarter and last year at this time. If you could focus on the cash and cash equivalents, it was an exceptionally high amount there, $105 million, because we had drawn down to repay the $90 million MTN bonds, which was due subsequent to the balance sheet date. And moving ahead, we will be -- okay, so this is our debt maturity profile as of March 31. So the big stack of $190 million that you see there, of which it contains a $90 million to redeem this orange $90 million that we see here post-balance sheet date. And we are also currently working with the various banks on the options to term up this $190 million credit facilities. And at this point in time, we have an untapped revolving credit facilities of $140 million. I shall now pass the next section to Alex, our Head of Asset Management.
Okay. So referring to Slide 29. Portfolio occupancy as at 31st of March was 96.1%, comparable to last year, but 1.2% lower than last quarter at 97.3%, okay? The fall is mainly attributed to Changi City Point, whereby there are 2 nonrenewal tenants and 1 free term case. For the next slide, Fung Leng? I would like to highlight that our exposure for the remaining expiring leases represents less than 12% of total NLA or less than 14 -- about 14% of the gross rental income. As you can see, out of the 153 tenants, I'm glad to inform that 37 tenants has already committed. And thus, the actual exposure shall be 9.6% of NLA or 11% of the gross rental income, which I'm going to elaborate later on. Turning to Slide 31. Okay, this refer to the renter reversion, which is reported based on the year-to-date basis. This will have a better reflection of the performance as we move through the quarters. As such, the portfolio rental reversion for the period between 1st of October '19 and 31st of March '20 is 5.2%, with all properties registering positive growth. Note that this positive reversion is mainly the result of expiring tenants locking at a higher rental rate before the start of the COVID-19 impact, which is in February onwards. Shall we move to Slide 32? Okay. This Slide 32 shows the remaining leases that are expiring for the remaining 6 months for the respective mall. So as I mentioned, out of the 53 expiring leases, there are 37 already committed. And the you can see from the slide, Causeway Point and Northpoint represent almost 50% of the leases in terms of numbers and in terms of the NLA. But nevertheless, there's some progress we have made and especially for Northpoint, we already have kept about 14 of the tenants that's committed and likewise on Northpoint, 11. So the renewal process is still ongoing despite the difficult period. Next slide, please. Coming to portfolio support traffic, it was 2.4% lower year-on-year, mainly attributed to the sharp fall in March, impacted by the COVID-19. And a big Malls like Causeway Point, Waterway Point saw a dip of about 12%, where the fall for the smaller malls is not that significant, ranging about less than 5%. In terms of the portfolio tenant sales for 3 months from December '19 to February '20, it was 4% down year-on-year, mainly attributed to Causeway Point and Changi City Point. The year-to-date tenant sales was down by 2.5%, mitigated by the stronger sales before the COVID-19. The COVID-19 impact was felt across all mall in February 2020. Tenant sales at larger malls saw a dip between 2% to 10%, where smaller mall saw a mixed variance. Tenant sales for the next few months is expected to be lower than flat due to the implementation of the circuit breaker in April, and now it has been extended to first of June. Next slide, please. Okay. Now as I refer to Slide 35 is a recap on the tenant support packages, which we have rolled out in February and March. And based on the enhancement announcement in March, most tenants will not have to bear their full rent up for April to June, as their rental will be covered by a combination of rental rebates, property tax rebate and, of course, offset from the cash security deposit. This support package covers not only FCT, but it also covers the non-REIT under Frasers and also the 5 more that's managed by Asia mall. So with this, I shall now pass over to Richard on the outlook pertaining to the impact of COVID-19. Richard, please?
Thanks, Alex. If you look at these numbers here, I think we are all very familiar with this. This has been announced by MTI. So looking forward, I think we are expecting things to be affected. The GDP is to fall between negative 4% to negative 1%. And also, Alex has gone through in terms of the COVID-19 circuit breaker and various measures. So what's happening here is the measures has been tightening. And tightening ever since the circuit breaker was first announced. So every time it's announced, it has impact in terms of our operations, both for ourselves as well as for our tenants. We have to look at tightening the measures, putting more people in place to ensure that the measures are adhered to, and also helping our tenants throughout this period. For example, at a certain point in time, the supermarkets require more spaces to manage the crowd that comes in. So we have to open up our atrium. Now you see a lot of GrabFood drivers or delivery guys coming into the mall to collect and pick up the delivery. And this is where, again, we have to manage the situation. So this is an ongoing issue that we are facing on the ground. And thankfully, our team has been on top of it throughout this period. They have been doing a great job in ensuring that all those measures that have been put in place have been adhered to. We try to help our tenants as much as possible. Let's go to the next page. So again, there are all these measures that we are all familiar with. Of course, the other big one besides the circuit breaker was the announcement by Ministry of Law in terms of the temporary relief measures to allow our tenants to opt for defer in rent. But I think the keyword here is deferment in their rental. It's not a rental waiver. So tenants have from April to October -- I believe, was April 20 to October 19, that period, for them to speak waiver if they need certain relief from landlord and to arrange for a payment subsequently after these measures has been lifted. So I mean if you look at what Alex has presented just now, in a nutshell, if you look at the next couple of months, with the various measures that we have put in -- already announced and put in place, for the next couple of months, the tenants really don't have to come up cash -- or significant amount of cash throughout the next period. So the question here is how many of the tenants will be opting for this measure? To be frank, up to now, I mean we probably have only 1 case that is brought up to my attention. And even for that 1 case, it's not really something -- that they have something -- they have muted the idea that they may be seeking for this. So the proportion is still very small. And I guess a lot of tenants, once they realize that this is actually a deferment and not a waiver, so they will have to relook at the possibility of them being able to repay this rental obligation subsequently. And again, they look at the measures, and they are probably also waiting for us to roll out the various measures. And in the next couple of months, they don't really have to pay rent, I believe we are not expecting a significant portion of this of our retail base to come forward with this relief requirement. So as far as we are concerned, we are doing whatever we can in terms of, for example, preserving cash flow for any further unforeseen deterioration to the current condition. We -- for Hwee Pio, she is working very hard to ensure that we have enough facilities during this current period. And she has shared the amount that we have. And we've -- based on our cash flow, that is something that is comfortable for us at this point in time. The operations side is working very hard to ensure that every time new measures are put in place, we are on top of it. We make sure that we provide whatever necessary assistance we could in a very fast and efficient manner. So as a whole, I think FCT, we are proactively managing both in terms of operations, in terms of financial discipline, and also we try to maneuver and get ourselves out of this climate as well as possible. With that, I end my presentation, and let's hear some of the questions that you have. Thank you.
[Operator Instructions] So the first question we have comes from Terence Khi from JPMorgan.
I just had a few questions. I guess the previous tenant support package have been announced prior to the extension of the circuit breaker. So I wanted to get a sense, would you be looking to sweeten the package, given that the circuit breaker has been extended for 1 month?
Okay. Now that our initial provision was for -- was meant for a 1-month circuit breaker shutdown. So now that has been extended by another month. Honestly, we are looking at that. Currently, we are looking at what can we do to sweeten the -- or to help the tenant during this additional month of circuit breaker. But like I mentioned that now we still have multiple options to play with. I mean we still have the property tax rebate that we have not -- the 85%. We have already given back the 15% that was announced earlier under the budget announcement. This 85% that was subsequently announced, we have not utilized it. So we still have the capacity there. It's just a matter of whether we use 85%, we use 50%. And what about the balance? The balance could come in various form again. I mean we still have the security deposit offset that we could utilize. And at the same time, I think we are also looking at potentially helping our tenant a little bit more by dipping into our pocket. This has not been finalized. We need to work this through as a group because not only we are looking at FCT. We're also, as a group, looking at what is happening at Asia malls, what is happening at Frasers in totality. So once this -- if there's any changes or improvement to the package, we will come back to the community.
Okay. Sure. And also in terms of impact of COVID on, let's say, your leases. Have tenants been asking for lease restructuring, shifting to GTO? What is the impact on like reversions and sign-up interest for new tenants for some of the vacated spaces?
Okay. Terence, there are many parts of the question. So let me try and dissect that. I think in terms of tenants coming back to us for various things, like, restructuring rental, this, in fact, are things that's ongoing, right? Even without COVID, we do have tenants, from time to time, come back to that. Of course, with COVID, the situation is a little bit more serious. And we do see some of the tenant sales have dropped drastically, even before the COVID or even before the circuit breaker. So this is where we have to deal with our tenants on a case-by-case basis and have to look at the situation, what is relevant, and what we think we can help. So again, coming back to the big picture. The next couple of months, most of them are not actually paying rent through the various form of incentive that we have put in place. So at the moment, we do not need to even talk to them about this and for a matter as most of them are closed, right? So this is something that, again, is not cast in stone. It is not a case whereby we are moving towards one option on the other option. We have to be very calibrated. We work with every tenant, and every tenant has a different issue, a different problem, and we will try to work with them as much as possible. But at this point in time, like what I said, we will see how we can best help them through the next couple of months. And I think you -- there's one question in terms of rental negotiation and what do we see in terms of rental reversion. I must admit, I mean with all this happening, the negotiation definitely has stretched much longer than the norm. The good thing for FCT is, as what Alex has shown just now, more than 90% of our leases have already been locked in, and we have done that way, way and above before -- way before the COVID-19 situation that came in February. So you can see that the reversion was still very healthy at 5.2%. Of course, going forward, it's a lot more challenging. But I look at it as we have a couple of different markets of retailers. There's one group of retailers who look at this as a crisis that happened and something that we can overcome over time, right? So this is where we have this group of retailers who will be looking at it in the long term. They view, especially most of our assets, because this are key assets in very dominant space. So some of them, they do not want to give up in the space. And they believe once the crisis is over, I mean, their sales will recover, and they want to continue, they have a position in our mall. So these are the group of tenants that we believe we should be able to retain them. There's 1 group of tenants who may currently be on a wait-and-see basis, mainly also partly because of their own business environment, the trades that they are in, the product that they are in. So we have this group of tenants who are in a wait-and-see situation. So what we do for some of this is perhaps we can look at shorter list them, to just work through the period, and then we can regroup and talk about it again when the market is a little bit more stabilized, and we can see whether it is sustainable for them to continue or otherwise. So this is a group whereby we may work with them on a shorter-term extension.
And there's a third group of tenants, which we think, even without COVID, their business proposition may not be sustainable. So this is one whereby some of them, even if they want to continue, we may look at options of replacing them. So those are the 3 buckets of retailers that we are looking at. Definitely, I don't expect everything to continue in terms of rental reversion based on the current rate. But the good thing is we're only left with less than 10% to deal with currently. I hope that kind of answered your questions, Terence.
Yes, yes, that's very helpful, Richard.
So our next question will come from David Lum from Daiwa.
Yes. Good morning, everyone. Can you tell us why the smaller malls are doing better than the larger malls during this situation? And the second question is, what is the basis for the 50% retention? And how you look -- going to look at the retention as you head to the end of your financial year in September? Will there be any amounts retained for this financial year?
Right. Thanks, David. I'll take the first question first. Why smaller malls are doing better? There are couple of reasons. One is, of course, in terms of the base itself is smaller, right? The traffic base that goes through the mall for a start is smaller. So the impact is likely to be also less. The magnitude is lesser than the bigger mall, so a drop of that significance. The other view that we have is also some of the concern with shoppers is because the bigger malls, especially those in a very dominant position with MRT station, bus interchange, they tend to have higher volume of people. So for those that are a little bit more concerned with high-volume of people, they continue to go to the smaller malls where it's not as congested. They just buy whatever they need, and then they move on. So these are some of the psychological effect that we see throughout this period. So to us, we look at it and say, "Look, perhaps that's one of the reason." For Bedok, it's a case of the base was smaller. In the past, we have lesser shops in place. Now we have more shops. So that kind of accounts for the increase. For YewTee, it's strictly because -- driven by the near fact that that's the strongest NTUC, the largest NTUC you see in the area. So a lot of people are going there. Even throughout the measures -- additional measures put in place, we continue to see large crowd coming in, which is why we have to moderate, we have to make sure that we manage the crowd access. So that's the reason why we -- the smaller malls are less impacted versus the bigger malls in terms of shopper traffic.
Maybe just to add on to what Richard said. If you look at a smaller mall, in terms of the composite of the non-discretionary trade is relatively higher, right, compared to the bigger mall. So being the fact that they have a higher concentration of non-discretionary trade. So even in this kind of current situation, because it's more of a necessity, so the impact is lower. Whereas if you look at the bigger mall, as you can see, the fashion trade is quite fairly affected. Again, these are discretionary. That's why that impact on the bigger mall is relatively more than the smaller mall. So that exists in the current situation.
Okay, the second part of your question was in terms of retention by 50%. I think the 50%, we work out. We like to look at our cash flow going forward. So now that we know -- in fact, even before the announcement came on, we already prepared ourselves that the circuit breaker is likely to be extended. So in our own simulation, we pegged for a longer closure. So if you look at the cash flow requirement for the next couple of months, especially those fixed expenses that we still need to incur despite the mall almost fully shut down, we look at it and say, "Look, how much we need to set aside for the next 2, 2.5 months?" So this is the reason why we actually set aside the amount. So it's not the case of, oh, we take a percentage, and we are happy with it. We work backwards and see how much we need over the next 2, 2.5 months. And from there, we try to retain the amount to see us through during this period. So David, I hope that answered your question. Okay. Just a follow-on. The question is whether will we distribute this at the end of the year? With the new announcement from MAS, I mean that gives us a little bit of flexibility of whether we distribute by year-end or we can extend it by another 12 months to September 2021. This is something that I think we're going to look at it. We're going to see how it pans out. I mean if things recover beyond the next 2 months, then we can review and see how much of this can be distributed or all of this can be distributed. However, if the condition continues to be a drag, then we may opt for the other alternatives of stretching it a little bit longer. So at this point in time, I can't give you a definitive answer. It's very much depending on what happens, what pans out the next couple of months.
Our next question comes from Brandon Lee from Citi.
Yes. I think basically I just want to know of your whole portfolio, so far, how many tenants have really come to you and applied? What is deferred? And do you expect more, I think, over the next 3 to 6 months? And the second question is, I think in terms of your security deposits, how much have you tapped into it so far? And how much more can it last?
Okay. Thanks, Brandon. For the deferral, I mentioned just now, so far, as far as I know, there's only one particular tenant that has informed us of thinking about putting into -- putting in a request for this deferment. Other than that, we have not had any other tenants requesting for it. And the main reason is because, as I mentioned and also Alex in his presentation, the next couple of months, most of the tenants do not have to pay rent or pay a very insignificant amount of rent. So that is one of the main reasons why we think that the proportion of tenants coming forward for this deferment may not be significant. And of course, now a lot of them are clearer in the sense that this is a deferment and not a waiver. So they have to also look at post listing on the measures, how can they pay back this amount that is owed to us. So those are the considerations that's being evaluated. And honestly, we do not expect significant portion of our tenants to come forward. We don't really have a number. Maybe if you ask me, 10%, 15%, perhaps at most. In terms of SD, we still have, I think, I believe, in our balance sheet, it's about $53 million of SD that's not being utilized because our plan was actually to utilize it over the next few months for them to offset against their rent. So I hope that answered your question.
Our next questions come from Derek Tan from DBS.
Richard, just 1 question for me. I'm just wondering if, let's say, if we assume that there's a gradual return to our previous lifestyles, right? I was just wondering whether across our malls or sectors, where is your team focusing on? Or is there a risk in the longer term you'll need more help. Just want to get a sense of your segment, do you think I needs more help in 6 to 12 months kind of horizon?
Okay. If we look through our tenant base and see which are the most impacted category of tenants, I think largely your -- those that don't fall within your necessity products. So you talk about fashion, you talk about sports, you talk about jewelries. So those are the categories that we think may take a little bit longer to go back to normal. But having said that, we also -- while at the same time, looking at what's happening around the world and other markets, say, for example, I mean, sort of interest that we see what's happening in China, for example, when they released the measure or they partially released the measures, you can see that people start coming back again because of the last couple of months, really, has been very difficult for everyone. You stay at home, you cannot do a lot of things. You find that you are bored. So you want to come back and do whatever that you have missed doing for the couple of months. So there could be 2 possibilities. One is that they call it -- some people call it revenge shopping, come back and do a big shopping after that since you have stayed for the last 2 months. But at the same time, we are also looking at it in terms of sustainability. Probably this category of tenants may take a longer time to recover than your basic necessities.
Our next question comes from [ Ting Shen ] from CLSA.
Can I just clarify on the tenant support package, that $17 million is out of FCT's pocket, right? And does that include the PGIM portfolio as well?
Okay. The amount that was announced, the $40-over million package that was announced is meant for FCT, Frasers, those non-REIT assets as well as portfolio under Asia malls for the total amount.
Would you be able to break it up into -- especially for FCT and the attributable portion of the Asian malls?
FCT, it's about $17 million. That's what I could share. I mean, I could share with you for FCT. And I would -- yes, I would imagine, for Asia malls, there's not a lot of difference from there because the size and proportion of our portfolio are quite similar.
Okay. Understand. And that does not include the 1-month rental rate, right?
No, no. That includes -- the $40 million to $45 million is actually meant for the 1-month rental waiver.
Okay. So that's all-inclusive for the rental relief?
Yes. Yes.
And can you also share what's the assessment criteria or how can a tenant qualify or is this subject across all tenants?
You mean for the rental waiver or the rental rebates? Okay. The rental rebates were given, especially because initially, when we announced this, that was even before the circuit breaker was announced. So we actually looked at it and say, "Okay, we're going to help our tenant with 1-month rental rebate," and the idea was to spread over maybe 2 or 3 months, maybe 3 or 4 months, 25% every year. But when the circuit breaker was announced, we decided to bring forward -- because more than 50% of our tenants could not trade so we decided to say, "Okay, why don't we bring it forward?" So we give a rental rebates to all those tenants, especially those who cannot trade. That's the first category. The next category was SMB, right? SMB, even though they could trade, but the mere fact is that they cannot have sit down trading, all take away. And we expect the crowd to -- we expect the deliveries to also be impacted as a result of all this. So as a result, we decided to even give this category of tenant. So it's a function of the help that we think is necessary. The only category that we did not give are the essentials category that qualify to continue to operate. So those will be like your supermarkets, your pharmacies in the first round of circuit breaker, even some of the services were allowed to operate. So those are the guys who did not get the rebate.
Understand. And just the last question on the leases signed this quarter. I think earlier you mentioned that most of the leases are signed earlier, which is why the reversion was positive. Were there any leases that were signed in March itself? And what was the reversion like?
Okay. The reversion ranges, those that were signed in March, I would say, generally were lower than what you have seen. But then again, because the proportion is very small. So it's not going to change significantly at this point in time the numbers that you have seen. It's slightly lower than that.
Are they still positive?
On the average, I believe so. On the average.
Our next question comes from Kar Mei from CIMB.
Just to ask on the retail income is earmarked for what purpose? If possible, could you guide us on the amount for each purpose, for example, potential rental deferment, working capital, et cetera? And also another question is, if rental income is different, accounting-wise, do you still recognize revenue as usual, even cash will only come in 6 months later?
All right. Okay. In terms of the utilization of the cash retained, how we do it is we look at the next 2, 2.5 months in terms of our fixed commitment, what are the things that we still need to pay, despite not receiving full rental income. So that's how we work out for our working capital for the next 2, 2.5 months to arrive at the amount of about $18 million. So that answers your first part of the question. The next one is in terms of treatment, I believe -- I mean Hwee Pio, you can correct me if I'm wrong, the -- we are still, for the rental, that if the deferment comes about and if there's a request for deferment, the deferred rental will still be recognized in our books this year, despite not having a cash flow. Hwee Pio?
Yes, that's correct.
Yes. Okay. Would you be able to give us some color on how much -- okay, you say that retained income is -- how much can the retained income cover in terms of -- for your fixed components commitment in the next 2.5 months? And then assuming a certain percentage drop in rental income, would you be able to guide us on how many -- how many months or percentage of rental income are you expecting when coming out with this retained income?
Okay. We are looking at the next 2 months of having very, very low income because it's only the essential trade that could trade. I mean in April, you have a larger category of that. For May, I mean that category has even reduced further. So we are seeing very -- so in our computation, as I mentioned, that's not even before the circuit breaker was extended, we already foresee that it will be extended. It's a matter of how long. So we built in the 2 months of very insignificant amount of revenue coming in. So that's how we work backwards in terms of setting aside for our retention.
Our next question comes from [ Geraldine ] from DBS.
Just 2 questions. If you have the number, maybe the percentage of tenants that fall under the higher risk group, the SME and then mom-and-pop shops alike?
Okay. So you're asking in terms of percentage of our tenants for under the SME groups?
Yes. Yes.
I don't have the figure offhand, but I -- for suburban malls, I think there's a good mix between those what we call national chain tenants, international brand. So for most of our tenants, most of our malls, if you look at the tenancy breakdown, I think that SME will not make a significant portion because those are largely the smaller specialty retailers. The bulk of it are actually -- I consider them national chain, because they have outlets everywhere. Not so much mom-and-pops. And increasingly, this number has also decreased over time. So I don't really have a number, maybe just estimate, 10%, 15%, perhaps.
Okay. And maybe another question. Should a tenant choose to already terminate. Are there any terms to protect FCT? And will the usage of the security deposit affect underlying this protection?
Okay. No. The security deposits are there for a reason, and that is to ensure that they fulfill the obligation. So if a tenant wants to preterm, for example, we will then have the opportunity to claw back from the security deposits in terms of any outstanding amount, any reinstatement that's required, right? If there's any surplus, then we will return. Otherwise, we'll be able to keep the -- in other words, we can keep the security deposit.
Our next question comes from [ Derek Chang ] from Morgan. Currently, we have no questions in the queue. [Operator Instructions] Okay. We have a question from Vijay.
Richard, maybe can you just give a quick comment on the PGIM mall performance during the quarter in terms of tenant sales and how those operating numbers were?
Okay. When we compare the performance of their portfolio and ours, especially the first quarter, it's quite similar. And the main reason for that is because -- I mean the type of asset that's in that portfolio is very similar to ours. So if you look at it, basic necessities. So again, they have difficulty managing crowds because despite the fact that when the other measures were increasingly tightening situation, there's still a lot of people going in. We have to manage the crowd going to the supermarket, especially. So most of the malls, in terms of trading, were very much -- were quite similar to ours. I guess the only slight difference would be the malls like maybe Tampines 1, which has got a larger proportion of discretionary spending items like fashion, et cetera. So maybe in terms of crowd, in terms of traffic going to that mall, it's impacted a little bit more significantly as compared to the rest. Whereas for those malls, we have a still very strong super market, continued to see very strong numbers that's quite similar to ours, especially the first quarter, very marginal impact.
Okay, okay. And there has been some call on the industry, especially F&B tenants, to move to a GTO-based rents. Maybe what's your thought on that? And currently, what proportion of your rents is GTO?
Okay. At the current moment, our base is about maybe 4% to 5% on the total revenue, right? I'm talking about percentage out of our total revenue. Every tenant is different. Some is 0.5%, some is 1%, some a little bit more. I think this is something that a lot of them have been asking for it, perhaps is during this period because if things go back to normal, they may choose differently because for some tenants, in fact, their turnover rental is very small. But once we increase its proportion, they may not want to do that because they may end up being as higher rent as compared to the base. So for every tenant, it's different. It's just that at the current situation, because the sales is badly impacted, they chose to go or suggest that they want to go toward GTO. And again, every tenant is different. So it's very hard for somebody to say, "Come in and take it. Go for all GTO. Because then you have to negotiate again with every tenant. And getting into GTO doesn't mean it's better off for the tenants or better off for the landlord. It could go either way, right? So the way we are dealing with it is still continue in the current structure as far as possible. We will -- we will talk to every individual tenant separately. And because every one of them has got a different margin, a different sales numbers. So this is something that we will continue to engage with them, and they shouldn't be a cookie-cutter or one shoe fits all.
Okay. Okay. Sorry, one last question. Maybe with the MAS increasing the gearing limit to 50%, is the acquisition still on the table, especially the remaining PGIM portfolio?
I mean, they, opening up the -- or increasing the leverage component helps the REITs, in general, in many perspectives, right, especially some of the smaller REITs. If you look at their gearing, they are already hitting more than 40% for some of this. And that kind of helps them to ease the situation. So that's one of the main reason why I think MAS came in and released that earlier, sooner rather than later. And they have also mentioned that they will not execute the requirement for ICR for MAS perspective at this point in time. So their intention is to help, in terms of cash flow, helping REITs tie over because there's a lot of feedback coming from us that they have to help us in some form in terms of managing our cash flow, and they have done that. In terms of ability, it gives us -- or it gives every REIT now a little bit more, I would say, gunpowder, if you're going to go out and look at acquisition because, of course, that has come -- that can only come in when the market has stabilized. But it certainly gives more opportunity for REITs to acquire and look out for opportunities out there.
We have the second last question from [ Derek Chang, ] who's trying again.
Richard, just want to ask a question on the tenants that are more vulnerable. Earlier, you mentioned fashion, sport, jewelry. That's about 19% of your portfolio rental. If you narrow it down, which is a proportion of overall portfolio rents, which are really more at risk in terms of preterm rental, rental waivers or rental deferrals? Any color on that?
Okay. Derek, even if you look at -- you add up the numbers, I'm not saying that every one of them are impacted in the same manner. Some of them are impacted. Some of them are prepared for it. Some of them are big enough that they see beyond this immediate period. I mean the larger guys, say, for example, UNIQLO, et cetera, they are looking beyond the crisis period. So if you look at only the very small ones, like what I say just now, probably the one that we can categorize as vulnerable, maybe 15%, 20% -- about 15% -- 10%, 15% as of now that we see, maybe there's some risk to that. These are the smaller one-off mom-and-pops operation or a very small setup with a low capital base. But then again, if you look at what's happening on the other hand, is Enterprise Singapore, the authorities are doing whatever they can in giving almost 0% loan to these people to tie through banks, additional cash or additional loan for them to take. So those are all the various help and measures that they have. So again, that's the reason why I'm saying that not all of them may come for a deferred payment because, at the end of the day, the deferred payment means that they have to pay back somehow. So if they could use other means to tie up, including the packages that we have available, they may not really go for that, unless if the situation deteriorates even further beyond the extension of the circuit breaker.
We have one last question because we need to end the call on time. We have another call to make. So sorry, Derek, if you have further questions, you can send me an e-mail. One last question comes from the line of Brandon Lee from Citi.
Richard, just 2 more questions, right? Can you give us the occupancy costs of some of your major trade sectors? And the second question is, how are the other stakeholders in the PGIM fund doing? Do you think there's a chance that you can just buy them out, given what's happening now?
Okay. All right. I think the occ costs at this moment, it's not an appropriate measure because the sales are so disrupted. So if you look at the first quarter itself, maybe I would say, it has gone up maybe to about 18%, 20%. But beyond that, there is no longer any relevance because most of the sales are so disrupted. So we will not really look at that.
For the other investors, I presume you're talking about the 12% investors in the PGIM fund. Yes, this is something that -- to us, we view it as a potential possibility because some of them may have use of the fund for something else. So we are talking to them. We think that perhaps this is an opportunity as well to engage them. We're not saying definitely they're going to exit and sell out. But with what's happening around the world, we believe -- I mean, internally, we believe that there are potential opportunity here to talk to some of these guys.
All right. Thank you, everybody. We have come to the end of the analyst briefing. So if you have further questions, please feel free to send us an e-mail. If not, we thank you very much, and we wish you a pleasant morning update.
Right. Thank you. Stay safe. Thanks. Bye.