Frasers Property Ltd

SGX:TQ5

Earnings Call Transcript 2018-Q4

[Gerry Wong, executive]

Good morning, ladies and gentlemen. My name is Gerry. I take care of Investor Relations for Frasers Property Limited. On behalf of the Group, I'd like to welcome you to Frasers Property Limited's FY '18 full year results briefing. We have with us today, our CEOs from across our business, as well as our corporate C-suite, who will be taking you through our presentation. Our Group CEO, Panote Sirivadhanabhakdi, is unfortunately unable to make it here today. He sends his apologies. There is a bereavement in his wife's family. So he is not able to be here. So we're going to have a Q&A session after this. So may I request that everybody please hold your questions until the Q&A session. And without further ado, may I now invite Mr. Chia Khong Shoong, our Chief Corporate Officer, to join us on stage now to take us through the start of the presentation. Mr. Chia?

[Khong Chia, executive]

Good morning, ladies and gentlemen. Thank you for joining us this morning. I will start the briefing by going through the key highlights of our business this past financial year. Then Chris Tang, Rod Fehring and Choe Peng Sum, the CEOs for our Singapore, Australia and Hospitality business units, respectively, will take you through the operational updates for their respective BUs. Then, Uten Lohachitpitaks, who is our group CIO will follow-up with updates for Europe and the rest of Asia. And finally, but not least, Loo Choo Leong, our group CFO, will wrap up today's presentation with our results and financials. Frasers Property achieved a healthy set of results for FY '18. Attributable profits reached SGD 759 million on the back of SGD 4.3 billion of revenues. Choo Leong will elaborate further on this financials in his segment later on. The results reflect in large recurring income base that we have been working hard to grow over the past few years, and I will talk more about this in my next slide. In view of Frasers Property's financial performance, the Board has proposed a final dividend of SGD 0.062 per share. We believe that the logistics and industrial sector benefits from a multi-geographic footprint, because many of our customers are multinationals. Over the course of the past 2 years, we've extended our logistics and industrial platform from Australia to Thailand to Europe. We are positive about the long-term prospects of the logistics and industrial segments in these markets, which is why we've been putting a lot of attention on further strengthening our platform. In April, we increased our deemed interest in Taiwan, which has been consolidated as a subsidiary of the group. We're also pleased to be nearing the completion of the Alpha Industrial acquisition in Europe, with acquisition of the 4 remaining assets completing this December. Operationally, both Geneva and the Alpha Industrial business became a single Frasers Property Europe team in July, under the leadership of Wulf Meinel, who is here with us today. You're most welcome to ask Wulf about our European business during Q&A later. We also scaled up in the U.K. with the acquisition of a portfolio of U.K. business parks. We've had an existing platform in the U.K. that focus on development for many years. We took advantage of the recent Brexit-related uncertainty to expand our U.K. portfolio into another asset class. Business parks are an attractive asset class to us because of its defensive characteristics and our portfolio's long [ rail ] means that it is in a position to ride through the uncertainties of the next few years. As you know, our development capabilities allow us to create investment properties and development is a skill set that is not easily replicated. Yesterday, we celebrated the official opening of Northpoint City. The retail mall offers a seamless experience between the existing north wing and the recently completed south wing, and sits below the newly completed North Park Residences. We also welcomed our first tenants at our recently completed Frasers Tower. Together, these 2 properties increased the NLA of our Singapore portfolio by over 20%. We also have development projects that we are working on in the hospitality segments, including our first Capri by Fraser in Tokyo, as well as ongoing C&I and retail development projects in Australia. There is, of course, also One Bangkok, our mega integrated project in Thailand. As a result of all our efforts to grow FPL's recurring income base, as at the end of FY '18, Frasers Property had assets under management totaling around SGD 35 billion across 5 asset classes. Frasers Property has also made significant headway in other areas of our business. We're firmly in the digital age, and we choose to embrace the possibilities offered by the digital age and take this as an opportunity to better engage our customers and media needs. In the middle of this year, we jointly invested with GIC to develop a co-working platform across Asia with JustCo. This broadly follows a team of real estate being a service that seems to be gaining a lot of traction. Our business units have also leveraged digitalization to engage with customers in new ways, and winning awards along the way for their efforts. This is just a start of more digital initiatives to come. Earlier I mentioned the development -- that development is a skill set that is not easily replicated. Hence our development business and capabilities remain important to us. We've made some strategic land acquisitions in Singapore, Australia and Vietnam over the course of the year, and we'll be putting our development capabilities to good use. As we invest in our business, we maintain a disciplined approach to funding. We've been diversifying our funding sources over the years. This year, it is notable that we successfully raised the First Southeast Asian Syndicated Green Loan, and we've also issued our first Thai baht debentures in Thailand. The initiatives that we've undertaken reinforce our network of multinational and multisegment platforms. We fully recognize that headwinds are coming and that we face in the coming years moving our sector in the macroenvironment across the geographies that we operate in. We need platforms that are strong to meet the bumpy ride ahead, which is why we've been putting a lot of effort into strengthening the bonds across our network. In our January AGM, shareholders approved the change in company name to Frasers Property Limited. More than a name change, it represents the unification of the collective brand equity and people across the group under a single brand, one shared belief and a common set of values. Experience matters is an articulation and expression of what we believe in and who we are as an organization, and is our guiding light as we move forward. This is a familiar slide to you now, so I won't spend too much time on it. I will just highlight that our portfolio of assets are well balanced across our 5 asset classes. This is also another familiar slide. From a geographic perspective, our portfolio is also well spread across our key markets in Asia-Pacific and Europe. In a nutshell, our balanced portfolio across asset class and geographies provides a degree of resilience and stability. There are headwinds that we face, of course, and changes to the shape of our business. We will continue to focus on building the depth in our platforms and enhancing our portfolio value. Ultimately, we want to build a business that is able to deliver good value over the longer term. Thank you. I'll hand over to Chris Tang now for Singapore operational updates.

[Kok Tang, executive]

Good morning. My name is Christopher Tang, the CEO for the Singapore SBU unit. I'll walk you through the operational update for Singapore. In Singapore, the earnings for this year has been anchored by 2 things: the completion of Parc Life Executive Condominium, it -- as well as the strong presales of Seaside and -- of Seaside. Let me just walk you through, now for the -- it's jumping. You're controlling for me or? Thank you, I'll control it, it is easier that way. Thank you. We have got -- okay, let me go and start over again here. Thank you. Even the presentation has some aversion to residential. It's still jumping. Are you controlling? Okay. It is stable now, which is a reflection that the residential market has stabilized. The -- we had a solid presales, as I say, from North Park Residences as well as Seaside Residences, which are 84% sold. In terms of completion, this year, we've completed Parc Life as well as North Park Residences. Jiak Kim, which is our next project, that is targeted for sales in the first half of the next calendar year 2019. In terms of design sustainability for the residential business, we have won a couple of awards which we're very proud of. The BCA Green Mark Champion. This is awarded by BCA. For the FIABCI Singapore Property Awards, we won it for Rivertrees. And the more recent awards that came up from Edge Property, we won quite a few of them too. In Retail, we have increased our presence in the very resilient suburban market. We have completed the integration of the north and south wings of Northpoint City. We now call it -- we started calling it Northpoint Shopping Centre because of its size -- and the multi-asset classes in it. We think renaming it to Northpoint City more appropriately reflects the character of the shopping mall there. It is the largest one in the North. It has got a community center, as well as a civic [ comp ] Plaza integrated into it. We officially opened it yesterday. We've started trading since early part of the year. The occupancy is greater than 90% now. For the whole retail portfolio -- gee, I've got to keep on turning back -- for the whole retail portfolio, the -- we are enjoying greater than 90% occupancy. And in terms of rental reversion, it's about 3% -- 3.6%, that's in tandem with the market conditions. At the back of our mind, also based on your personal experience, retail as Frasers' great disruption, many of you are exploring with alternate means of buying things and in the digital front, we need to engage of our consumers in like manner. We won a couple of awards on the digital front. The Tribal Quest won the Best Retail Event awarded by Singapore Retailers Association. Our Frasers Galactic Passport won the Gold award for -- from the International Council of Shopping Centers, which is quite prestigious organization. If you remember, you saw a lot of Star Wars Troopers last year. This year, maybe a softer touch, we may see some best along with our children. So on [ all ], we have asset under management under retail SGD 5.8 billion properties spread across 11 properties. For Commercial, we are benefiting from the recovery in office market. Frasers Tower was completed in the May of this year. As Khong Shoong reported, we got the first syndicated green loan, which is a green -- platinum asset. 90% of the tower has already been leased, pretty good names. You have names like Microsoft, Total. In terms of the other asset, Alexandra Technopark has been repositioned into a business campus. HP has departed from there, so you see a temporary blip in occupancy is down, but we're gaining a lot of traction in re-leasing it. Some of the analysts here have already taken a walk. We've been in the Park and so far, we've been receiving very good comments, both from the investment community as well as from the tenants' community. I've mentioned, our average occupancy has decreased a bit because of HP lease is expiring, but we're making good progress. In terms of portfolio under management, close to SGD 4 billion, spread across 6 properties. Frasers Centrepoint Trust has announced its results separately. I just bring you through a few key highlights. FY '18 DPU hit another record high of SGD 0.12. The revenue grew 6.5% year-on-year. For that portfolio, occupancy remains high at 94.7%. And the rental reversion there, as with our rest of the portfolio, was about 3%. Frasers Commercial Trust, the other listed REIT under the Singapore portfolio, once again separately announced results which you have read by now. The DPU had a slight drop, because the NPI drop, there were a couple of reasons. There was lower occupancy rates for Alexandra Technopark, I mentioned that, that is due to the HP lease terminating, is a large lease, and we're in progress of re-leasing those spaces and having good traction on those. Also the cost -- another cost is the AEI at China Square, which is positive. This are temporary drop in occupancy. We have a revamp in China Square retail podium there. Divestment of 55 Market Street that is divested at a very good price, and the weaker Australian dollar from the portfolio that is in Australia. However, from the distributable income, there was a 5.2% increase. This came primarily from Farnborough, which we own 50%.

We've put a note there. I'm so sorry, guys. I thought the slide will stay in place and I read through my script, you'll be following it. But you're having a preview of even my colleagues' presentation in Australia. Why is it happening, can anybody tell me?

We did divest Market Street for SGD 216 million. We announced that too at a pretty good cap rate.

This is the summary slide of the profit before interest and tax for Singapore. Residential up, we mentioned primarily, completion increase in sales. Retail and commercial REIT up. The balance of the portfolio compensated for the slight drop in FCOT. Risk down, fee income and others up, primary from one particular tax provision taken for others. The last slide, which is the operating environment for Singapore. First slide, GDP growth. I'm sure you read the same slide. You see the same data as me. I'm just putting on my perspective of things here. The GDP growth. The way I look at it, stable economy, unstable slides -- but stable economy. Residential, price increases, despite cooling measures, which was quite heavy -- quite, quite, quite drastic in July. You'll find sales continuing and price increase stabilized. In other words, stable. Year-to-date sales of residential, you'll find sales have not gone down, in fact the past few launches were pretty well taken up, which is quite good. August retail sales, the chart at the bottom left, you can see an upturn, which we also find in our own experience at a shopping mall, there's been an increase in sales. Rental for office, bottom [ meter ] is going up. We are enjoying some of the upturn in rental. And the last line on the right shows the vacancy, which is the other side of the coin. As the vacancy drops, the rental increases. So 3 key messages from what -- how I see the market from these slides. The residential new measures have had a stabilizing effect. The retail market seems to be bottoming out. And in the office sector, you see strong leasing activities, which is positive for the sector. Thank you. What leaves to be observed now is when Rod presents, whether the slide jumps. Rod?

[Rodney Fehring, executive]

I'm reluctant to know what to do, whether Gerry, you control the slides or I'll try to. So -- we'll just see how we go. If it jumps again, I'll leave it to you, Gerry. Okay.

My name is Rod Fehring. I'm responsible as CEO for the Australian business.

And it's done it already. I'll leave it with you, Gerry. You're in control. I'll stay on the operational update slide for the time being. Australia's economy continues to deliver some solid economic growth, with GDP currently at 3.4%, heading into 2019. The RBA has maintained a cautious, but positive outlook for the Australian economy. Employment is at near capacity, with unemployment at about 5%, which has traditionally been used as the measure in Australia as a full employment. Inflation remains low, at sub 2%. Retail sales growth have been at historic low, at 1.5%, while household incomes have also remained relatively static, and household debt continues to be high. There are reasons for headwinds to begin to emerge, which I'll refer to later in the outlook slides. But firstly, I'll now turn to overview the Residential, Commercial, Industrial and Retail operations in Australia, as well as our investment portfolio held-on balance sheet, and a brief overview of FLT. I'd also conclude with some outlook statements. Thanks, Gerry. Turning to our Residential business. It achieved record result in 2018. The result was largely driven by project completions in New South Wales and Victoria, and to a lesser extent in Queensland. And it has benefited from strong sales several years ago, which are now flowing through to construction completions and settlements. Over 1,800 units were released during the year and 3,040 units were settled during financial year 2018, generating SGD 2.1 billion in revenue. We expect to complete and settle around 2,300 units in 2019, producing revenue of about SGD 1.8 billion. Our contracts on hand, which will settle during -- in FY '19 and beyond, total 2,415 contracts on hand, worth about SGD 1.5 billion. So we have forward momentum carrying on from 2018 into 2019. This compares, though, to 3,850 contracts on hand, which were held as of September last year. As these numbers suggest, a strong wave of sales and settlements that have washed through 2018 and will continue into 2019. We've maintained a disciplined approach towards restocking. We've taken positions which have meant that there is no planning risk associated with the projects we've secured. The Carina project in Queensland is a relatively small project by our standards, but is zoned, development approved and ready to go in a market, which has relatively speaking, enjoyed less upswing in its -- good going, Gerry, you're wrestling well, we're still at Residential by the way -- will commence trading in the not-too-distant future. Several other projects have also being secured, but remain subject to the satisfaction of preconditions and they will be announced in due course, once those preconditions are resolved. Moving now to Commercial and our Industrial and Retail portfolios. During the year, 12 facilities were delivered during FY '18, totaling 323,000 square meters with an end value of SGD 500 million. 3 logistics assets were sold to FLT, as previously announced, and 2 facilities were sold to third parties, where they acquired the entire property and required delivery from us. And a further 7 facilities were retained by FPA on our balance sheet. The forward workload at year-end comprises 12 projects totaling 166,500 square meters. The end value of these projects is expected to be in excess of SGD 360 million. Strong leasing market conditions have continued into the first quarter of FY '19 and are expected to continue well into next calendar year. Forward workload is approximately 20% higher, compared to FPA's 10-year moving average activity levels. The strong market conditions have resulted in robust competition for Industrial land, particularly in Sydney. Zoned industrial land values in Sydney's prime Western regional sub-market have increased from $220 a square meter to $600 a square meter or higher. A combination of the lack of supply in zoned industrial land have driven these price rises. Notwithstanding these conditions, C&I team have secured a further 68 hectares of new land, assets in Victoria, New South Wales and Queensland, to maintain our production process. Our retail portfolio, consisting of approximately 122,000 square meters, is under active development at the moment and throughout 2019. This will result in the completion of about 58,000 square meters of retail floor space at Burwood, Edmondson Park -- Burwood in Melbourne, Edmondson Park in Sydney and Eastern Creek in Sydney. A further 21,600 square meters of floor space is already operating in trading at Central Park in Sydney and in Coorparoo. The Mambourin Town Center in Melbourne's West is in the early stages of planning, and will not come onstream until 2023. As these assets are completed and stabilized, we will then look to place them into appropriate long-term ownership structures as part of our ongoing capital management program. Investment properties. Thanks, Gerry. These are the non-REIT portfolio, which we hold on FPA's balance sheet, and it holds 27 properties worth SGD 1.6 billion, with office making up 56% of the portfolio, industrial 37% and retail 7%. These are completed assets generating income, all in the early stages of stabilization. In addition to these assets held on balance sheet, Frasers' manages 91 Industrial and Commercial properties through its REIT platform. In the Australian business, we have made strong progress on asset management, with the overall occupancy at 98.5%, with 75% of the portfolios income leased to multinationals, ASX-listed entities or government tenants. In the non-REIT portfolio, we're seeing significant valuation uplifts during the year, reflecting the strong leasing environment, especially in the office sector. In addition, further cap rate compression has been realized during the course of the year and improved, while in both the industrial and office sectors have supported higher asset valuations. Rental reversions have fallen in the industrial sector from 11.7% to 4.7%. These are negative. So the reversionary influence is actually reducing, putting pressure on incentives as -- and also seeing some rent improvement. Similarly, in the office sector, incentives have come under pressure, reducing reversions from 11.2% to 7.9%, still positive reversions, though. FLT released its results earlier in the week. So I won't spend a lot of time on FLT, repeating the good results that have been presented by our Industrial REIT. Distributions for the year totaled 7.9% per unit and represented 2.6% increase in 2017. The FLT portfolio is well positioned, with occupancy at -- in excess of 99% and a WALE approaching 7 years. The portfolio has grown to 82 properties, valued at SGD 3 billion, that's SGD 2 billion in Australia and SGD 1 billion now in Europe. There is good visibility in income, with only 2.5% of gross rental income expiring in 2019, which is a very good position to be in. Gearing has also slightly reduced. The highlight for FY '18 was the diversification of the portfolio to include assets in Europe, specifically in the Netherlands and Germany. The diversifications accelerated FLTs at scale and gained exposure to favorable yield spreads available in Europe, as risk-free investment yield remain ultra-low. On a PBIT -- from a PBIT perspective, the overall PBIT is an increase on FY '17 of 23.5% at SGD 358.4 million. The increase was largely driven, as you can see, by an uplift in residential development contribution to SGD 145 million. The other contributors notable on this slide have also contributed healthy increases on the previous year, reflecting very solid property fundamentals for the year ending 2018. The future of the emerging structure of our trading activities, particularly in the residential sector, will be the influence of joint ventures have upon our trading performance, where revenues in 2018 were actually slightly lower than 2017, yet PBIT for the year is higher. You can expect to see this trend play out in future years.

Finally, to outlook for the Australian business. As mentioned earlier, economic fundamentals for Australia remain solid. Unemployment continues to trend low and economic growth activity remains solid. There's been a lot of press regarding the sentiment on the Australian residential market. National property prices have shown a mild decline to date, with larger declines recorded in Sydney and Melbourne. These declines appear to be orderly and following an extended period of sustained price growth over the last 3 to 5 years, reflecting a cyclical nature of the property market. However, headwinds are emerging. The 10-year bond yields in Australia are rising. Credit growth is restricted through the action of the central banks and the regulators, and the main banking -- and the Australian dollars did appreciated about 7% against the Singaporean dollar, overall, creating -- having implications for Australia's denominated earnings. Residential market has been the first to be impacted by these headwinds. And the outlook for the residential sector remains subdued, and we expect further house price declines, particularly in Sydney and Melbourne, as the market returns to a more normal set of trading conditions.

Uncertainty around tax policy changes will further impact sentiment, as federal election looms in the early part of 2019. The effect of these cyclical changes have an increasing impact -- will have an increasing impact from the second half of 2019 into 2020. However, our project portfolio will be characterized by project completions, leaving us headroom for cautious reinvestment as opportunities present themselves as the cycle plays out. Other sectors remain strong, with cap rate compression evident in the office and industrial sectors. Leasing activity is expected to remain strong too, and we expect to see the emergence of some rent growth and -- in selected office and industrial markets. As noted on the slide vacancies -- as noted before, slide vacancy rates remain low for prime assets in core geographies, with where yields remain at cyclical lows. The benefits of a diversified business model will become increasingly evident in subsequent years.

That concludes the outlook for me, and I'll hand it to Peng Sum. Well done, Gerry. I think you kept them stable.

[Peng Choe, executive]

Thank you, Rod. For Hospitality, I don't know if you would remember, the half year results I mentioned that we are under some headwinds. Unfortunately, the same reasons for the half year results has rolled over to the full year results as well. The 2 main reasons is that we had a onetime cross-currency swap gain -- mark-to-market gain of about SGD 13.5 million for our cross-currency swap Sing dollars to Japanese Yen. And that's a onetime that we had last year, and we didn't have that this year. And the other one, of course, is the acquisition fee of about SGD 2.5 million for the purchase of the Novotel Melbourne at Collins. So that has affected our full year results. And later on, I'll show you what effects it has on the PBIT versus last year. So in spite of that -- thanks, Gerry -- is we then, of course, try to work very, very hard to overcome that. We're happy to announce we have opened at least 5 properties, one in Fraser Suites Shenzhen and then Fraser Suites in Dalian. We have opened Fraser Suites Riyadh in Saudi Arabia, and Fraser Suites Muscat in Oman and our boutique hotel chain, the Hotel du Vin at Stratford-upon-Avon, has just opened as well.

And we've also signed up at least 10 management contracts and with 7 in areas that we already have existing properties, so to strengthen our clustering there as well, from Istanbul to Dubai, Jakarta, Edinburgh, Kuala Lumpur, Hanoi and Chengdu. Moving on, of course, to hospitality investments. At North Asia, we are happy to say that we had a piece of wonderful prime land in Ginza, just very close to the GINZA SIX super mall. And it's -- will be developed and ready by 2021. Unfortunately, it won't be ready before the Olympics. But we do have our Fraser Suites Akasaka, which should be ready by -- before the Olympics, right. So let me know if you need any bookings, so anyone going to the Olympics, right, so you can write good stuff about us. And then -- but the operations for North Asia has done as well. The China market has really punched above its ground for occupancy, about 92%. Average rates have also gone up and same with RevPAR. So that has been encouraging. For Asia Pacific, we have experienced some headwinds in Australia. But at the same time, we're trying to push up the occupancy above our comset, competitor set, and they have done well, at 86% occupancy. Average rate has dropped, mainly because of our higher supply in Brisbane as well as Perth. But nonetheless, versus the competitor, we are way above the comset. We're also excited to be announcing soon the opening of Capri by Fraser in China Square. And that should be ready by second quarter 2019. It's right in the heart of that China Square area and very, very prime and good area. For Europe, U.K. And Europe are doing exceptionally well in terms of occupancy and average rate. Our German properties are getting along very well. Frankfurt, Berlin and as well as Barcelona and Spain have done well. And our MHDV though, the rooms occupancy has done very well but not the restaurant business. During, as I mentioned, the half year results as well, restaurant business in U.K. has been affected with Brexit setting in. People are more conscious about spending on restaurant dollars. And so we've seen some challenges in the restaurant business. But the rooms part, I guess, because pound sterling has dropped, has attracted quite a number of visitors over. We are also very happy to announce that we are opening soon Fraser Suites Hamburg, just by the Rödingsmarkt market, beautiful 120-year-old tax building that we converted to Fraser Suites Hamburg and right in the heart of town. And that should also be ready by second quarter of 2019. The Frasers Hospitality Trust has got its challenges and are mainly coming from Australia. The Sofitel Sydney Wentworth has faced some drop in occupancy and average rates. The Novotel Darling Square also because we have closed some of the rooms for renovation. But happy to say that we've actually finished total renovation of Novotel at Darling Square. So that is looking sharp. The Westin KL, too, has gone through some pressures. I guess, even before and after the elections, there has been some headwinds there and including F&B revenue as well. The ANA Crowne Plaza in Kobe, we've also closed the -- many of the ballroom meeting facilities to upgrade their facility, so that has affected it. Plus, sad to say, a lot of the natural disasters have happened over that part of Japan and has affected the business. All right, so that is the story on Frasers Hospitality Trust. And finally, again, I'll just reiterate what happened. Half year results, the 3 main things that has affected us is, the one-off SGD 13.5 million in cross-currency swap that we won't have this year as well as the SGD 2.5 million in acquisition fee, which accounts to a hefty SGD 16 million, and the challenges we have at the Hotel du Vin restaurant business in U.K. Right. So thank you very much. With that, I'll hand it over to Uten.

[Uten Lohachitpitaks, executive]

All right. Good morning, everyone. I am Uten, Group CIO, and I will cover Europe and rest of Asia in the portfolio of Frasers. Can I have the slide on Germany and Netherlands to start with? 2018 for our fiscal year has been relatively busy activities for Europe, where we have completed the squeeze-out process of our remaining stake in Geneba Properties and as well as the completions of the acquisitions of Alpha. And within the Alpha Industrial acquisition's portfolio, as you have noted from our announcement, we have had a total of about 22 assets in acquisition portfolio. Only 12 that has been completed as of end September. So we do have about 10 additional assets that we are looking to complete. Subject to the satisfactions of conditions of the acquisitions, that would give us a circle of about EUR 100 million to complete, hopefully, by December next year, 2019.

So in all, that would add up to, as of what we have on balance sheet, asset under management of about SGD 2 billion, around 45 assets as of close of September. In additions to the acquisition of Alpha Industrial, we also have completed the divestments or sales of 21 stabilized assets that we took from Geneba and some other third-party acquisitions for a value of about SGD 980 million that we are well aware of in the divestments to FLT. So that actually would sums up to where we have in our average occupancy of the whole portfolio, 98%, with a very long defensive WALE of 8.4 years. In terms of outlook for Europe, yes, okay. GDP remains relatively stable. The prime rents in Netherlands and Germany on the whole of the markets look very stable. But I would like to highlight just a few submarket uptrend that we are picking up from the leasing and the vacancies situations in the market. Submarkets like Venlo, Düsseldorf, Stuttgart, have seen uptick in rent, pretty healthy in terms of demand and low vacancies. So that's the submarket that we happen to also have most of our assets concentrated, and that's the belt coming from Netherlands in terms of the logistics down to Germany that spread downwards towards the distribution change towards the southern part of Europe. And that's also one of the area that we will look at completing more acquisitions and assets coming across from Germany and Netherlands. The total take-up, as you can see in 2018 for Germany and Netherlands, very high, 11 million square meters. And as well as, as you can see as well, the outlook of the prime yield, it's on a declining, but that's on the back of higher asset value, due to compressions of cap rate. From an outlook standpoint, we expect the trend of a cap rate compressions to continue driving up valuations, and hopefully, with outlook of rising in rent, that would help to make investments to remain profitable going forward for new acquisitions. And I must say, due to the low-interest rate environment in Europe, more capital has been shifted from the market into Europe, and that's also, at the same time, driving competitions and making additional investments in Europe very challenging to us as well. So therefore, the acquisitions of Alpha Industrial has now added on a new capability to our group, which is the ability to develop and originate and create assets on our own, and that remains one of our core strategy of us maintaining and expanding our presence in Europe.

Can I move to next to U.K.? Similar to Europe, U.K. has been very active activity for us. In the course of 2018 for us, we have in all acquired 6 business parts for a total value of about SGD 1.7 billion out of the total of property that we have invested in U.K. of about SGD 2 billion. We have a very healthy occupancy rate at close to 90%. Since the acquisitions, we have taken quite a lot of initiatives in looking at asset enhancement. Leasing activity has been strong. So we are looking at modernizing some of the -- some buildings within the business part. Hopefully, that would also pick up in value. Similarly, we also are seeing improvements in some of the new rent and new leasing that we have picked up or signed up within the course of this year.

In terms of the development side of the business, we are seeking planning approval for Central House at Aldgate East, which is 23,000 square meters, thereabouts, in terms of a new office development that we're looking at. And we also have achieved sales of 30 residential units in the course of 2018. Residential market in U.K. remains challenging, and we don't expect that to change significantly in the course of next year. Again, that's partly due to the sentiments towards U.K. in terms of residential markets.

From an outlook standpoint -- can I have that? Yes, thank you. Employment remains low -- unemployment rate, sorry, remain low at 4%. Vacancies, this reflect vacancies rates in London CBD area, not reflecting the business part in Thames Valley that we are in. And the interest rate environment, obviously, the outlook towards rising rates, but again, that's something to be seen. Prime industrial rates, I must say, remain tight, and current outlook continue to remain tight, which has declined from 4.25% to 4% in 2018, and that, we expect in the demand from e-commerce and as well as consolidations of logistic within U.K. to drive and haul up that cap rates going forward. Can I move to China? In the course of 2018, we have achieved close to -- sorry, about 1,400 in units sold. In the midst of -- we are in the midst of launching -- completing Phase 4D of Gemdale Megacity in Songjiang and as well as 3C2 of Baitang One residence, and that's our pipeline into 2019.

In all, we have about unrecognized revenue of about SGD 300 million, and I must say, given where the environment in China is today, we are in fairly decent positions with not a lot of stocks on hand. So we are in the midst of looking at that market to take opportunity where there are pipelines or things coming out from China that is well -- decent for us to look at.

Can I move to Thailand? Yes. Thailand, as you are aware, it's been a growing investment market for us. I will start off with One Bangkok, and this is not new news. We have announced the groundbreaking on 8th of March, and constructions on groundwork, soil removal is ongoing, and we are still on schedule, per the construction schedule that we have planned for.

Golden Land is another investee that we have made into. It has seen the high revenue growth and very good uptick in net profit. As you can see, it has reported 125% up in their profitabilities, and that's only reporting 9 months. I believe, in the course of next few weeks, it will be announcing the full year results. So that has actually contributed a fair bit to our earnings. In the course of that 9 months, it has achieved the 2,600 units from 13 projects and, also, at the same time, active ongoing developments of about 43 developments.

Balance sheet of Golden Land remains strong and healthy at gearing of 0.6, giving a fair bit of a balance sheet capacities to take on market opportunities when they are in the markets.

I'll move on to TICON. Yes. TICON has -- I'll start off with TICON has changed its financial reporting from the fiscal year January to December now aligned with FCL -- FPL, closing the fiscal year in September. So for the purpose of 2018, it will be only reporting a 9-month results. So please take note of that as you look at the financials of TICON. What we have here is only reporting of 6-month result. Again, similar to TICON, it should be coming out in the next few weeks as well in terms of its full 9-month results.

Since our investments, TICON has also seen an uptick in terms of its revenue and profit. 134% increase in profitability, and this has not include the announcement of its sale of about SGD 3.6 billion into TREIT, and we expect that to contribute to the bottom line as it reports its 9-month result.

On balance sheet front, TICON remains healthy at about -- net gearing of about 0.4. From a business strategy standpoint, it has a fair bit of balance sheet capacities that it will look into the deployment, where it has announced smart industrial platform as a strategy that it has also entered into a joint ventures with STT GDC, which is a global data centers that TICON would own 51%, and it will looks to be an operator of that data centers jointly. Other than this, TICON has also embarked on the investments together with JustCo, and that's entering the coworking space that we -- Frasers has invested together with GIC. All right, so this joint venture that TICON has done, it's only for Thailand as a specific market that it owns the 51%.

I'll move to Vietnam. Vietnam is not a new market to us. We have been there with -- for the longest time, with Me Linh Point, and it has so far achieved full occupancy. The development that we have entered into its residential project at Q2 Thao Dien, it has achieved 84% or 266 units of sales or presales out of 315. We don't have a lot of stock left from this development. From an outlook standpoint, Vietnam, we do hope to come to the market with 2 new investments that we have recently, in the course of 2018, announced. The joint venture with Tran Thai Lands group where we have 2 parts of land, one is in Thu Duc District, and the other is in District 2, right. So hopefully, that would be a continuity of our development works in Vietnam. Let me turn you to the summary of our earnings outlook. On the whole, from Europe and Rest of Asia, we have achieved 33.5% up in our PBIT. Largely, the contributions come from Europe, which is the contributions of almost a full year from U.K. and a full year from Europe. Thailand has been a big jump of about 71.5%, partly due to the uplift of the performance from Golden Land and as well as almost a half year of consolidations from TICON as we convert that into a subsidiary. China remains about close to SGD 150 million. That is pretty much in line with what we have from 2017.

So I'll pass on to Choo Leong.

[Choo Loo, executive]

Thank you, Uten. Good morning, ladies and gentlemen. My name is Choo Leong. I'm happy to report that the group achieved a good set of results for the financial year ended 30 September 2018. The attributable profit amounted to SGD 759 million, based on the recurring income sources, and, of course, with the development profits on the back of project completions, as well as gradual recognition from North Park Residences, which has also been completed and fully sold in the financial year. Seaside Residences, more than 84% sold, and we have been recognizing the profits on a gradual basis as well.

The higher earnings were partially offset by impairment of intangibles in the hospitalities, our hotel chain, MHDVs, F&B segment. I think Peng Sum has given a lot of color on that. So maybe we can go through the numbers. So PBIT increased by 17.4% to SGD 1.3 billion. I'd like to highlight the increase in fair value at group level is increased by 80% for the FY '18 to SGD 388 million. And that's mainly arising from the cap rate compression, as well as better leasing results for some of the properties, and they all come primarily from Singapore, Australia and Thailand. Henceforth, we are happy to announce the attributable profit of SGD 759 million, which is a 10% increase from the previous financial year.

So that brings as of 30 September our total assets of SGD 32 billion, of which SGD 28 billion are property assets, including our stake in joint ventures and associated companies like, for example, Golden Land. SGD 2.2 billion of presold revenue from our development properties, and as what was highlighted by Khong Shoong earlier in the key financial highlights, they come from Singapore, Australia, as well as China.

Moving on to the next slide -- thanks, Gerry. The benefit of speaking last, so my colleagues have elaborated on the reasons for the PBIT ups and downs for their respective segments, so I shall spare everyone the agony of going through it again. But I'd just like to make a few observations or highlight a few things. One is that the PBIT for this financial year has welcome our new subsidiary, TICON, which is consolidated from April 2018 and included, like what Uten mentioned earlier, our new kids on the block, made income contribution from our FP U.K. enlarged platform, headed our CEO of U.K., Ilaria del Beato, who's unable to be with us today. And, of course, full year contribution from Frasers Property Europe. And fortunately, Dr. Wulf Meinel is with us today. If anyone wants to speak to him, he's the gentleman wearing the red socks and looking very dapper, yes.

So 65% of the PBIT are from recurring income sources, and around 80% of the PBIT actually comes from developed markets, Singapore, Australia and Europe. So I just want to highlight that, that demonstrates the stability and resilience of the income that the group has reported for FY 2018.

I won't be covering any forward-looking statements because this has been adequately covered by my colleagues. So moving on to the next slide. Thanks, Gerry. Capital management. Our total equity as of 30 September 2018 stands at SGD 14.6 billion. We have a healthy cash and bank deposit of SGD 2.6 billion, resulting in a net debt of SGD 12.3 billion, hence, our net debt over to our total equity stands at 84.4%, higher than the 70.6% that was recorded in the last financial year, but lower than the 0.89 that was recorded in quarter 3. I thought I'd take this opportunity to preempt the question that will be asked relating to gearing, and I will answer this question in advance. Real estate is a capital-intensive business, as I'm sure everyone would be aware, and hence, the group keeps a close eye on balancing between growth, quality of earnings as well as gearing.

The group as guided in the past that our -- the board and management are comfortable at the range of between 80% to 100% of net gearing and will continue to manage it within that range and taking into account market conditions, growth opportunities as well as stability of income. And there are few levers how we manage it. One of them would be capital management by way of recycling of assets and unlocking of value. So this is the answer for probably the first or second question that may be asked later at the panel. I'd like to highlight that another way to look at it would be from a gross debt to property assets perspective, we're at 53.4%. And what we have also put in place to manage the risk of rising interest rates would be to increase the percentage of fixed-rate debt either by issuing fixed rate instruments or by entering into interest rate swaps. And now it is at 77.6% higher than the 67.4%. And part of the capital management relates to managing our debt maturities, which is something that we will present in the next slide, and we have increased that to 3.3 years from 3.4 -- 3.1 years in FY '17. Despite that, our group treasury department have continued to do a great job to keep the average cost of debt steady at 3%. So moving on to the debt maturity profile. Thanks, Gerry. As you can see, we have made it a mission to ensure that the debt maturities are manageable and that there are no significant towers that are facing us. We have smoothened out and continued to have efforts to extend debt maturities, and this is something that we'll continue to monitor and manage closely. And as I mentioned earlier, management of capital involves various levers and the productivity of the assets, as well as recycling of assets, will continue to be an area that we will look at. Moving on to the key financial ratios. As of 30 September 2018, net asset value per share stands at SGD 2.53; earnings per share, after taking into account fair value change and exceptional items, at SGD 0.234. The net interest cover reduced from 9x to 5x. This is effect of PBIT over interest. And there's reasons for that: One would be with the completion of Frasers Tower in Northpoint City south wing. The interest on the loans are now in the P&L. Previously, they were capitalized, so that increased the quantum of interest. And, of course, the timing, there's a time gap of stabilized earnings coming in to offset the interest cost for these large assets that we've acquired -- we've developed. Last but not least, this is the last slide. We saved the best for the last, with regards to dividends. We appreciate the support of our shareholders, and they will be expecting returns on their investments. And we -- management sees the payment of dividends as involving a high degree of financial discipline. And in coming to the recommendation, we will take into account the cash flows, the earnings levels and forward plans before deciding on the number. And despite the lumpiness of earnings, which are inherent in a business such as ours, from the development side, the group has been able to pay a consistent full year dividends of SGD 0.086 per share over the previous financial years. So for FY '18, we are poised to do the same, and we've recommended a final dividend of SGD 0.062 per share, which added with the SGD 0.024 that was announced in the first half, will make the SGD 0.086 per share, still consistent in terms of quantum and also consistent in terms of payout ratio, which is about 60%, if we base it on earnings -- core earnings, attributable profit before fair value and EI; or if we base it on attributable earnings, is around close to 40%. So with that, I'll hand it back to you, Gerry. Thank you.