Swire Properties Limited

Good afternoon, ladies and gentlemen. Welcome to Swire Properties 2025 Annual Results Analyst Briefing. Joining us at today's briefing are Mr. Tim Blackburn, Chief Executive of Swire Properties, and Ms. Fanny Leung, Chief Financial Officer of Swire Properties. Tim and Fanny will first take us through the 2025 annual results, then we'll proceed to a Q&A session. Before we start the presentation, may we first take a look at a short video on the company's key developments and milestones last year. Please enjoy. Properties Limited Properties Limited Properties Limited Properties Limited Properties Limited May I now invite Tim and Fanny to take us through the presentation. Tim, please. Great.

Well, good afternoon. A very warm welcome. I hope you enjoyed that summary video of what's been a very busy six months. Welcome to the SWAP Properties 2025 Annual Results Briefing. I'll take you through the results highlights for the full year, touching on some key developments and progress we've made with our strategy across our three core markets and some of the portfolio updates. And Fanny will take you through the financial highlights, our ESG performance and our sustainability achievements over the past 12 months. And then I'll close with some brief comments and outlook for the year ahead. Okay, so we're pleased to report the underlying profit of $8.62 billion, an increase of 27% year-on-year, due primarily to the sale of several non-core assets in Miami and in Hong Kong, which is directly in accordance with our active capital recycling strategy. Despite the loss of rental income from Brickell City Centre and the more of the disposal and lower office rental income in Hong Kong, we've achieved the recurring underlying profit of $6.3 billion, a testament to the resilience of the office portfolio and the positive momentum in the retail portfolios in Hong Kong and in the Chinese mainland. This is all underpinned by the successful portfolio upgrades and the $100 billion Hong Kong dollar investment plan. The company has declared a second interim dividend of $0.80 per share in 2025, or a full-year dividend of $1.15 per share, an increase of 5% year-on-year, which is consistent with our commitment to enhancing shareholder returns and our aim to deliver mid-single-digit annual dividend growth and to paying out approximately 50% of our underlying profit in ordinary dividends over time. I'm also pleased to highlight that this represents a mid-single-digit annual dividend growth for nine consecutive years. So with a strong balance sheet and a healthy gearing ratio, the business remains on a solid financial footing. We're well placed to achieve our long-term growth targets thanks to an active capital recycling strategy, a diverse development pipeline across all core markets, combined with a proven track record and strong execution capabilities in Hong Kong and in the Chinese mainland. So this slide shows some of the highlights of what was a very busy year, another busy year for Swire Properties, and I'll touch on a few of them. On the capital recycling front in Miami, we successfully completed the divestment of our commercial interests in Brickell City Centre in July. In Hong Kong, we completed the sale of non-core industrial site in Ching Yi and the remaining Tai Kexing car parking spaces in October and November. And in December, we completed the sale of the 43rd floor of One Island East to the SFC as planned. We also celebrated some landmark events on the retail front in the Chinese mainland and following the hugely successful launch of Louis Vuitton's The Louis on Nanjing Xilu, In June, we opened several flagship luxury maisons in Taikoolee Sandlington in December. These have fundamentally transformed the North Block. Over the Christmas holiday period, we opened the first phase of Taikoolee Chulongwan in Guangzhou, and this is the first of our new retail-led centres as part of our HK$100 billion plan. The market's response has been very positive, reaffirming our commitment to the increasing demand for experiential retail. 2025 was also a significant period for our residential portfolio, and over the last six months we've launched pre-sales at the Headland Residences in Hong Kong, we've sold the fourth batch of residential pre-sales at Taekwonyuan Residences in Shanghai, We've announced the VIP pre-sales for up-house residences and wireless residences in Bangkok, and we successfully completed the sale of two luxury houses at Deepwater Bay Road for $2.2 billion, which is one of the highest-priced luxury residential transactions in Hong Kong in recent years. This is an important slide you've seen before. It highlights our track record of active capital recycling and thanks to the divestment of the non-core assets in Miami, we've recycled $7.3 billion in the second half of 2025. So increasing our cumulative disposal proceeds to $58.7 billion and providing the liquidity for our $100 billion investment plan to drive growth for the next decade and support the progressive dividend policy. So on the $100 billion Hong Kong investment plan, as previously reported, we're making solid progress. over the last few years across all markets with 67% now committed. And in the Chinese mainland, we remain focused on retail-led mixed-use projects in Tier 1 and emerging Tier 1 cities. We're on track to double our GFA in the Chinese mainland by 2032. In Hong Kong, we're pacing our plans for future expansion opportunities at Pacific Place and at Taiku Place, reflecting the challenging market conditions. And on the residential front, we're continuing to build a diverse pipeline of trading projects in all markets. For this project, this is the completion schedule for over 12 million square foot GFA of new projects over the next few years. and clearly our focus will be on disciplined execution of our result-led strategy in the Chinese mainland with new Taikuli and Taikuhui branded projects opening in Beijing, in Sanya, in Shanghai, in Guangzhou and in Xi'an. We also have a diverse pipeline of premium residential projects across all markets which are well placed with improving market conditions. I'll move briefly to the investment portfolio. Clearly the office market in Hong Kong remains challenging due to the supply overhang. Nevertheless, we see a pick-up in the level of inquiries and in take-up. Overall occupancy of 91% across our office portfolio we're outperforming the relevant sub-markets, consistent with the flight to quality trend in core locations, and thanks to our commitment to placemaking and our industry-leading ESG credentials. At Pacific Place, occupancy has improved to 96%. Taiku Place occupancy at one island east, one Taiku Place, has remained stable at 91%, and occupancy across the other Taiku Place towers is at 88%. and encouraging the occupancy at two type of place, our newest triple grade A office has increased by 5% to 73%. Attributable gross rental income was down 5%, attributable valuation in the office portfolio declined by 3%. So overall, negative rental reversions are narrowing. where rental levels are stabilising in Central, they continue to reflect the prevailing soft market environment. And our strategy will be to continue to focus on tenant retention given the current market outlook. On the retail front, Hong Kong has been very resilient in 2025. Occupancy at Pacific Place, City Plaza and CDK outlets was maintained at 100%. and encouraging retail sales growth was positive across all our malls in Hong Kong, outperforming the Hong Kong market overall. Attributable gross rental income was flat year-on-year. Attributable valuation for the overall retail portfolio declined slightly by 3%. So this slide shows our combined Chinese mainland portfolio now contributes 43% of our attributable gross rental income. and notably the rental contributions from the Chinese mainland retail portfolio now exceed those from the Hong Kong office portfolio. Over the past 10 years, in terms of attributable gross rental income, we've delivered steady CAGR of 10% and over the medium term we anticipate an increasing contribution from our Chinese mainland portfolios as we bring some exciting new projects online. So in terms of exciting new projects, I've mentioned some of these earlier in key developments, but together with our core luxury brand partners, we're embarking on a significant phase of transformational upgrading across our existing malls in Shanghai and in Beijing, for example, together with an exciting pipeline of new Taiku Li style open lane retail developments in Guangzhou, Sanya and Xi'an, which embrace cultural heritage and reflect the local context. Across the Chinese mainland, all our existing malls have been busy with strategic upgrades, improving the overall retail experience. We've seen positive signs of recovery. Overall retail sales were up 7% year-on-year on a tributary basis and significantly ahead of sales in 2019 on a like-for-like basis as a benchmark. All of our malls in the Chinese mainland reported positive sales growth. with HKRI Taikoo Hui in Shanghai and Taikoo Lusani Tuol in Beijing outperforming. Attributable gross rental income was positive, occupancy remains high across the whole portfolio and valuation was up by 9%. Office in China, in the Chinese mainland, the portfolio was stable, resilient despite market oversupply. and we remain focused on integrated mixed-use developments and core locations in Tier 1 cities in Guangzhou, Beijing and in Shanghai. So many of our retail-led mixed-use developments will be launched this year in 2026. We've got an extremely busy program ahead, but thanks to the 100 billion investment plan, we have laid solid foundations for growth in the Chinese mainland, especially for premium retail-led portfolio with GFA, as I mentioned, almost doubling over the next five years. Moving to the residential trading portfolio. We have an interesting and diverse pipeline of 11 projects currently under development representing nearly 4 million square feet on an attributable basis across core markets in Hong Kong, Shanghai and in Southeast Asia with phase completions equally over the next five years. A little bit more detail about that trading portfolio with regards to increase trading profits anticipated from 2026. As I mentioned earlier, Hong Kong recently had the sale of two luxury houses reflecting an average sale price of close to $150 a square foot. With approximately 150 units now pre-sold, the headland residences look well placed to capture the improving market sentiment. In Shanghai, Century Summit and Century Heights, almost 98% pre-sold and Taipo Yun Residences approximately 90% pre-sold across the first four batches and we're planning to launch the remaining two batches this year. And in Jakarta over 50% pre-sold at Savia Vasa we're now handing over units at our premium residential development in South Jakarta. This slide just illustrates the diverse pipeline of trading properties in Hong Kong and Southeast Asia, which will generate that increased contribution from trading profits in the next few years. And finally, moving to our hotel portfolio. The performance of the hotel portfolio has been improving, reflecting higher occupancy and REVPAR. And importantly, in October, we announced the decision to adopt the Upper House brand for all properties. We continue to explore third-party Utah management agreements, and we're looking forward to five new houses opening over the next few years in the Chinese mainland and in Tokyo, as well as the upper house residences in Bangkok, our first branded residences globally. So on that note, I'll hand over to Tiffany.

Thank you, Tim. Let's look at the underlying public. In 2025, the underlying profit increased by 27% to $8.62 billion. The strong performance was mainly driven by gains from the disposal of non-core assets, reflecting our successful execution of capital recycling strategy. Recurring underlying profit declined by 3% to $6.26 billion, largely due to the loss of rental income following the disposal of Bicol City Centre Retail Mall and lower Hong Kong office rental income. The underlying loss from property trading was due to increased sales and marketing expenses, while hotel performance improved in both Hong Kong and the Chinese mainland. Our investment property portfolio delivered a receiving performance, with attributable gross rental income down 2% year on year. Disregarding the impact of Miami Disposal, attributable gross rental income reduced slightly by 1%. Hong Kong office sector saw a 5% decline, reflecting negative rental reversions under the adverse market condition of high vacancy rates and new supply. However, our office leasing activity improved since Q4 2025, supported by better market sentiment and continued fight to quality demand. Our retail malls in Hong Kong remained fully led throughout the year, with signs of stabilization emerging in the second half, resulting in accelerated retail sales and rental growth in the second half of the year. In the Chinese mainland, retail rental income increased by 2%. Food traffic and retail sales increased, reflecting transformational upgrades and continued enhancement of the tenant mix at our malls. Both retail sales and rental growth accelerated in the second half of the year. The board remains committed to create long-term shareholder value by delivering sustainable dividend growth. For 2025, dividend per share increased by 5% to $1.15, marking the ninth consecutive year of mid-single-digit dividend growth. Our dividend strategy aimed to deliver mid-single-digit annual growth in dividends and a payout of approximately half of the underlying profit over time. As of December 2025, valuation of our investment property portfolio stood at 268.3 billion, representing a 1% decrease from December 2024. The decrease mainly reflected fair value losses, primarily from the investment properties in Hong Kong office, and the disposal of certain non-core assets, partly offset by portfolio additions, and foreign exchange translation gains from the Chinese mainland. Additions principally reflected capital expenditure on Taiku Place redevelopment in Hong Kong, Taikuli Saniton in Beijing, and Taikuli Xi'an. There was a reduction of 12.5 basis points in the cap rates for certain Hong Kong office properties. At the end of December 2025, net debt decreased by 10% year-on-year to $39.5 billion, with gearing improving to 14.6%. This was driven by strong cash inflows generated from the disposal of non-core assets and sales of residential trading properties. Weighted FH costs of debt declined from 4% to 3.5%, reflecting lower interest rate and an increased proportion of renminbi bonds and loans at a lower funding cost. Our liquidity position remains strong, as at December 2025, Available committed facilities increased to $62.6 billion, with cash and undrawn committed facilities totaling $23.4 billion. Our debt maturing profile remains well spread. We continue to increase renminbi borrowings to support expansion in the Chinese mainland. As of December 2025, renminbi funding proportion increased to 49%. Our credit rating remains unchanged at A2 under Moody's and single A under Fitch. Total capital commitments amounted to $29.5 billion as of December 2025, including $9.8 billion relating to joint ventures and associated companies. Majority of the capital commitments for the Hong Kong portfolio are expected to be deployed after 2029. So now I move on to sustainability highlights. We continue to be highly recognized by many global and regional sustainability indexes and benchmark marks. We are pleased to continue to rank number one in the Hang Seng Corporate Sustainability Index for the eighth consecutive year. We have also maintained our global sector leader title under the mixed use category for the graph speed for the ninth consecutive year. We also received the Pioneer Award in the Green Building Leadership in the Developer category at the Green Building Award 2025 of Hong Kong GPC. 2025 was a defining year for our sustainable development strategy. I'm pleased to report that we have achieved most of our 2025 sustainability targets across our pillars, as highlighted here. Reaching this milestone demonstrates our strength of our long-term planning, effective execution, and successful integration of sustainability into our business strategy and operations. For climate change, attaining net zero emissions by 2050 remains one of our highest sustainability priorities, and we are well on track. We achieved an absolute reduction of 52% in our scope 1 and scope 2 emissions, surpassing both our 2025 and 2030 science-based targets. Carbon intensity associated with tenants' operations also decreased by 63%, exceeding our 2030 target. We continue to ramp up our renewable energy adoption. Hong Kong ally Tai Koo Hui and Tai Koo Lee Chan Tan have secured off-site renewable electricity in Q2 and Q3 of 2025, respectively. Meanwhile, Tsai Koo Lee San Lee Tuan , Tsai Koo Hui Kwong Chau and Tsai Koo Lee Ching Du continued to secure 100% off-site renewable electricity. Moving on to tenant engagement, the Green Performance Plant continued to gain momentum. The overall sign-up rate has exceeded our 2025 target, with more than 180 office tenants representing 66% of our occupied Ladder Bowl 4 area had signed it up. Thanks to the unwavering support from our office tenants in Hong Kong, we have achieved a collective reduction of approximately 436,000 kilowatts of electricity consumption, and diverted over 200 tons of waste Our green kitchen initiative also achieved a significant milestone by soliciting over 140 F&B tenants across our Hong Kong and Chinese mainland portfolios committed to the initiative. In 2025, we made significant progress on our green retail partnership with LVMH and Kirin Group to enhance ESG performance across their stores. We remain committed to zero harm. Through the successful implementation of our health and safety roadmap, supported by our investment in technology training and awareness programs, we achieved record best performance this year, with our lost time injury rate achieving a 53.6% year-on-year improvement. This year also marks the 25th anniversary of our Community Ambassador Program, a milestone that reflects our long-standing commitment to community investment. Our decarbonisation and green building investments are supported by green financing. As of December 2025, approximately 70% of our Current bond and loan facilities are from Green Financing, surpassing our 2025 target of 50%. In 2025, Swire Properties was awarded Best Issuer for Sustainable Finance Hong Kong as well as Best Green Bond Real Estate Hong Kong at the SFAA Awards. Last but not the least, We undertook a comprehensive review of our SD2030 strategy. We are imagining our long-term sustainability ambitions to ensure they support our growth plan. We unveiled our new SD2050 vision, building the world's most sustainable communities. Encountered by our 4 Commitments to Zero, Zero Harm, Net Zero Carbon, Zero Waste to Nandfield, and Water Neutrality, SD50 is structured at around 27 focus areas with 140 KPIs established across 5 strategic pillars. Please stay tuned for the launch of this FE 2050 strategy in our sustainability report, which will be published in early April. With that, I'm going to pass it back to Tim to talk about the outlook. Thank you.