Earnings Call: Q1 2023

May 11, 2023

Welcome to Robinsons Land Corporation's investors' briefing for the first quarter of calendar year 2023. Joining with us today from RLC are Mr. Frederick D. Go, President and Chief Executive Officer, Mr. Kerwin Tan, Chief Financial Officer, Chief Risk Officer and Compliance Officer, Mr. Faraday D. Go, Executive Vice President, and the rest of the IR team. We prepared a presentation on the unaudited results for the first quarter of CY 2023. At the end of the presentation, there will be a question and answer session. We will now proceed with the presentation. Mr. Kerwin Tan will present the company's financial performance, while Miss Erica Lim will cover the operational highlights. Thank you, and good afternoon to everyone. We are pleased to share with you RLC's performance for the first quarter of 2023. We will touch on the financials of the company and operational highlights per business segment, including our CapEx spending, provide updates on our digital and other initiatives, and future plans and strategy, updates on our ESG activity and journey during the period, and lastly, our cash dividend declaration. In the first quarter, RLC registered strong revenue growth of 39% year-on-year to PHP 9.28 billion, while net income attributable to parent surged by 90% to PHP 2.66 billion, surpassing the first quarter 2019 level. Our EPS for the period increased by 95% to PHP 0.53 per share, while net book value is now at PHP 26.36 per share. The residential business registered solid performance as revenues surged by 68% to PHP 2.38 billion, on higher recognition of steel reaching the equity threshold and higher percentage of completion for the quarter. RLC's net sales take-up almost doubled year-on-year in the first quarter 2023, while joint ventures net sales take-up ballooned by 166% with the launch of Haraya, our second project with Shang Properties. Earnings in joint ventures contributed PHP 293 million in our residential division. Our malls business also recorded high revenue growth of 46% year-on-year to PHP 3.91 billion, while mall rental revenues jumped 55% versus same period last year. The hotel's revenues surged above last year and even above pre-pandemic levels. Our logistics revenue, or RLX, continues to be stable. We completed Calamba 2A, making it the count of RLX to eight assets. Our office business posted steady growth in the first quarter of 2023, grew by 4%. Each business unit contributed positively, a strong testament to the company's recovery and growth story. Our asset portfolio as of the first quarter of 2023 is composed of 53 operational lifestyle centers, 88 residential buildings, 40 housing subdivisions, 31 office developments, 29 mixed-use developments, 26 hotels, nine work.able centers, and eight industrial facilities. Turning now to the financial performance highlight. RLC's financial position continues to be solid and healthy, with total assets at PHP 225 billion. This includes cash of about PHP 6.5 billion. Shareholders' equity landed at PHP 136 billion, net of PHP 4.26 billion of treasury shares from the company's buyback program, which commenced in November 2021. Interest-bearing debt for the period ended at PHP 51 billion, translating to 34% net debt-to-equity ratio. Meanwhile, earnings per share was at PHP 0.53, 95% higher than the first quarter 2022 earnings per share. With this, book value is now at PHP 26.36 per share, a hefty discount from its currently traded share price. For the first quarter of 2023, consolidated revenues climbed 39% year-on-year to PHP 9.28 billion. This is driven by the company's investment portfolio, coming primarily from our malls, offices, and hotels with strong performances for the said period and significant contribution from our residential business. Meanwhile, EBITDA increased by 35% to PHP 5.03 billion. The growth is slightly slower than our revenue. This is mainly because of higher consolidated OPEX registered during the first quarter of the year. EBIT surged by 55% year-on-year to PHP 3.72 billion, due to slightly lower depreciation as a result of the Forum closure for redevelopment. For our bottom line, net income attributable to parent registered an outstanding 90% growth to PHP 2.66 billion. This is mainly because of two key factors. Number one, lower income tax rate. Number two, higher stake of RLC in RCR from 63.49% in the fourth quarter of 2022 to 66.14% this year. This slide highlights all businesses posting strong growth during the first quarter 2023, except for China, as revenues for this segment have substantially been realized. Higher revenues came from all our domestic business units, especially the investment portfolio, which accounted for 73% of total revenue. While the residential division also experienced strong growth, including significant contribution from our equity share in joint venture. I will now turn over the presentation to Ms. Erika Lim, who will report the operational highlights of our business units. Thank you, Mr. Kerwin. Good afternoon to our participants. Robinsons Malls continues to assert itself as the second-largest mall operator in the country, highlighted by its 53 lifestyle centers, spanning 1.6 million sq m of leasable space. That is 91% leased out with over 8,000 retailers. Sustained consumer spending and retail sales lifted Robinsons Malls revenues to PHP 3.91 billion, up 46% year-on-year, to account for the 42% of consolidated revenues. EBITDA grew by 53% to PHP 2.29 billion, while EBIT surged 160% to PHP 1.43 billion year-on-year. Meanwhile, rental revenue escalated by 55% to PHP 2.79 billion. Looking at sequential period, despite strong holiday season in the previous quarter, first quarter 2023 mall revenue grew by 3% and rental revenue by 5% quarter-on-quarter, proving the company's optimism that mall operating fundamentals will sustain a strong recovery. Meanwhile, Offices ended the year with 741,000 sq m of leasable space with a total of 31 office buildings and an average of 89% lease percentage. Robinsons Offices delivered steady top-line results with a 4% growth in revenues to PHP 1.85 billion in the first quarter of 2023. This stable performance is primarily driven by the sustained occupancy of majority of its portfolio, which consists of quality assets located in CBDs, key cities in Metro Manila and in provincial areas, all with a healthy tenant mix. EBITDA rose 3% to PHP 1.58 billion, while EBIT grew 2% to PHP 1.33 billion. In addition, RLC strengthened its presence in the growing flexible workspace segment with the opening of new build-to-suit work.able centers in Cyberscape Gamma, Pasig. Currently, there are a total of nine work.able sites in our portfolio. With the easing of travel restrictions and the reopening of the country's tourist destinations, Robinsons Hotels and Resorts, or RHR, exceeded the first quarter 2019 revenues by 70% to PHP 879 million. Year-on-year, RHR revenue increased by 152%, while EBIT and EBITDA surged by 330% and 131% to PHP 167 million and PHP 23 million respectively. To date, RHR is the largest hotel developer and operator in the Philippines with 26 hospitality developments. Last March, we opened RHR's newest five-star hotel, The Westin Manila, located in San Miguel Avenue, Mandaluyong City, with 303 suite rooms. The Westin brand is known for its wellness offerings, empowering guests' well-being and world-class service. New project launches in the first quarter 2023 raised the combined net sales take-up of RLC Residences and Robinsons Homes to PHP 5.62 billion, up by 94% versus the same period last year, represented by the red and blue bar graphs. The strong sales comes from the company's existing and newly launched projects. Meanwhile, net sales take-up from joint venture projects with Hongkong Land, Shangri-La, and DMCI, represented by the yellow bar graphs, outperformed the previous year by 166% to PHP 4.99 billion. This came with the robust sales coming from Haraya, the second project with Shang Properties joint venture. On the other hand, realized revenues climbed by 68% year-on-year to PHP 2.38 billion for the quarter. The robust performance was driven by the faster completion of our residential projects, coupled with remarkable contribution from our joint venture equity earnings. EBITDA surged by 73% to PHP 519 million, while EBIT jumped by 79% to PHP 499 million versus the first quarter of 2022. Equity share in joint venture contributed PHP 293 million. In the first quarter of 2023, RLC Residences launched two projects worth approximately PHP 13.4 billion. The first one is Le Pont, located in our Bridgetowne estate, Pasig City. Le Pont allows buyers to embrace the elevated lifestyle they deserve. Next, Sierra Valley Gardens Building 4, the fourth residential tower tucked within Sierra Valley, Cainta, Rizal. Seeing healthy demand from affluent buyers, our joint venture with Shang Properties launched Haraya, our second project with our JV. Haraya is in our Bridgetowne Destination Estate and is destined to be an iconic home address in the east of Metro Manila. Moreover, RLC continues to make significant strides with its existing JV projects, registering healthy sales take-up across all three projects. Just a little over three years from launch date, Aurelia is already 75% sold, Velaris at 67%, and Sonora at 49%. Robinsons Logistix and Industrials, or RLX, recorded revenues which modestly increased to PHP 137 million in the first quarter of the year versus the same period last year. EBITDA increased by 18%, while EBIT accelerated by 25% to PHP 130 million and PHP 98 million, respectively. RLX has eight industrial facilities located in Sucat, Muntinlupa, Sierra Valley in Cainta, San Fernando, Mexico in Pampanga, and Calamba, Laguna, all with a total gross leasable space of 199,000 sq m. These industrial facilities are fully leased out. RLX completed its eighth logistics facilities, RLX Calamba 2A, located in Calamba, Laguna, with a total gross leasable space of 33,000 sq m. In the first quarter of the year, Robinsons Integrated Developments recognized revenues of PHP 119 million from a portion of deferred gain on sale of land to joint venture entities. EBITDA and EBIT settled at PHP 46 million and PHP 45 million, respectively. For our China project, remaining revenues is for the car parks. In the first quarter of this year, revenue was at PHP 14 million, while EBITDA and EBIT were both at PHP 8 million. Pivoting to CapEx, RLC spent PHP 4.52 billion in capital expenditures for the expansive development of malls, offices, hotels, warehouse facilities, acquisition of land, and the construction of residential projects for its local operations. To support our growth plans, our land bank now spans across more than 800 hectares. With the crystallization of land bank values in Metro Manila, RLC's land bank value is estimated at about PHP 185.6 billion as of March 31, 2023, 47% of which, or PHP 87.4 billion, is attributable to the land bank value of our destination estates. We move now to the company's digitalization efforts. Leveraging on the reach of our omni-channel platform, we have introduced innovative advertising campaigns for Robinsons Malls, as shown in this slide. We greatly look forward to the launch of RLC's MallDash mobile app, lined up for launch in the first half of this year. The residential division actively launched campaigns using its various media and digital platforms. During the first quarter of 2023, RLC Residences amplified its digital presence, using it as a platform for the launch of Le Pont, Sierra Valley Gardens Building 4, and Mantawi Residences, Cebu, this April. For Robinsons Hotels and Resorts, we continue to improve end-to-end guest experience in our recently launched mobile app. Looking ahead, Robinsons Malls will unveil the Opus Mall to the public this year, a premier upscale lifestyle center in Bridgetowne Destination Estate. For next year, we will complete our new mall in Pagadian Zamboanga del Sur, Mindanao. For offices, slated to be completed this year is GBF Center 1, which will increase office leasable space by 7% to 794,000 sq m, while for the next year, GBF Center 2 is expected to be completed. Both GBF Centers are premium top-of-the-line developments, courtesy of Robinsons Offices. Both properties will rise in the Bridgetowne Destination Estate. Cybergate Iloilo 3 is also expected to be completed next year, which will increase office space by 12% to 886,000 sq m. Our logistics and industrial facilities division completed our RLX Calamba 2A warehouse in the first quarter of 2023. We are targeting to complete additional two new warehouses for the year, namely RLX Calamba 2B, as well as a second site in Sierra Valley. For the next year, RLX is expected to complete RLX Calamba 2C and RLX Montclair, bringing our logistics facilities above 300,000 sq m of leasable space. Our residential division is actively launching various projects nationwide. This year, we've already launched a total of PHP 13.4 billion with Le Pont Residences and Mantawi Residences Tower 1. We will continue to sound off to the market and respond accordingly with the foreseen demand. Lastly, Robinsons Hotels and Resorts successfully opened The Westin Manila last March and has completed the remaining rooms of Go Hotels Plus Tuguegarao. Next year, we expect to complete NUSTAR Hotel, our foray in the ultra-luxury segment. This will be located in NUSTAR Resort and Casino, Cebu. With this, our rooms shall grow by 6% to 4,497 by 2024. Finally, we place a spotlight on RLC's various ESG initiatives. RLC remains as a market leader in solar energy usage, with 24 Robinsons Malls harnessing solar power with a total capacity of 31 MW nationwide. This translates to 28 million kWh of clean energy and over 20,000 metric tons of carbon dioxide avoided, equivalent to more than 337,000 trees planted. Five of our office developments have acquired LEED or EDGE certifications. We held tree planting activities in eight different localities at the start of the year. All Robinsons Malls are designed with a system for wastewater conservation and recovery. 29 of our malls have rainwater collection systems, and 15 malls use recycled water for non-potable use. Aside from this, Robinsons Malls and Offices installed water-efficient fixtures in its restrooms to further reduce water consumption in its establishments. We focus on giving back to communities with the Robinsons Land Foundation, Inc. To date, RLC conducted relief operations in Imus and Tagum last January and February. For community development, we are active in livelihood programs through our RLove livelihood carts and EntrePh Corner. Finally, we continue to support schools through our Brigada Eskwela program. We have a long-standing commitment to good corporate governance and stewardship. We have adopted an anti-bribery and anti-corruption policy to uphold appropriate, ethical, and responsible business conduct. Moreover, RLC has duly complied with the registration process of the Anti-Money Laundering Council pursuant to the Anti-Money Laundering Act. Kindly allow us to briefly share pictures of our ESG efforts through the next two slides. As a centerpiece of our shareholder return policy, we are pleased to announce that the board of directors of RLC has approved last April 21, the declaration of PHP 2.6 billion regular cash dividends or PHP 0.52 per share to all shareholders of record as of May 31, 2023, with a target payment date on June 21, 2023. This translates to 27% dividend payout ratio in line with RLC's dividend policy and a dividend yield of 3.74%. For the last two years, we have provided equivalent to 37% of 2021's NIAT and 48% of 2022 NIAT in terms of shareholder return in the form of both cash dividend declaration and buyback program. As of March 31, 2023, the company has repurchased PHP 4.26 billion worth of shares, equivalent to 47% of its PHP 9 billion buyback program launched last November 2021. This ends our presentation. We are now open for questions. Thank you very much. If you wish to ask a question, please raise hand. Kindly wait for the host to announce your name before we unmute your line. Once unmuted, kindly state your company before asking your question. Thank you. Our first question comes from the line of Jeanette Yutan. Jeanette, you may proceed. Hello. Good afternoon. Yeah, thanks for hosting the call. I just have two questions on the residential side. First question is actually on the reservation sales. Could you give us more color or information on what drove your strong reservation sales? Could you give us details like what's the buyer's profile in terms of what percentage is sold to OFW, to locals, or to international? And if you can give us information like what are the projects that drove the robust demand in 1Q? And then, of course, what's the outlook for the rest of the year in terms of reservation sales? Hi, Jeanette. Thank you for your question. I'll have somebody answer the first question, but we don't break down our sales according to OFW, but we do for international sales and domestic sales. We also have a breakdown of foreigners versus Filipinos. Our outlook for the rest of the year remains to be extremely positive. The first four months of the year have been very encouraging and have been close to record levels, definitely much higher than last year, and we expect it to continue to be so for the next three quarters. Who would like to answer the first question? Zar, are you online? Sir, for the first question, Filipino buyers account for 75%, and then foreigners is 25%. Okay. Any indications like what projects drove the robust demand? Go ahead, Zar. The sales primarily came from our new launches. Sync continues to be contributing to our sales for first quarter and also our newly launched Le Pont for first quarter also. Okay, thanks. My second set of questions relates to the level of unsold inventory. Just wondering if it's possible to ask what's the level of unsold inventory in terms of value as of end 2023, and if you could give us a profile of the inventory. Yeah, we can give you the available inventory for sale as of end of, I think you mean first quarter 2023. Yes. Correct. That's $31 billion. Is it possible to know the profile, like how much is vertical versus horizontal, NCR versus non-NCR, and how much is RFO? Last question is, what's your strategy to push the inventory out? Are you offering easier payment scheme, soft discounts, et cetera, and what would be the level of unsold inventory that you're comfortable with? I think the answer to your question is that the overwhelming majority of our available inventory for sale is vertical. Again, a significant majority of that inventory would be in NCR. We are comfortable with our current level of inventory. Having said that, I think that the next launch of a new project for RLC will probably be in the late third quarter of this year, so we don't see any launches in the next, shall we say, 3 months or 3, 4 months. We are comfortable with the current level, and there's nothing extraordinary that we are doing to, as you would say, push for the inventory to sell. Because in line with your first half of your questions, we're quite happy with our sales. Our sales are quite good, much better than last year. As you can see from the slide in front, it's 94% up year on year. We just continued to do all the same efforts and the same programs that we have been employing for the last few years, and we just continued to build on that. Okay. Thanks, Dek. Can you share how much is RFO for the unsold inventory? Sure. Zar? Less than 5% of the $31 billion is RFO. Okay. Thank you. Thanks. That's all from me. Thank you very much. Thank you, Jeanette. Thank you. Our second question comes from Carl C. Carl, you may now proceed. Good afternoon. I should mention that my organization is Regina Capital. Let me check first, by the way, if you can hear me? Yes, Carl, we can hear you. Great. Just continuing Jeanette's mostly residential questions, regarding the JV project sales this time, did most of them in the first quarter come from Haraya? Zar, you may want to answer the question. Yes, primarily from Haraya. Primarily from Haraya. Okay. Next question from me is actually on, so as mentioned by Kerwin, the tax rate was very low in the first quarter. What was the reason for this, and should this pick up in the coming quarters? Kerwin? Hi, Carl C. Thank you, Carl C. The result of the low tax rate was because of our infusion of one of our office assets, Gamma, into RCR. We infused this in the second half of 2022. Hence, we see the effect of the lower tax rate in the first quarter of 2023. Okay. That means, is it fair to say tax rate will remain pretty low or not too far from these levels, in the next quarter, maybe two quarters? As of this month, yes, the projection is that it should be low. Stable. Okay. I guess I'll ask regarding the other segments this time. Regarding the office segment, the vacancy rate just inched up 1 percentage point quarter-on-quarter. I'd like to ask, what was the profile of the tenant or tenants that vacated, and did they give a reason? Let's say, was it a POGO closing or was it a BPO doing more work from home or anything, really? Yeah, I think it was just the expiration of a lease of a BPO tenant. Got it. Again, if I may ask if there was any mention of operations were shrinking in general or work from home or transferring or anything like that? In this particular case, I do not know the specific reason. In general, we have not been very bullish on the office sector. We would like to characterize it as being steady. It's not also just dropping or anything like that. I think the confusion on this tug-of-war between PEZA and BOI had not been good for the industry. I think a lot of the BPOs adopted a wait-and-see attitude. Our office business organization, however, meaning our office business unit executives, are quite optimistic about the second half of this year. They think that the uncertainty between PEZA and BOI is getting fleshed out, and a lot of this uncertainty because of CREATE also. I don't want to go into a litany of this, but there were some ill effects also of CREATE on the BPO industry. I think all of these are being thrashed out now as we speak. I do believe that we're quite optimistic about the second half this year. Perhaps in the next call for the second quarter, we will probably still not have very good news. Those reasons that you mentioned, Carl, such as consolidation of office space or more work from home, is having some negative effects on the industry. I will not sugarcoat that. Sorry. If I may go back to the residential segment, I did forget to ask, how much were revenue reversals in the first quarter of this year? Anybody want to take that question? Carl C., we record numbers on a net basis. There were some revenue reversals, but these were immaterial. Okay. Great. On the mall business this time, from what I can tell, it looks like mall EBIT margin is actually above pre-COVID level, at least the average of 2019 level. I just wanted to check. First, is it fair to say that you expect the mall EBIT margin to be around pre-COVID level from here? Is there any reason to think it'll be above or below by any large amount, I suppose? The other is, if in fact you expect it to be roughly at pre-COVID levels for the full year, if there was just a timing issue perhaps, and that's why first quarter EBIT margins looked a little high. I think maybe there's a little bit of too much analysis going into it. In general, the mall business has been quite good. It is the good news for Robinsons Land for this quarter, and it has been for probably a few quarters back, and we expect it to continue to be good for us for the rest of the year. The big differential on margins, as far as we are concerned, as far as operations is concerned, will be the cost of power. Power is our single largest expense, and as you are aware, the price of coal or the price of gas has been fluctuating quite wildly ever since the tensions in Eastern Europe. However, the good news seems to be that coal and gas prices have been dropping recently, and that will have the single largest effect on our margins. If you're trying to do some forward-looking assumptions or some forward-looking analysis, it will probably be a good thing to make some assumptions on what you think energy prices will be like in the next three quarters, because I'm pretty sure that's the reason for your question. To try to make assumptions of how the next three quarters might look like. I think energy would be the single largest factor that might affect our margins. Going back to a couple of weeks back, the government reminded some provinces that they were technically on alert level two. Just wanted to check that, in fact, the government has not asked the mall operators to reinstate any form of restrictions. Yes. There's been no change in the restrictions in terms of entering the mall, consumption. There's none. understand. As mentioned as well regarding the mall business, that you're doing still very well in the first quarter, right? It's fairly unusual to see revenue still go up quarter-on-quarter after the holiday season. I suppose I'm a little concerned if this is, in fact, just some pent-up demand that might taper off in the coming months. Or do you guys have the view that, no, this is what's more normal, that even fourth quarter was just not strong enough or something? How do you view the consumption story here in the Philippines? Are they? Yeah. Well, so far our tenant sales continues to grow, and then it's also contributing to the increase in rent. Also, new tenants opening in our existing malls. If you recall, last year we opened our Antipolo expansion, our Gapan in Nueva Ecija. Late the previous year, we opened our La Union mall. All the new tenants are opening up. As well, when we opened our Tacloban mall. There's contributions coming in from basically four new streams of four new malls, plus our existing malls, the occupancy is improving. Yeah. It will continue to go up. Yes. Got it. Sorry. Again, going back to the residential. Deck mentioned earlier that you are extremely positive on the outlook. A related point, just to be certain, you have no expectations of large cancellations from here, right? Basically, I'm asking, the guys who had trouble during the COVID period mostly have canceled already. From here, it's just more normal levels of cancellations from here? Yeah. Okay. Yeah. I think if you're referring to the COVID issues on cancellations, I think we're past that already. I think we were past that maybe even two or three quarters ago. We're definitely past that already. As a matter of fact, I think two or three quarters ago, I was saying that as much as possible, we don't even want to talk about the COVID situation already, because I think we've already moved on from that. I guess to answer your question, yeah, I think cancellations have normalized, so we don't think we have any more abnormalities as far as cancellations are concerned going forward. Okay. Thank you. Those are all of my questions. Thank you, Carl C. The next question comes from Eric Chan. Eric, you may now proceed. Thank you. I have four questions. First one on the REIT discussion earlier. I missed the number that you mentioned in terms of the value of the REIT-able assets, at RLC. Along that same path, I want to understand what are the key considerations in determining whether a certain case of asset injection into RLC. Is it more to do with RLC's balance sheet? Is it more to do with RLC's cash flows? What are those considerations? That's the first question. Okay, I'll answer that question first. I think theoretically, we have three asset classes that are REIT-able. The first one would be the balance of our offices. That's probably about PHP 30 billion worth of assets. There would be our malls, that is definitely over PHP 100 billion worth of REIT-able assets. We have our hospitality or hotels, hotel asset class. At this point, I probably wouldn't venture to coming up with a value for that class because, as you know, all the REITs are really based on yield, and our hotels have just started to turn the corner, and so they probably won't be REIT-able for some time. That actually brings me to answer your second half of your question, which is what will be the catalyst to determining whether we will do more REITs or inject more assets into the REIT into the future? The answer would really have to do with interest rates. As interest rates were very low 2, 3 years ago, it was very interesting for Philippine corporates to do REITs. However, as we all know, interest rates have been moving up, especially the last year. Because of that, it has not become very interesting for corporates to REIT assets. I think for us to consider REITing more assets, we have to do a lot of pencil pushing on the benefit for the sponsor, and the benefit of a REIT holder. What will make holding REIT assets attractive to the retail investors? It's a balancing act between those two, and it's primarily very yield-driven. At low interest rates, it's very attractive to the corporates, but probably not attractive to the investors. At high interest rates, the opposite might be true. It's really trying to find that middle ground that both the sponsor and the investors are both happy. Thank you. My second question on Land Bank. On page 24, there's a disclosure that this Land Bank is about PHP 186 billion. Can you disclose how much is that over the carrying value on book? Okay. I don't know if we have the answer to that question. Finance team or IR team, would you know? I'm sure it's, of course, much, much higher than the carrying cost of book value. No problem. We can circle back, follow up after the live call. My third question is, now that we are truly in the post-pandemic world, can you discuss your underlying tenant sales, especially in terms of sales per square meter type of metrics? How are the tenants doing in terms of those sales productivity and foot traffic volume compared to pre-pandemic? Ardy? You're comparing the tenant sales now as against pre-pandemic, right? That's correct? Right. Correct. Well, what we see is for certain segments, such as the one, supermarket's doing very strong. It's above 20% of pre-pandemic. We have our F&B that's also doing very strong. We also have the leisure, like the athletes who are like sports brands, they're doing very well. Amusement is doing very well as well. What would be probably more challenged would be the clothing that's related to office wear, shoes, that's not as strong. Overall, it's up over 10% versus pre-pandemic. Yes, overall. In terms of revenue. What about in terms of foot traffic? Okay. Foot traffic-wise, we are basically, essentially close to already what we have in 2019, essentially. It's already above. Got it. Great. Thank you. My last question is on China. Can you talk about, with the completion of the Chengdu project, what are the RLC's China strategy going forward? Are we expecting another wave of investment? If so, what type of balance sheet size should we expect going forward in terms of China exposure? Hi, Eric. I think about 3 years ago, we already announced that we were not going to enter or reenter China anymore. We long ago said that this would be our first and only project in China. We're just winding this down. Got it. Great. Thanks, Frederick. Very clear. I don't have any more questions. Thank you. Thank you, Eric. We have a question from Marco. Thank you, Marco. Were there any specific strategies that led to strong pre-sales in 1Q, even outperforming industry growth? Zar, would you like to take this question for Resi? Okay, I'll just answer it. I think the answer is similar to what we've been talking about recently. I think we've put together a great team. A team that's more focused on the customer, a team that's more focused on the product and the service. I think that strategy has been bearing fruit, and the markets have noticed the difference in the quality of our products and the brand that we have painstakingly developed over the last few years. I think the brand recognition now of RLC Residences in the local market as well as in the international market is what is helping boost our sales. Next question. How much is your CapEx budget for this year? It's about PHP 20 billion, Marco. The second question was already addressed. If there are no further questions, I will now hand over to Mr. Frederick Go for his closing remarks. Yeah. We have time for more questions if there are, but if there are none, I'll just recap the presentation today. Mall rental revenues are robust and way above pre-pandemic levels. Our Q1 is even above our Q4 figures, despite the Q4 being a traditionally, seasonally strong period. Our residential pre-sales are also likewise higher than Q4, and it's recording very strong pre-sales numbers as well in the Q1 versus the Q4 of 2022. Our hotel's EBIT is now positive and looks promising as we ride on the return of domestic and international tourism. I believe that our hospitality business will likewise benefit from a rebranding of our hotels and our very strategic move to develop higher-end hotels rather than the affordable hotel segment. On the industrial front, our new brand of RLX for warehouses as well as industrial facilities has consistently been producing increasing revenues, and we believe that this will continue to grow in the short and medium-term. Our offices business, on the other hand, as we discussed earlier, we would like to describe it as steady. On the parent corporate front, we have just declared our highest dividend per share of PHP 0.52 per share. This is the highest in the company's history. Also, we have returned to shareholders a substantial portion of our profits in the form of buybacks, stock buybacks, on top of the dividends. Based on our computation, we have returned 48% of our profits in 2022, in the form of share buybacks and dividends. We continue to post robust first quarter numbers right after a record year, and this is a result of the many initiatives that we continue to pursue on the back of strong fundamentals and a solid balance sheet. Once again, I'd like to thank everyone for your support and for giving us your time, your precious time this afternoon as you participated in our call, and we look forward to speaking to you again in about three months from today. Thank you, and have a great afternoon, everyone. Thank you, everyone, for your participation. You may all disconnect.