Capitaland Integrtd Unit

I hope you all are feeling great today. Happy New Year if you're celebrating. If not, I hope you had a good respite last week. I'm Alison from the investor relations team. We have the management here with us today as well. I'll introduce them later during the Q&A. To kick things off this morning, Tony will share his highlights for the full year results. And now I'd like to invite Tony on stage to share his insights. Tony. Thank you.

good morning uh wish everyone happy new year happy lunar new year obviously we know uh entering 2025 is a quite uncertain year given what's happened late last year certainly i think as i go through the presentation i think we are quite well positioned to face any kind of challenges ahead So I think we continue our efforts to really fine-tune our portfolio, I think, for the last two years or so, you know, in anticipation of potential changes in climate, the environment. Slide to slide five. So I think this will be a key anchor going forward for the next couple of years. And we anticipate we will continue to be quite active in looking at how we can even further strengthen the portfolio. A couple of things we have been doing over the last two years, I think, are bearing fruits. I think these are worthwhile efforts that would always anchor CICT stronger as we go into year after year. Next one. I think it would be very, just as a recap before I go to the full financial year, just a quick recap on what activities have happened so that you have something bearing, how that number has gone into our results. We started earlier this year when we announced AEI for IMM. The work actually started in about second quarter. so phase one phase two a large part of the space mostly at the supermarket area that we reclaimed back and we've done a little bit of right-sizing and of course we introduced other retail trade with the aim of bringing up to in total 110 outlet shops in Ironman so that would be one of the strong anchor So we announced the AEI, the work went on, we finished towards the end of the year, Phase 1, Phase 2, and we quickly started Phase 3. So there was some income impact in 2024, but it started to stream in towards the end of the year, and those Phase 1, Phase 2, I think you expect that income will start contributing again. Also forgot to mention that Galileo, we took back the building at end January, so income frozen there, so we have no income for 2024 Galileo. So income gone, I mean income as long as, I think part of it has gone also from second quarter to quarter. And then we also completed, as you move along the timeline, Clark Key AEI, that was announced I think last year, we did that. So it was completed late, later part, it was officially TOP around third quarter this year. So that also started to see some contribution coming in, kicking in. And we announced more AEI work at SIGMI, one of the building, 101 Miller. really to uplift the overall quality of the building 101 Million Hunters Recap is 50-50 joint venture with Moravec and it's one of the I would say the vintage premium grade A office I would say vintage premium building in North Sydney Last few years, there were a few newer buildings that came out premium level, but this is really the first vintage level. I mean, it's like our capital tower here back in maybe early 2000s. They were the premium grade. So it's quite timely to bring that aura back. And I think Mervick and us agree that we should spend a bit more money to uplift it. And we got very strong tenant feedback. Even prospective tenants like it very much. I think we are potentially seeing a bit more traction from a leasing front. So AEI over there, completed. Other area that we're going to start looking at is more the retail component, which is called Greenwood Plaza. we also done a couple of adjustments to our portfolio um probably well known we acquired ion um completed in uh 12 september is it no no no completed in sorry 30 after agm 30 31st october with officially over um and and then we divested uh 21 collar key it was completed somewhere in the middle of november as well So a lot of activity happened over the year and it made the number a little bit more difficult to rationalize. But I thought it was quite good to just do a little bit of recap so that you can recalibrate the 2024 number and as you start looking at 2025, 2026 number, there's a little bit of a projection going forward. So we are pleased to end the year in a very strong position as a result. If you look at all the metrics, on sequential quarter to quarter has improved. Later I touched on portfolio occupancy has gone up to 96.7% sequentially, about 0.3% point. It basically cut across the three buckets. Other matrices which I'll touch on later on, I think I need a little bit more elaboration, like tenant retail sales portfolio is 8.8%, office reversion is 11.1%, I'll give a little bit more colour later, retail sales up 3.4%, again I'll give a little bit more colour, likewise for traffic and occupancy, so occupancy costs. This is just a visual aspect of what happened, what we've done at IMM. I think already I mentioned at the forefront, you can expect more contribution in 2025 for IMM as we work towards completing the Phase 3 somewhere around the quarter. For Galileo, the work on the ground is progressing on schedule. So if nothing, no slippage in time, we expect to hand over the building somewhere around, maybe around the quarter. That's where you can start to see a little bit of revenue recognition. This is structured such that we can have a more matching in revenue and cash flow. quite unlike other long big leases that we have typically when you have no fade-out period no there'll be a run free but this one we negotiated a little bit more balanced so we get some payment so any kind of incentive or flip out I think it's all even out towards throughout the entire lease time So, likely to see revenue income contributing around maybe, hopefully around fourth quarter, if you're on schedule, but more significantly earning by over 2026. We also don't anticipate any kind of distribution coming from Galileo in 2025, given that, you know, it's a ramp-up, you still have expense to pay, but more substantively, I think, will come from 2026. Yeah. So for the full year, overall numbers are quite decent, I would say, given the background. Revenue increased by 1.7% on year-on-year. MPI about 3.4% on year-on-year. Other measures are pretty healthy. We managed to bring down the leverage to 38.5, give us a lot more headroom, financial flexibility to look at potentially even more new AEI. We are constantly doing all this work to make sure that our asset quality are maintained, ensuring that we are always planting new flags going forward where we can have new revenue streams. So we have that flexibility now with whatever happens in the market. Cost of debt remained fairly stable, about 3.6 compared to last quarter. And overall, I think we have already lifted up the fixed rate borrowing. In fact, when we did the divestment of 21CQ, I would say most of the funds, we used to pay down the short-term debt. There is a little bit on the high side. So overall, on a hedge level, 81%, I think we are very well protected, whatever outcome we face in the financial market. Portfolio valuation has gone up. Overall, port-wise, 26B, up 6.2%. Singapore, obviously, is a strong contributor with ION coming in, minus of the 21CQ that we divested. Germany held well, Galileo actually went up, MAC came down, but overall on a net basis, it's gone up. And Australia side, unfortunately, the tap rate expanded by 100 basis points over the year. So the entire valuation has been affected as well. So on a net basis, about 6.2% that comes into our valuation. um second half um so this number may be required to be explained second half um we accounted ion as a joint venture so the revenue mpi doesn't flow in here so it will be more a share of the joint venture result so this is only reflecting on the current asset minus the 21 cq right Notwithstanding that, I think our overall still growing 1.3% MPI without Denawan CQ and without Galileo contribution. Full year, I will not touch much. Maybe just move on. This is just a snapshot view. We are solidly in Singapore anchor, almost 95%. Having said that, I think these are activities that were done that resulted in this kind of composition. Nevertheless, I think we will continue to be agile and see what else can we do to further fine tune our portfolio. On the deep-heel front, sequentially, it's a growth, 5.43% to 5.45% from first half, second half. Second half, obviously, you have a bit of noise again on those things I mentioned. We acquire Ion. we raised equity fundraising completed only in october it's a timeline difference where we have the enlarged base but it's not matched by the corresponding contribution So you would add that in, let's say assuming we did an equity fundraising starting from September, we did an EFR, we did a placement followed by a prep offering, that would add in about 0.07 cents. So it would have been a 5.52 versus a 5.45 on a light for light basis without dilution. So this is a little bit clearer how on a normalised run rate, how we look at it. Correspondingly, 10.88 would be potentially about 10.95 cents if all Sui Sui matching finish EFR income coming on the day itself. So just a little bit of context. So I think overall the portfolio is done pretty solid. We have some contribution from ION for the two months or so. So that also help. Pleased to say that I think the IAM performance is better than what we have earlier projected. Of course, I can't disclose too much, but generally it does help to uplift a little bit. So if you recall, we did the announcement on the fundraiser. had some discussion with investors in how we should look at the number we projected. The fee in units may have to go out. This time around, we did not, right? It's all maintained on a light-for-light basis, 50-50%. So you are comparing completely on a 50-50% basis. So I think we are pleased to say that the underlying portfolio strength has been able to push through, plus the better performance from ION as well. This one is just more, a little bit more, you know, for you to note. I mean, for you, whether you're investing, existing investors, note 11 February is the last day you get your 3.29 cents. So NAV per unit has gone up by 2.09 on the back of the valuation that's gone up. So I think we are trading at probably about 6, 7% below around there for NAV, yeah. On the debt maturity front, which I won't elaborate too much, I think we have a little bit of a small tower to deal with. Part of it is actually from the Euro loan, so we do expect the rate to creep up. It was locked in years back. But nevertheless, I think the aspiring tower will probably be in the low trees. So there will be potentially a little bit of an uplift in the overall cost. But we try to manage that. We try to manage the drawdown as little as possible. so it's all about very active cash management right ensuring that you don't have to carry very expensive cash in your account unnecessarily so i think we've been doing that successfully over the last 12 to 18 months minimize the drawdown ensuring that you're able to manage your interest expense I think this representation of the balance sheet, pretty healthy indicator all throughout. Leverage went down to 38.5, as I mentioned earlier. So total borrowing came down from 9.4 to 8.9. The other matrices, 81% fixed. Again, very, I think it's in a good position, given that volatility in this rate is still ongoing. interest cover ratio peak inch up a little bit or 3.1 times and average duration also gone up to 3.9 so you know all these matrices seems to be landing in a nice position uh average cost of that is maintained at 3.6 percent yeah which i mean elaborate earlier um so occupancy you can see throughout the three buckets overall it's gone up to 96.7 from 96.4 but across the three buckets all has improved right This one I'll just skip. So we'll be quite actively managing our aspiring coming due. A few percentage points are already in discussion. We do expect it to be a positive kind of reversion number. We won't disclose too much at this point in time. But broadly, I think later my colleague will join us. You can have a little bit more Q&A. This thing remains healthy. I mean, there are talks whether it's quietened down. I think we're reasonably okay. In the fourth quarter, even the office managed to close 187,000 square feet of space. Not too bad. Slowly, slight slowdown from third quarter, but maintaining very strong retention. A lot of tenants are deliberating what they want to do. Things seem to be changing. More people are back to the office, whether they should expand. Clean track, look at economic environment with a new administration from the US, how to affect the overall outlook in this part of the world. So I think there's a lot of deliberation. Given that context, I think generally the leasing activity still looks really healthy. So we closed $1.8 million last year in total for the retail and office space. On the retail space, again, across the sub-urban and downtown, I think we're aging up as a portfolio. Retail space, 99.3%, in-shop from 99%. Fairly, I think, quite reasonable movement. Of course, sub-urban is almost full, right? 99.9%. And downtown is in-shop from 92.2% to 98.8%. Yeah. um reversion number earlier i alluded uh it's quite healthy both urban and downtown almost nine percent about there so this is a i think the trend um i mentioned a couple of times there's a bit of catch-up wave uh during covet where We have to do some rent adjustment and then because of the fair trade agreement, we do have to pay it and pace out the adjustment over time. So 2024 is a continuation, maybe a little bit left in 2025. And going forward, it's all really about how the retail trade, the tenant themselves are able to trade well, occupancy cost ratio become even more important as we come to a better landing on where the overall cost structure will look like for us, also for the tenant. So tenants here, this is just a breakdown. So this one needs a little bit of elaboration. So overall, what we have done is we brought in ION into the whole bucket, the number. So the retail sales include the per square foot ION. so that elevated on the per square foot year on year so it's not exactly really like for like but i thought it's important to just paint a snapshot as we end the year because going forward you will always encounter all this comparison year on year a little bit of noise by the start that will be give you a good sense how that composition will look like if we strip out ion we are looking more like a portfolio retail sales around slightly around slightly less than minus one percent uh and then downtown will be probably about one percent so about there right and suburban held very well 0.4 but the next few quarters going forward you will present that in the manual so that you can see the trending as well for us to be able to maintain some kind of useful info for you to do as you look at your projection, how the retail sales will look like. Similarly for shopper traffic, we just put in the ION number, so it looks like a big jump, downtown 17%, but you just strip that out, exclude ION, it will be more like an 8% rather than 17%, but it's still a very healthy uplift. Again, this is just, we always present it just to give you a bit of flavor, what are the things maybe doing well, not doing well. Pop in the iron number, you can see that, you know, trade like jewel watchers will start to spike up, right? Because, you know, they do have retailers that are in that category, right? But it's more for me and for the rest of the team is to track, right, going forward, how that trend will look like, yeah. So you can see a large component now of our trade mix is coming from a pretty higher value kind of retail type trade. I think notwithstanding some concern about the general retail environment here, given all the challenges, strong sink dollar, high cost base, retailer couldn't find the manpower, I think we'll continue to be able to track good new to market. and that's one of the very strong key and um key reason why is underpinning the the portfolio strength ability always able to source out and now we have a good team here on the ground uh on the opposite here so so i think maybe some of them are down in I've been scouting out the region, the world, trying to find new concepts, bringing ideas in. Sometimes it's a bit defensive. We also want to energise activity in the CBD. You see KOTU. If you've not been to KOTU, uh it's the latest um a nice scene place to go to um good concept but in the cbd environment receive very good reception so i think that would strongly anchor not i'm not just helping our own building but also may help the person in that locality you know where capital green is located so we help to strengthen overall cbd location as a as a p.s location but also anchor our building very well yeah So we are able to bring new concept, the very popular oriental kopi, you know, everyone in Rasulullah the JB will say, why go all day, why just come to our Bugis Junction, right? So we do a little bit of defensive measure, things like that, make sure that we are able to anchor our asset, you know, look at the competition, not just in your next door, your neighbour, but also competition from the neighbouring country as well, yeah. On the office side, overall portfolio occupancy has gone up 0.2%. If you cut across the three, the market again in Singapore obviously has gone up. Germany is the only one asset we have not included, Galileo. So MAC got a little bit of challenge there. So we lost some tenants who decided to downsize, and hence the occupancy has come down a little bit. But also very pleased to see that we are getting some traction also in Australia. So overall occupancy in Australia has gone up as well. This is what we presented. I think just the long short story is that I think overall our expiring rent is not, you know, it's not out of the mind kind of numbers. Quite close to where the market is. I think we give earlier before some investor to us, what kind of guidance, 25, 26. So look at Aspari, it's probably not far away from market. I think we have a decent shot of getting a positive reversion. Well, I'll stop here. I think the rest, maybe the last one more slide, just on some point, just to round it up. Earlier I mentioned this year, Keating to look out for completion, IMM were in bringing that inflow more than 2024. completion of Galileo, right, 25 and 26, later part in 25 and 26. And we will continue to be looking for new avenues for us to even strengthen the portfolio further, anchoring ourselves even stronger in Singapore. With that, I think I'll end the presentation. I would like to invite my colleagues to join me. I think we are open for questions, right? Wait, wait. So, wait, wait. Come. Each one. Jack, Mei-Lin. Later, I'll introduce Chen Xiang.

CHEN XIANG LING- Thank you, Tony. Before we start the Q&A, I'll introduce the management. So on Tony's right, we have Mei Lian, our CFO. On Tony's left, we have Jack Bin, our Head of Investment. And on her left, we have Yijuan, our Head of Portfolio Management. And some housekeeping rules to note before we start. If you have any questions, please raise your hand and wait for the mic to come to you. And please state where you're from and your name. And please try to limit your questions to two per round. If we have more questions, we can come back to you. All right? With that, do we have the first question? Okay, maybe moving for once, ladies first.

Hi, good morning Tony and Tim. Thanks for allowing me to ask the first questions, and Happy New Year to all. Maybe just one, I think we have heard news that there's F&B closing in the Singapore market, quite a number of retailers are closing, and you have also guided that FY 2025 you'll be looking at the retailers' performance, so just want to get a sense Are the retailers still, sentiment-wise, are they still positive? And would you still be able to push your occupancy costs from 17% now?

So first part of the question, 3,000, I think there was a 3,000 closure reported in the news. But there was also 3,007 new opening. So actually on a net basis, it's an increase in the F&B opening. I think this is, of course, it's island wide, right? So it's in a way a reflection that there's still, I mean, food is still a basic bread and butter stuff that most people would turn to. I mean, the challenges of cost environment is real. But nevertheless, there are still good concepts that can do well. And there are tenants who are prepared to come in. So I think that kind of mood, I think, will probably likely move into 2025. Obviously, the environment is a lot, probably more uncertain. But broadly, from an F&B space, I think people are quite curious about new ideas. I mean, it's a consumer-driven trend that would sort of anchor how F&B operator decide whether they want to be here or not. That's one of the broad picture. But there's also quite well accepted, I think, trend you see in the market that there are a lot of F&B operators using Singapore really as a launchpad. They wanted to see whether out of the original country, new concept, new from foreign country, and they want to use Singapore as a launchpad. And Naturally, I think we potentially be one of the few landlords that they will reach out to. And we have that good blend of urban downtown offering that they can present to. So I think even, let's say, there's a bit of a reduction in appetite. But there will still be new ones that are prepared to come in. We probably will still be one of the landlords that they will turn to. Maybe each one, you want to add something? Give some colour? Yeah.

Yeah, I think just echoing what Tony said, right now when we look at the F&B, in terms of within our portfolio, we do see a lot of interest coming actually from new cafes. Fine dining generally in the market, we know there's a little bit more challenge now because of high cost environment. But at the end of the day, if you look at it, and I look at it broadly, right, not just F&B alone, if you look at our retention numbers, it shows that actually this retention number, 80 plus percent, is very strong. And this actually includes the part that, you know, where we actively curate what the brands we want to actually turn. If you talk about tenants who want to stay, actually there's a lot more. And if we look at the every quarter when we share the neutral markets, right, you see a lot of new F&B brands. Actually, a lot of times we have to select which F&B. Too many pictures to put, right? We have to kind of right-size a little bit. So that shows that actually there is actually good demand. But what I would say generally would be The F&B entrants coming in now, they actually do come with quite a fair bit of financial backings for some of those that come from overseas, and they're very selective about the locations they go to. And definitely those that are better curated malls, better located malls, will always be in demand. And that's why I think it reflects on the occupancy numbers.

So the second part of the question is more on occupancy costs, whether you can still push higher, whether you can give the breakdown, suburban and downtown occupancy costs.

If we look at these occupancy costs, suburban now we are roughly about 15.9%, 16%. And if we look at the... Downtown, we are probably 18 plus, which is actually quite in line with what our numbers are. I mean, in previous sessions, we have also shared that all costs is just one component. It makes up a lot of functions, right? And whether or not that we can have a room to stretch, I think it's to stretch it reasonably. We, at the end of the day, want it to be sustainable that, you know, the tenants that are in our malls, we continue to do well.

Thank you. Just a second question. Any updates on the tax transparency for IO?

We have written in to IRAS on seeking tax transparency and the proposed structure that we have in mind. But we need to – this is an ongoing process. It's something that we will update when there is more clarity.

Still target this year?

It all depends on when IRIS can come back to us. I think there are ongoing review given the global PEPs that is implemented. So this is also a position that IRIS will have to review.

Thank you. Okay, next. Mervyn, you want to go?

Happy New Year, Tony and team. Congrats on the quality results. We can start on the fees and units. Positive surprise. Any guidance for coming year? And ION, you mentioned, is doing much better than your underwriting assumptions. Occupancy last disclosed was 96%. Any details on that and tenant sales for ION? Was it up year-on-year or maybe down due to softness and luxury sales? Thanks.

When we presented the proposition to acquire ION with the fundraising exercise, I think we projected a 70% MFU, what it potentially may go up to. And we have also been very clear, our preferred option is really not to. So that still won't be the position. We arrived a year well, the portfolio has performed well, we have reasonably good chance not to move down without the tax transparency. So I think that again requires a fair bit of monitoring, making sure that the expense is under control, manage the interest expense well, it's ultimately the distribution that will determine how investor will react. But generally, in the packing order, this is right at the bottom, how you want to deliver the DPU. In terms of, what else do you want to ask about performance? Yes, it's better than what we have underwritten. Hopefully momentum can sustain. There will also... AEI work that were ongoing that time in 2024, part of it completed perhaps later part of the year, and hence you see some uplift from there. But they also plan AEI going forward in 2025 as well. So we'll see how things perform there. Broadly, I can't be too specific. Occupancy has gone up. You know, closer to 98%. We don't have that year-on-year comparison, right? Because, I mean, we only took over end of October, right? So we can't comment on that. But generally, look at overall luxury retail trade. and Aion obviously is not just luxury right overall luxury retail trade has softened around the world to different degree in different country yeah so Singapore is not spared overall has slowed down yeah but again I think if you recall Aion is a very unique animal it's a it's a product that cut across all walks of life, different income stream, serve the desire of different consumer type. And on balance, it's quite well curated. So those bottom type, if you go to ION, it's still relatively busy overall. So they are also looking at upgrading AI work to do. So I think there will be some balancing effect some trade down some trade up potentially that can help Aion ride through a different economic cycle and one unique feature about Aion because if you look at the retail trade that little pie chart I show Aion tend to have a higher component of the turnover sales than our typical mall By nature, because the ticket size are bigger, it can be lumpy, right? It may be seasonal, it can be lumpy. It also depends on economic environment. So that's the one that may have some variability. But overall, the base rent is going up. Like the rest of the offshore road, you have seen as reported. So likewise, I think the base rent is going up as well. So that will cushion. Yeah.

Okay, perhaps, um, charity.

Hi, morning, Tony and Tim. Happy New Year. We just want to get your thoughts around the operations of cinema cinemas, given the recent use of cataclysm closure. I mean, luckily, they're not in your most but you do still have I think shore and GV any opportunity to downsize these tenants.

So cinema, we do have some. Exposure-wise, it's not a lot less than 1% in total GRI contribution. So from a risk exposure perspective, it's really not significant. uh right now i would say that you know the good thing is that unlike others uh hours are still paying rents they are on their current in rents uh so that's a good thing but uh jokes aside i would say um we we have already kind of identified you know cinema and how it's actually going to develop this this part of things you know people look at netflix nowadays people rather go uh play games you know uh social media or rather than watch movies So within our asset plans, we do actively look at whether or not there's alternative uses for it and actually how we can reposition some of the space. But having said that, we have to be mindful that when cinema, typically they are located in the top floor of the malls, in certain corners of the malls where It is not naturally the first footfall, kind of heavy footfall area. So it needs a very targeted approach when you look at this and talk to the kind of alternatives that we are currently looking at and see how to fit them in meaningfully. But definitely we've If we kind of replace cinemas eventually at some point, you may look at it, right? One thing is that the sales efficiency that we will get, because they do occupy more space, and in terms of sales generated, it's a little bit on the lower end. In the past, the reason why cinemas were very, very strong propositions for malls is because they actually bring in the crowd, right? They draw in. It's almost like a loss leader, right? You bring in people, and then hopefully they bring up the rest of the mall. But currently, we have to reassess how this fits into the overall strategy. Thank you.

Thank you. Can I also ask about interest cost guidance? Just a quick one for you.

For this year, I think we have close to $1 billion of borrowings to be refinanced. And I would say the average cost of this debt that we're carrying now is in the low three range compared to the current spot levels, which is closer to $1 billion. more than 3.8%. So in terms of average cost, I think the guidance would be likely inch up. We will still be below 4%. We are now at 3.6%. So the increase will not be so significant compared to prior years.

BJ, you had a question, right?

Hi, morning, Tony. Happy New Year. Just two quick questions. Firstly, in terms of capital recycling, I think last year was a good year in terms of both divestment and acquisition, and you have got your gearing lowered with 21 quality. So what are your plans for 2025 in terms of divestment as well as acquisition? There was a talk about sitting in Rafael's place also, right, divestment? Okay.

So I think with the divestment of 21 Collier Key, we have lowered the gearing to around 38.5%. So that gives us more headroom in looking for new investments and other opportunities like the AEI or redevelopment. So in terms of divestments, if you're asking us, I think as part of normal business operations, we always actually constantly evaluate the portfolio. asset by asset to see whether what is the highest and best use and whether we should divest or whether we should do an AEI or whether we should do redevelopment. So that continues for us.

Okay. I mean, can we expect similar divestment and acquisition this year like 2024 with interest costs now peaked? I mean, are you more optimistic in terms of capital markets for this year?

If there's the right opportunity, we will definitely be doing them. So, yeah, it has to be the right asset.

Correct. So, I think, Vijay, the way I would characterize that is that, like Jack was putting a clause, it is a BAU for us. Portfolio reconstitution, we still have some journey to go. And we have evaluated every single property we own, right, what the potential we can ride through. vis-a-vis what's changing in the market. uh what are the area we can think about whether it's a redevelopment that would require engagement with authority and sizing up the market over there what they make sense and there will be also some assets we say okay it's going to be a run of the mill maybe it's going to be very slow organic growth but because upscaling may be tough uh then you want pocket that we say okay let's hold on to it and see how how the how the landscape look like Because very difficult to just talk about investment without considering capital market, because you need to find source of capital. And if capital market doesn't exist, then what else can you do? Is it a third-party money that you can look at? Or maybe potentially somebody interested in property, then we divest. So, likewise. When we assess the investment, in our mind we say how are we going to redeploy that, right? So constantly having that continuum that we are evaluating. Number change all the time, sometimes the number, because for whatever reason interest rate has gone up, gone down. make it more possible or less possible, flush of activity, capital market activity become active again and there's a lot of investors very hungry to invest and say can you present something for us to look at yes then we will look at it very actively but nevertheless it doesn't mean it's a drop off our radar it's always in our mind while our asset team work through the assets you know they also bear in mind what would be mid-long term potential of this potential asset sometimes we say that okay next five to seven year this is something we want to do then you have planned along that line yeah so it's a continuous effort yeah so I cannot pinpoint 2025, 2026 for all you know end of the year can be very active again never know right yeah

My second question in terms of office specifically, do you see any impact from Keppel South Central for any of the buildings here and is IY Central Boulevard impact fully already priced into the market?

Also for office market, Central Boulevard we heard is around 75% pre-committed and they are quite vocal in saying that they are on track for full occupancy by mid-year. um in a way i guess that the market has kind of taken that you know as a done done thing um from capital south of course what we hear right now the take-up is not as strong um but having um overall the new supply is still tight if you look at it in a three-year horizon right because after this one the next one is short tower which is pushed back to 2026 And then if you look at the shadow stock, it's actually not very high. It's actually around 300,000 plus square feet. If you look at the secondary stock that may come from some of the movements of new competitions, it's actually also quite manageable. We are talking about 600,000. or or lesser right if some of these commitments happen so like metal space uh south beach sites will will kind of backfill so by and large i would say that the the demand supply dynamics is still relatively healthy i think so far we are not seeing any of the landlords also under pressure to really drop rents so i think it will be a good shape for us thank you perhaps we'll pass the mic to gulafis and then we'll go on to the online questions

Hi, thanks, thanks. Well, congratulations on the better performance. I'm just wondering what's your interest rate outlook for this year and how do you see it impacting your cap rates, especially perhaps in places like Australia where you had that huge, quite substantial takedown in your valuations? And the second question is what is your preference between redevelopment, AEI, acquisitions and divestments. I have one last, a third question, but I'll ask that if I have time.

So, okay, this is our view. I think maybe probably quite shared by some of the participants in the Australian market, right? I think generally you've seen this heightened activity happening last year. on the transactional front predominantly in the office space we've seen quite a fair bit of transaction that sort of encapsulate why the expansion happened in 2024 so it's about on average you're looking at six and a half percent six to six and a half percent kind of the acquisition cap rate right so but you also signal to me that things seems to have normalized stabilized and normalized Given there's a little bit more matching of buyer sentiment, investment sentiment, and the landlord who are prepared to redeploy their capital elsewhere. My sensing is that we're probably quite based in Australia, around there, that level. RBA interest rate has held very very firmly on high perhaps market has a certain view that first of all unlikely it will go higher and the next move is likely going to go lower it's a question of timing so that could be that one strong motivation to drive some investment activity back in Australia so that's more from a capital flow perspective and that is probably the more defining variables that we look at the valuation of Australia asset it's a highly transactional market and highly look dependent on the transacted cap rate as a determinant of the value Putting aside, of course, the on-the-ground day-to-day operation occupancy demand, that's a different picture. It's a bit more, I think you can say, two-tier market. Maybe you want to elaborate a little bit, Signe? Office market.

So for Sydney office market right now, it's very clear that the core city, the core CBD and the premium stock is actually starting to see some recovery. But the rest of the fringe CBD locations, as well as your... alternative CBD locations are the ones that are still a little bit struggling. By and large, I think that progressively, we hope this year we will start to see stronger calls for return to office, and that should help proper demand. If we look at it right now, the incentives stabilizing for the core premium properties is not extending to the rest of the asset types. But clearly the B and C grades are the ones that's really struggling, and they would probably end up having structural kind of vacancy issues going the long term. And that's the reason why when we look at some of the assets, right, we have been relatively proactive in upgrading those assets to ensure that, you know, they have the specifications that is relevant to the tenants in today's market. So like 66G, it's a very... It's located at Midtown, close proximity to the core city, and in terms of specs, it's actually reasonably well. It has its own tenant base, that's why its occupancy has been holding up quite well. And we are actually extending, I think Tony earlier mentioned, we've been doing some upgrading works to 101 Miller, and then of course we will try to backfill some of those things. Probably if I may just touch on a little bit on North Sydney. So North Sydney is also... undergoing a little bit of a challenge. And with VicCross station coming out, VicCross is slowly ramping up the occupancy. We do believe that even though near term it's a little bit challenged, the development of VicCross together with the other new products like one that is SunDrive actually uplift the quality of stock in North Sydney. And hence it will, in the mid-term, likely make it a more viable and attractive alternative location. So we believe in North Sydney will come to see a bit more positive growth in the coming years.

Okay, on interest rate outlook, we are watching market developments. It really depends on what Trump measures will be in terms of his administration. The tariffs will have an impact on inflation in the longer run. But in the immediate term, what we are seeing in the market is there's a softening of rates in recent times. There are concerns over the economic outlook as well. So right now, the yield curve has actually kind of flattened. We have seen floating rates decline over the past three months. We're now at 2.6%, 2.7% for floating rate. It used to be above 3%. So in terms of our capital management, we have actually kept a portion close to 20% in floating rate. So that could benefit if we see a continuous decline or slow decline in floating rates. But on the fixed rate, as I mentioned, the current spot levels are still high trees. So if we look into refinancing long-term debt fixed rate, we would likely have to pay up more based on what we are carrying on our books.

Can I ask one question on Malaysia? Because by the end of next year, the RTS will be ready and do you see any impact? I mean, could you look out further than just this year? If you see any impact on any of your malls? I mean, I know you don't have anything in that area, but would you see any impact, whether it's negative or maybe even positive for IMM?

I think on aggregate, it will definitely ease outflow for sure, because you're making the in and out more seamless. And you rightfully mentioned it may not just be a single-way flow. It could be a two-way flow. So we are watching. But importantly, I think we've been very proactive in the last two years to really look at our portfolio and see what we can do to at least reinfence and be a bit more defensive, whether it's in South Melbourne or in downtown. A couple of activities, whether it's IMM, Clark Key, we are even planning now a few other assets in downtown for a different kind of posturing. So these are all activities that are geared towards in anticipation, whether it comes true or not, to ensure that we are prepared. To what extent your impact, I think there's too many variables. Of course, cost, comparison, It's one factor. Whether our shoppers here prefer to do it across the border, that's one factor because high delta, the difference on the price they have to pay versus efficiency, convenience, I think all those things are not so easy to measure. If you say that closer to the border, potentially, yes, yeah, easy, right? Instead of doing a few rounds of change in your ATM RT line, then before you hit the RT, yes, right? And then that's only arriving at Malaysia border, and then you talk about going inward. So the further away you can imagine, the intuitively you feel that it's probably less impacted, intuitively, but hard to say. Again, we cannot rule out Singapore as a destination also very attractive for all the visitors. So whether we also can attract good inflow coming in. So even if our neighbours in the northern region who are able to curate a very well presented offering, I would not be surprised if we see Johor-e-Malaysia or even foreign visitors to Malaysia decide to pop in Singapore for a couple of days. So I think those are strong dynamics that we are constantly reviewing and you won't really know the full impact until the things really happen. But what we can do is now to prepare ourselves for that.

And then the choice between redevelopment, AEI and acquisitions and divestments?

Very hard to put a choice. We do that for different reasons. Redevelopment is about relevance, about relevance of that assets to the vicinity that you're targeting or the market segment you're targeting. If it's already outdated, doesn't make sense anymore, given the landscape has changed completely, then redevelopment may be the best number one choice. Divestment is different. Divestment is about what is the best use of our capital. right so if we have a other opportunity to present to us yes it's about improving your quality of portfolio maybe you take this out and then put something else of a higher quality or maybe one that has got a higher runway right than the the one that you're exiting so it's a bit different by different motivation AEI I would say really is in response to the more near mid-term trend change right so sometimes you do a bit of AEI and it varies on the scale from a small reconfiguration of space for or to entire change on a cluster so you're all very dependent on how the competition landscape has changed the consumer taste has changed. Even applied to office, some minor AEI work may be relevant because certain space becomes potentially an inefficient space. Then we may think about, hey, this space perhaps, I mean, level 9, one good example, we are thinking about what we want to do at level 9. So this is an office environment. So we are driven by different motivation. So maybe you want to add something.

Yeah, so for the credit to the asset management team, they have been actively working on all the permutations from very small-scale AEI all the way to redevelopment opportunities. One of the things I would probably just add to Tony is that sometimes you also have to look at timing. Well, when we talk about small AEIs and reconfiguration, the timing is very much within our control. We can look at the least expired profiles. We can look at when we want to time it. When it comes to more major AEIs or even redevelopment, some of these we have to factor in timelines or considerations that are not just within us, but also in the precinct, master plan, land use change and stuff like that, which will be a bit more protracted. So even when we talk about preference, and definitely within us we have a priority, these are which works we want to go first. Of course, return is very important, but that's a side is really to make sure that the timing fits how things pan out.

All right, can we just take a pause and then we go on to the online questions? Yeah, so we have a question from Jadid from Nuveen. Any update to the DPU equation expected associated with the acquisition of Iron Orchard? Perhaps we'll take that one first before going to the next. Any update to the DPU equation expectation? Wow, okay.

I'll put it this way. If we can continue the same run rate since we took over from end October, assuming they don't continue to perform on par of what they've done in 2024, I would imagine the contribution would... Don't forget we actually did not increase the MFU, right? What do we say? It would be less than 1%. In my view, it would be less than 1%. I think we have variables there because embedded, okay, so backtrack. Earlier, I mentioned we account ION as a share of JV, right? So everything flows on a net basis after tax, after interest costs upstream to the two shareholders, ourself and San Hong Kai. Also depends on what we need to retain over there, let's say for CapEx requirement, right? Historically, the distribution has been healthy in the high 90s. But we won't rule out sometimes maybe you want to retain some over there. So that will affect the dividend upstream coming to both shareholders and to some extent impact DPU. So too many variables to attribute. But as you can see, we're doing it already on a single. I think it's less than 1%, my sensing here.

Okay, on the next question from Derek DBS, how is management taking about management fees in units? Will they be the same as 30% or will they be more? And also capital top-ups for 2025?

Earlier I did mention it's right at the bottom of the packing orders. So if we can do it on a normal run rate, we wouldn't want to touch the MFU.

Okay, we can go to the floor for questions. Can we have attention, please?

Hi, morning. First question is on AEI. You're undertaking a few. Can you share what's the achieved AEI on those that has been completed? And for the ongoing one, what is the target? Second question is on portfolio reconstitution. I guess capital market aside, how are you thinking about Singapore versus overseas? Does it make more sense to add Orchard Road? Thank you.

I think we did allude in our previous announcement, I think we were looking at the high single digital ROI for IMM and Clark Key as well. So that's on track. On the actual route, I don't quite understand what you were trying to figure out. That's not within our sphere of discussion here. Singapore versus overseas we consider all market of course Singapore is not going to be a strong base and it will depend on what's the underlying our preference is Singapore all things equal yeah Singapore strong base continue to increase your lead because we also know competition is catching up with us right so we need to continue to be always leading the pack right and we get competitors chasing after us make sure that we better run faster right so singapore i don't think we can ignore it completely and it would be a high focus all things equal highest priority here right we've got a lot of things to do it can be uh ai can be redevelopment can be of course if there's an opportunity for the party then we will assess it but again we are we are careful right any kind of inorganic it has to be something that we firmly believe in the right price right and it should be a right price you have many star need to align capital source will be there whether it's the capital market source or private market or maybe our internal churning right so we need to consider how you're going to do it right so um we We don't want to be so locked in because we are industry market and Singapore is going to be put aside. So hopefully, we won't go away the idea that Singapore is losing focus. We will continue to be strongly anchored in Singapore. we need to continue over time to ensure we have opportunity to increase the coverage also in our overseas assets. Sometimes it's about a timing issue, when the opportunity surface. In Germany, two assets, no scale, problematic. In Australia, three assets, no scale, not so easy. So over time, if you are planting your flag in some jurisdiction, not in your homeland, then we need good foot soldiers on the ground to be able to manage assets for us. Without scale, not easy to manage them. So that's the context.

Can we pass the mic to Derek, please?

Just one question on the P&L side. On the tax exam income, which spiked up this second half, are you expecting that to normalize back to normal levels going forward? And same goes for the tax credit. I think we saw this second half. $12 million tax-exempt income.

I will come back to you on the tax-exempt income source. On the tax credit, it is, I would say, not going to be like every year we have a tax credit. This is due to the tax provision that we previously provided, and we've written it back after finalisation of the tax position with the tax authorities.

So there's no more of that. It should go back to expense going forward. Yes, that's right. There's one question on IMM. Are you looking to perhaps extend the land lease for IMM? I think it's down to 25 years. Is there a chance of renewal over there?

If the opportunity arises, definitely we will be keen to look at it. But having said that, it is something that is a plus 30, right? So when it's too early for us to engage, we have been trying, but I think from a talking perspective, they won't talk to us until it's much closer. But definitely something we will want to extend if we have the chance to. JTC, yeah.

Okay, do we have another question from the floor? Okay, moving, please.

I think the previous quarter, the guidance for rental reversions for the retail portfolio this year was low single digit. Is it something we are sticking to or erasing to mid-single digit given the... Low to mid-singles.

And definitely we are on track to... So far, from what we see, we are on track to be hovering somewhere around mid-singles. For the retail, yeah.

In terms of electricity costs, can you guide what rate you have been able to sign this year and how does it compare to last year?

For electricity tariffs, actually we are locked in for 2.25. It's actually a good discount off from lower than 2.24.

In the teens now?

Not teens. Tariff rates alone is probably in the teens, low teens. But if you look at all in, it's probably around just shy of 10.

Thanks.

Do we have another question? All right, if not, then Tony, would you like to share any closing remarks?

Thanks a lot for attending this call. Hopefully, we have no surprise for you, the results. We thought today need a little bit explanation on the numbers, quite noisy numbers. And hence, I thought better to run through the slides than what we did previously in the fire chat style. Which we like, we kind of enjoy it. um before we end i don't want to introduce my new colleague new to the team a good assistant to me you know we have a lot of things to do and uh junxiang is here to help yeah i don't think you're unfamiliar with him he used to before he went to malaysia he used to handle clean right your cfo clean yeah you see something By the way, third day only.

Don't pressure him. Thank you, Tony. Very happy to be back in Singapore and I did see quite a lot of familiar faces. Just give me some time, I'll get to know everyone probably over the course of the next few months. Looking forward, I think obviously we're quite excited. Last year has been a great year for CICT and And obviously, we are looking forward to do more things going forward as well. So look forward to catching up with everybody over the next few months. Thank you.

Thanks, Xun Xiao. Thanks, management team. So thank you for your time and attention. Before you go, please help yourself to the refreshments outside the room. If you have further questions, please send them to us. All right, have a good day ahead.