CapitaLand China Trust

Good morning, everyone. Welcome to CLCT's full year 2025 Analyst and Media Briefing. I'm Siu-Yi, Investor Relations for CLCT. Joining me today, we have our CEO, Jerry, CFO, Joanne, CFO, Designate, Ling Tong, and Head of IPM, Yeo Hong. For this briefing, we'll start with a brief presentation followed by a Q&A session. If you have a question, please use the raise hand feature and I'll direct the time to you. If that, I'll now hand over the time to Jerry. Please go ahead.

Welcome everyone to CLCT's full year 2025 financials result briefing. Thank you for making time to attend our presentation this morning. First, CLCT is the first and largest China-focused SREIT, and we uniquely offer connectivity to both SREIT and CREIT markets. Our total assets now is $4.5 billion. We have eight retail malls, five business parks, and four logistics parks. We predominantly tier one and tier two city exposure. Distribution yield, based on our announced FY25, full year 25, our DPU is 6.2%. In terms of our asset allocation, retail is our largest and most resilient asset class at 69% of gross rental income. This bread and butter more relatively defensive and benefits from government initiatives to boost domestic consumption. We also have new economy assets, business parks, logistics parks, which form smaller part of our portfolio at 31%, providing us some exposure to China's efforts to grow technology and innovation, including key sectors like semiconductors, electronics and ICT. For our retail portfolio, one of the key highlights in 2025 was our establishment and listing of our CREIT platform, CLCR, on Shanghai Stock Exchange, together with our sponsor. We managed to securitize one of CLCT's assets, Capital Mall Yu Hua Ting, which is from a tier 2 city in Changsha, into the CREIT, CLCR, at a premium to our valuation. The CREIT has also done well, and since listing has traded up almost 20% year-to-date. So all the transactions that we have done in 2025 validate the value and liquidity of our retail assets and CLCT will continue to seek opportunities to utilize this unique S-RID connection to benefit our unit holders. This also gives us greater confidence to actively source for new retail assets for investments, where we want to repeat what we have done in Huating's case, that is we buy well, add value with our operational and AEI expertise, and recycle at a good price within a relatively short period of time. While we are happy with the successful divestment of Yeehawating and demonstration of our retail value proposition, we did lose some income, which we will need to replenish over time. This would show up in our full year revenue and NPI, which I will now address. For full year 25, overall business conditions have been solved. Among the three sectors, retail have relative resilience, logistics, stability, We have stabilized amidst our rent resets for that portfolio, but Business Park has seen a weak demand. Portfolio gross revenue and NPI dropped about 9% year-on-year. Excluding the Huati, on same-store basis, portfolio gross revenue and NPI dropped to about negative 6% year-on-year. For retail, revenue declined by 9.6%, but narrows to 4.9% on the same-store basis, excluding the inviting factor, which was the biggest factor for retail. This year, we have embarked also on a number of AEIs in Sitzeman, Rock Square, Wang Jing, and Shefu, involving anchor or mini-anchors upgrading. The AEIs at downtime, around four to nine months, But that will benefit us when the AEIs are completed and started fully contributing by year end of 2025. Retail has also been affected by some of the continuing positioning at our Wickersmore Singan and general Wicker overall rent and occupancy in Grand Canyon Mall and Wang Sing. Next, for business part, revenue declined by 9% year-on-year due to lower rents and occupancy in Hangzhou and Xi'an. Main factors were the pre-termination of the service office master tenants in Hangzhou Phase 2 and delays for AIT in backfilling the vacancy created from a large tenant relocation a year ago. We're happy to share that AIT has made good progress. Now, AIT is at 85% occupancy. Although most of it came in in the last quarter of 2025, for Hangzhou Phase 2, for the service office operator backfilling, we have backfilled to 70% with a single-digit positive reversion for the area that we have backfilled. In terms of occupancy for BP, first quarter of 2025 was the lowest point for BP occupancy at 83.7%. But we have since worked hard to lease it up. And by the end of the year, the whole BP portfolio had an occupancy of 86.7%. Logistics, our smaller sector generally had seen improvement as we had leased out our previously vacant Shanghai Fengxian asset. And the lease was for a period of eight years, a long-term lease. And we have also improved occupancy in Kunshan and Chengdu. And so the whole log portfolio looks in a much better shape than maybe a year plus ago. For our full year occupancy, it ends at 98.1%, which is higher than a year ago. DPU-wise, DPU for second half 2025 is 2.33 cents. Full year 2025 is at 4.82 cents. So this 2.33 cents, this includes a one-time top-up distribution for second half of 0.33 cents, which amounts to about 5.7 million Sing dollars. That roughly equates the lost DI from Yu Hua Ting, which we divested in 2025. Our one-time top-up distribution is drawn from our past divestment gains that CLCT has done, and will be funded through that, and will only have a marginal plus 0.1% gearing effect. What we seek to do here is to provide unitholders with some income stability despite difficult conditions, while we look for a quality replacement asset to replenish and hopefully exceed the lost income from dividing it. I would also like to emphasize again, this is an interim measure. So what management is doing is therefore focusing on finding a good asset this year in 2026, as well as working on different ways to deliver further cost savings in financial costs to boost our DPU while continuing to work on preparations for further asset securitisation to the CREIT on our older, mature retail assets, which will of course expand our pathway for portfolio reconstitution and rejuvenation for our assets in our portfolio. For retail assets, there has been an improvement in shopper traffic and tenant sales in 2025. On the whole, For the full year, traffic grew 2.7% year-on-year and tenant sales grew 2.1%. 4thQ was a strong quarter for the year, outperforming 9 months with 4-5% growth in both traffic and sales as AEI efforts kicked in, especially with the full reopening of the new supermarkets in Shefu, Wang Jing and Sitzeman, all of which the results came in the 4thQ. In fact, for the supermarkets, we can see in 4thQ, sales growth was plus 47%, which is a very strong number once supermarkets were open. Overall tenant sales now are above pre-COVID levels at slightly above about 2% above pre-COVID levels. In terms of overall trade, overall occupancy costs, we are at 17.5%. That's a healthy level compared compared to pre-COVID range of above 20. Tradecats, they've done well. Maybe I just mentioned a few highlights here. F&B, we had the positive 5.8% year-on-year. That's the biggest tradecat for retail for us at 39.4%. So there was strong acceleration in sales in third queue and fourth queue, driven by introduction of new high-performing trendy brands, which have been cool factors for our shoppers. Growth was broad-based. You have old local favourites like Hai Di Lao and new ones like Kao Jiang, Japanese sushi chain, Sushiro and Genki Sushi, and even Starbucks delivered growth. And we have also IT, which grew 9.3% for the full year. This trade cap is boosted by consumption vouchers, as well as expansion of more digital brands during our AEIs in Shareful and Wang Jing. really to cater for the evolving consumer demand and broaden the appeal in the malls. In this category, we have Apple, DJI, Xiaomi. These are some of the brands that have good growth in 2025. Jewelry and watches also did well, plus 18.3%. That's driven by increasing demand for investment in gold. Sales increased from established brands, especially in Beijing. Toys and hobbies done very well this year, plus 52.3%. This basically stems from the continued popularity of collectible toys market. Pop Mart, for example, year on year, the sales went up 100% and Miniso also a strong, very strong double digit number. So they are still growing strong in this category. We also benefited from our AEIs. The supermarket upgrading in Wang Jing, Xue Fu and Xizimeng, as I mentioned, powered supermarket category in 4Q by a 47% sales growth, which we expect to spill over to first half 2026, helping to reverse the supermarket downtrend in sales that we have seen in the first half of 2025. Decathlon, which was introduced in one of the mini-anchor AEIs in Rock Square in October, was also done successfully and has basically produced sales growth from the sporting goods category for us. In Flockfield, the sporting goods category actually grew 39%, largely due to Decathlon's introduction. Of course, there are weaker trade cuts that offset our general sales growth. We have mentioned before fashion and beauty and health has been trending downwards. And for the full year, they have trend downwards about single digits in sales for the full year. In terms of occupancy, our malls continue to be highly resilient, with high retail occupancy of 97.2%, so similar to 3Q, with almost all malls above 95% occupancy, except for Sinang, which continues to require some repositioning to attract shoppers. Rental reversion-wise, we clocked the full year at negative 2.4%. We are affected by EV consolidation, which we spoke about in previous quarters. And we are pivoting to less EV reliance across our portfolio. So without EV, the EV impact, the rental reversion for retail is actually negative 0.6%. For 2026, we still have some EV tenants to deal with, but that will be at half the number of lease that will expire when you compare 2026 and 2025. So there will be a lesser impact. So reversions probably slightly stronger than the 2025 print of minus 2.4%. But it will still be mildly negative. In terms of business parks, Our business park occupancy, which forms 27% of GRI, this sector generally faces weaker demand and ample supply. Our business park overall occupancy is now at 86.7%. This is an improvement from 3Q, which was at 85.2% due to our improvement in CIAN AIT leasing progress. Our business park assets generally outperform their sub-markets, despite the generous soft leasing environment for this sector. Sing Su, our strongest business park asset, continues to have a strong year at 95% occupancy, For the CN cluster, we have made good progress, especially with electronics and ICT tenants. AIT asset occupancy is now at 85.2%. And we have made big strides to backfill the major tenant that was relocated one year ago. So you can see that quarter to quarter, we actually improved from 75.4% in third quarter to 85.2% currently. One of the bigger tenants that came in to the backfield space was Chang Seng Memory, which took up half the space of that major tenant, which relocated. And Changsik Memory is basically the largest DRAM manufacturer in China and is known as a domestic alternative to Samsung, SK Hynix and Micron. So it's an important tenant, very much in team with the kind of companies that are being supported by the government in China nowadays. AIH also improved quarter to quarter at 86.7% occupancy. For Hangzhou, Hangzhou phase 1 and 2, this cluster has a more challenging leasing environment compared to the rest of the BP clusters with lots of supply. Hangzhou phase 1 occupancy sleep versus step kill to 73.6% due to the loss of a large cultural tenant, about 2.6k square meters. which we are looking to build up. Hangzhou phase two, we have been working through our service office master tenants, which we have disclosed before, which over the course of Inno2025, we basically put back about 55,000 square meters, and we have successfully released 70% of the area to the sub-tenants. And we managed to push, by the end of the year, the overall Hangzhou phase 2 occupancy to 74.9% for the full year, versus the Q, which was 70.7%. Overall, BP reversions at minus 8.1%, driven mostly by SIA and Hangzhou, where we are pursuing tenant occupancies in a soft market. For 2026 for BP, we feel that reversions will likely be in the same order of this year, of 2025. For logistics part, the smallest segment, 3.7% of GRI. Our logistics portfolio have stabilized. Our Shanghai Feng Xian asset, which was not leased for much of 2024, is now fully leased and rent paying from July 2025. And we have also improvements in Chengdu that drove our occupancy. So all this drove our occupancy up to 98.1% for the full year, higher than the Q of 96.6%. In terms of bringing up the occupancy, we had required to basically use lower rents to get the portfolio list up. So you can see that the rental reversion for 2025 for logistics is minus 24%. Also, there was some situation where we proactively renewed some of the major tenants so that 2026 will be a very stable year. So all our efforts combined, we feel that going forward for this 2026 year, our rents have bottomed in our logistics portfolio and we aim to maintain the full occupancy at these rent levels. Valuation-wise, relatively stable valuations versus previous years. Slight overall drop of 0.8% with cap rate of largely unchanged. And the larger impairments were in assets with weaker performance. So, Sengnan, Aiton Muntun, and Shanghai Fengxian. Shanghai Fengxian had a bigger percentage draw to reflect the rent adjustment that we needed to do to sign in the long-term lease, which will provide income stability for this asset. Next, we'll go to capital management. I will let Ling Tong from our finance team to take that through.

Okay, thank you, Jerry. So for FY2025, CLCT continued to maintain healthy financial position. Our year-end total debt has reduced by $150 million on year-on-year basis. This is after Yu Hua Ting divestment as well as perpetual securities replacement in September 2025. Our year-end aggregate leverage is 40.7%. which is a significant improvement of almost 1.2% year-on-year, and 0.6% from Q3. This is attributable to stabilising Renminbi, and of course, Yu Huaqing divestment proceeds, and we have also accelerated cross-border cash movement from China to Singapore. Notwithstanding, the property valuation has a slight dip. So through 2025, we have stepped up our balance sheet natural hedge effort to make our gearing less sensitive to FX movement. We will continue bring cash from Singapore to China to maintain our aggregate leverage level. Average cost of debt has also gradually decreasing. Now is 3.32%, almost 20 basis point year on year improvement. CLCT has benefited from interest rate decrease both in China and Singapore. I would say CLCT has more exposure to renminbi borrowing and renminbi interest rate right now, which will give us more interest saving if renminbi rate continue to ease. Our ICR has decreased slightly to 2.8 times. This is mainly due to weaker asset performance. But this ICR is still much higher than MAS 1.5 times limit. Under required stress test scenario of 100 basis point increase in cost of borrowing or 10% decrease in EBITDA, our ICR level are still very comfortable. And overall, for our distribution income FX hedge, we have 72% of our distribution income. has been hatched from Renminbi to SingDollar. In Q4 2025, we successfully refinanced some SingDollar loans with Renminbi term loan, which boost our natural hedge and extended our debt maturity profile. Now, our Renminbi denominated denominated debt has increased to 60% of our total debt portfolio, up from 35% one year ago. This has exceeded our earlier target of 50% by the end of 2025. And we have also forward hedged to further improve our natural hedge position and reduce NAV impact due to renminbi and SING dollar fluctuation. Our debt maturity profile is well-stackered. We only have one offshore bond of RMB 600 million, which is due at the end of 2026. This was the FTZ bond issued two years ago. Notwithstanding we have sufficient bank facility to refinance this bond, we are still evaluating options which aim to continue our capital source diversification. Just to highlight that in early 2026, we announced that we have updated our MPM program, which is used to incorporate Hong Kong CMU clearing mechanism, which means that we are now able to issue bing san bon, renminbi denominated bing san bon. The mechanism is ready. For interest rate hedge, we have a 65% of our debt is hatched into a fixed rate and the remaining floating rate loans are mostly in remedy.