Capitaland Integrtd Unit

Can you hear us? If you can, can you give us a thumbs up? Okay, great. So thank you for joining us today. We know it's an early start, and we appreciate you for dialing in on time. We have the management team with us here today. We have our CEO, Chun Xiang. of investment, Jacqueline, portfolio management, Yi-Chan, and there are teams here with us. We have Mei-Ping, Tammy, and myself. We have to keep things focused today, so we'll start off with key highlights by Chunxiang before moving on to the Q&A. With that, I will pass the time over to Chunxiang.

Thank you, Alison. Good morning everybody. Thank you for joining us today. I know it's bright and early. Bright and early for me too. Feels like we've just spoken recently and here we are back again. Okay, today we just announced business updates for the first quarter 2026. So the numbers could be a little stale given that we have already spent some time talking about some of the transactions earlier and also obviously we have reported an advance distribution so some of you would have if you turn down your numbers from there as well. But nevertheless, let's go through some of the operating numbers, and then we will take some Q&A. But there are some exciting updates in this business update as well. We will walk through in the subsequent slides. Okay, so first quarter net property income, very healthy, 300 and close the quarter at 314 million, up 8%. But of course, this has a lot of, we're going through a lot of changes in our portfolio, so we need to dissect the numbers a little bit, but overall, a very healthy set of financial numbers as you would have been from our fund distribution anyway. Aggregate leverage 38.5%, down 0.1 percentage points from the end of 2025. Average cost of debt has come down quite significantly from 3.2% as at 31st December. 2025 to 31st March 2026. This quarter, in terms of cap market transaction, we issued 300 million fixed rate notes due in 2031, which is a five-year note at 2.18% on 10th of March 2026. Portfolio occupancy, 95.2%, down 1.7% quarter on quarter. I'll spend some time walking you through some of the reasons why the occupancy is down for this particular quarter. I think it's mainly due to actually, I don't think it's a portfolio-wide reflection. It's actually very tenant specific. The top three contributors to the decline in occupancy is actually tenant in MAC in Frankfurt. We have the largest contribution. In fact, it contributed approximately half of the job. Because by NLA, that tenant takes up quite a significant space and that contributed. But the rent on that tenant actually is not very significant. So the contribution was about 0.8% of portfolio occupancy. The rent contribution was actually less than is not as significant. Then the second and tenant, we have a tenant departure from Hunan office, one of the larger tenants that we have there. And also the third tenant contribution is a tenant in Clark Key that's on the third floor, is an event organizer. Very large space, but as you can imagine, third floor of Clark Key, very little rent contribution. So the financial impact is more significant It's not as significant as the job in occupancy suggests. But I want to highlight that we are very actively marketing the space. So, of course, we all know that MAC itself has some challenges in terms of leasing. We actually did improve the occupancy last quarter. I think when we highlighted last quarter as well, there's always some in and out in terms of the leasing momentum. So we'll be working quite hard to try to improve the performance for that particular asset. Kaki, a lot of work in progress. So the team is curating the tenant mix to try to dovetail with the completion of Canning Hill, getting some good traction in the recent discussions. So there could be some new names that will show up at Kaki over the next few months. And also for Hunan, the office tenant, probably contributed about slightly over 10% of the Hunan office occupancy. So we are also actively marketing that space, which we think is transitional and the office space is actually quite nice because it's fitted out. So it should take us not too long to lease up that space. Okay, so these are the three main. So it's actually very asset and tenant specific. I think overall the portfolio is still very healthy as Evidence by the renter reversions, which is still very healthy at 4.4% for the retail portfolio. And for the office portfolio, it's at 6.1% renter reversion. Quite in line with our guidance earlier to be trending around mid-single digits. Tenant sales per square foot up 2.2% year-on-year. Fairly healthy. This includes the March numbers as well, even after the start of the Iran war. I think January and February numbers were very healthy, as you can see also from the national retail sales numbers. I think February, they reported a 11% increase in year-on-year sales. Of course, there's some Chinese New Year effect, but then even if you combine the January and February sales, I think overall it was up about close to 4%, if I'm not wrong. So in our mall, Okay, next. Shopper traffic, also very healthy, up 3.2%. So quite in line with, I mean, slightly better than the tenant sales. In terms of the updates for first quarter, AEIs that we have previously announced, I think they're all work in progress. Lot One, Raffle City, companies more, all progressing quite well. Divestment of Okipanga has been completed at the end of February. In terms of utilities costs, I think we have been getting a lot of questions in all of our meetings over the last one month. I think happy to reiterate that our utilities costs, energy rates are all locked in across our portfolio. Our Singapore portfolio locked in until end of 2026 at a better rate than what we locked in in 2025 actually. So this year we're actually expecting savings from our utilities costs. For our overseas properties, we are locked in as well until 2027, depending on which property, and 2028 for some other properties overseas. Okay, so I think we have spent some time over the last few days talking about this transaction already. So I won't go spend too much time. We can take some questions as well. But I think a lot of you have already had a session with us on this. But I think the market reaction has been fairly positive. So we are quite happy with that. The placement was well oversubscribed at about, I think it was about just almost five times subscribed, just below five, I think. That allowed us to upsize our placement from $600 million. So that's the key change from the last time we spoke. I think when we spoke, it was based on a $600 million equity offering. Now we have raised $750 million. And at a title discount and what we originally assumed, which was 2.7%, The price that we did at 2.30 was actually a 2.36% discount to the adjusted VWAP. So all in all, very healthy demand for the offering. As a result of that, there will be some adjustments to the DPU accretion because of the larger equity offering. Accretion is at 1.7%. But of course, that also means that it allows us to lower our leverage to 38.7%. I think previously we reported just slightly over 39%. So that also means that it gives us larger headroom for other activities that we wish to pursue at least going forward in the future. Next. Okay, so I think this is the key update for this quarter. We want to also report that we have actually started the process for the AEI. at Plaza Singapura at the atrium. I mean, we have been looking at this for a while. I think we are now confident to go out and announce this asset enhancement, I think for a few reasons. I think planning wise, of course, this is not something that we take it quite lightly, asset enhancement, and this is quite a substantial asset enhancement at 160 million. I think we have always been quite deliberate in terms of the spacing of our asset enhancements, as you guys are familiar by now. We always try to time it with a minimal or execute it in a way that has minimal impact on our cash flows. So that has already started contributing to our numbers since February and March. And also that, in fact, gave us the uplift in terms of financial performance. That was one of the key contributors to the first quarter of performance also, in addition to Capital Spring and in addition to ION acquisitions. Danilo largely resolved and handed over to the tenant. We think that we are ready to take on another major AEI, which is Plaza Singapore, and most of you are familiar with the asset. It is an asset that has been around for a long time, and I think if you look at the performance of Plaza Singapore on a per square foot basis in terms of rent and sales, I think There is some room that we can value add when you compare it to some of the more neighboring malls in downtown, even within our portfolio. So the idea is to elevate the positioning. There are some infrastructure upgrades that we are doing. There is also a tenant refresh that we are planning. We will also be looking at, probably looking at some transforming some spaces into a more immersive experiential entertainment concept. This is something that we are exploring at the higher levels so that we are able to draw the crowd to the top floor. So that's one of the key feature and objective of this particular AEI. The other thing that we wanted to achieve was also to dark scale with the URA's master plan. There is a plan to pedestrianize the Orchard Road stretch in front of the mall. to now plan for the seamless linkage between Plaza Singapura to the Istana Park that is right in front. So we will be doing some upgrades at the front to extend the park experience so that it creates a more seamless connection between nature and retail. So to minimize the disruption, we do plan to carry out the AEI in phases with the mall remaining open and operational throughout this AEI period. So some of the pictures I think in the next page are this impression. Maybe go to the next page and show the pictures. So there will be some improvement in terms of the facade. There will be improvements to the drop-off point, creating a better experience. So the inside of the mall we will definitely be upgrading to make the space a bit more open and also the look and feel and the tenant mix is starting to see significant changes at least for the first and second levels and as well as the top level. Okay, so I think the other thing that's interesting is also we are creating some of these bridges standing across. I think the idea is also, because Tata Singapore actually is quite a big mall. It's about 700 over 1,000 square feet. So the idea is also to create better movement across various parts of the mall. So we have all these link bridges. not only looks good from the asian area but also facilitates the flow creates a bit more vibrancy to some of the upper floors so that overall effect on the mall is one of a little bit more exciting and vibrant across every floor and not just for The ground floor is doing well. All you want to do is also to replicate experience in the slightly quieter areas of the mall. Okay. So in terms of the financial performance, I will touch on that. Gross revenue, we are up 8%. But of course, this includes the contribution from Capital Spring, which previously was reported under JV structure. MTI up 314. year-on-year, we are up about 7.9%. So, this also excludes one month of Bukit Panjang because we have sold it in February. So, there's a lot of movements within the numbers. Okay, next. In terms of capital management, I think we have highlighted a very healthy balance sheet now. We are at 38.5%. Even with the acquisition and the And coupled with the equity offering, this is unlikely to change significantly. Interest coverage, very healthy, 3.8 times. I think the key takeaway from this part is that the average cost of debt has come down to 2.9% from 3.2%. Next. We'll spread out maturity profile. I think we only have about $450 million of loan left for refinancing for this year. and the rest of the years are I think fairly healthy with next year we're about a billion up for refinancing. In terms of Occupancy, I think we spent a lot of time at the beginning talking about occupancy, so I won't belabor the point. If you look at our retail, actually, it's generally, it's come down slightly, but I think the largest contributor to that drop was the truck key tenant I mentioned, but I think the financial impact is very small. because this is a combined look, including Germany and Australia, we can have some detailed breakdown later, largely contributed by Germany. Integrated development is down slightly. There are some vacancies in, I think, this is Funan, because it's contributed, it's included under integrated development. That's the drop that I was mentioning as well in the Funan planet. Next. Top 10 tenants, no significant changes. I will just add that ECB, which we have put into the footnote, will feature as a top 10 tenant going forward, but we're still in a process of handing over the last 2-3% of the, so we haven't included it. Once it's 100% handed over, then we will start including it probably from the next quarter or the following quarter onwards. Next. lease expiry profile generally still doesn't look too dissimilar from our previous. We have 11% for expiry this year for retail and 5% for office. Out of that, probably 4.3% of the retail and 1.6%, which is about one-third each, has been kind of resolved in advance negotiations. Thanks. Okay, healthy leasing activity. Despite the decline in occupancy, we still have a very healthy retention rate. For retail, it's close to 90%. For office, about 70%. And we have had quite a lot of new leases and renewed leases as well, about 339,000 square feet, spread across the various trade categories. And also for office, about 121,000 square feet. Retail occupancy broken down into suburban, downtown. Downtown, as I mentioned, contributed primarily by the drop in club key. Next. Rental reversion of 4.4% for retail broken down into downtown and suburban. Downtown, 3.9%. Suburban, 5.1%. Tenant sales, 2.2%, as we mentioned, broken down into suburban growth at 3% and also downtown at 1.7%. Just some of the highlights on some of the new retail concept that we have. Show Pasta, which is a Michelin-recognized casual pasta concept. They just opened in Rappel City. Shiseido at Tampines Mall. I don't know whether you guys have been to Tampines more. I think you can see the slow upgrade on the ground floor. We have also hoarded up the Isetan space. I think that's work in progress. So we expect to probably finish that over the next few months. But I think the ground floor area has been done in phases. So you can really see some of the new tenants showing up at the ground floor entrance area. Prada at Rappel City. We also have a new tenant at IMM, EYD, which is on the third floor. So that's quite interesting because it's on the third floor and we have a massive hub at IMM, so which are able to showcase some of their cars. So fairly interesting concept there. Okay, maybe we'll just move on. Okay, in terms of the office occupancy, as I mentioned, as you can see here from Germany, the significant drop in office is actually due to Germany. from 91% to 83%. But financial impact is, I think, not as significant as what the numbers suggest. Australia, actually, the occupancy has been healthy. As we have mentioned a couple of times, we think that the leasing momentum is still picking up. Occupancy in Australia actually improved from 91.8 to 92.8. And Singapore was touched on. I think generally quite healthy. slight drop due to the Hunan vacancy. The good news is that our average rent continues to inch up from last quarter 10.95 to 11.002.2%. Although I'll just caveat that of course you guys are aware that we have just announced the sale of Asia Square Tower 2 which has a slightly average Higher average rent than our overall portfolio. So this number could come down, but that's probably because it's not a like-for-like comparison once we take Asia Square out of the equation. Okay, next. Focus and outlook. Yeah, so I think overall, we are still on a pretty good and healthy space in terms of outlook. I don't think anything significant has changed from our last update. Rental reversions continue to provide the organic growth. Capital Spring, we are still benefiting from the contribution because it was only accrued, I mean, the additional 55% was only included from 26 August onwards. So this first half of the year, we are likely to see the accretion coming from Capital Spring. Galileo already, our first quarter numbers already started recognizing the income. So you can see it in the DPU impact as well. IIMM already completed, performing well above our underwriting numbers. So we are very happy with the outcome. If you go to IIMM today, you will see that the look and feel of the mall is significantly different from what it was before. So that was ADI that we're very happy with. Okay, so I think organic growth and also some of the contribution from the inorganic growth has really done well for us. And going forward, we expect this recent announcement on the divestment of Asia Square and the acquisition of Paragon to continue to build on that momentum with the 1.7% accretion. You can also see that our capital management, Merian's team has done a very good job in terms of our interest rate management. Over the last one quarter, we have brought the interest rate down from 3%, 3.2% to 2.9%. That's actually a very significant tailwind definitely helped to improve the bottom line performance and we expect this to continue to contribute. Because as you can see, last year we have been reporting, even in the second half of last year, we were still at 3.3, 3.2 average. So this 2.9, even if it maintains, will be a significant savings compared to last year already. I think energy rates, we've talked about it. Okay. I think value-growing strategy, I think this is the same slide we talked about it earlier at both when we briefed on the transaction as well as at the AGM. I won't spend too much time. I think we remain the five pillars continue to drive our growth, organic, asset enhancement, unlocking value through divestments and driving growth. And we have been very consistently unlocking value every year. In fact, we have been doing one divestment almost Well, this year we did two divestments. Last year we did one, the year before we did one, and we have been doing one high quality and meaningful, significant, highly accretive acquisition every year for the last two years as well. Okay, and capital management, of course, has an important tailwind. All right, sustainability, we are on track for most of our indicators. We won't spend too much time on that. Next. We'll just probably... I think maybe we can start moving to Q&A.

Okay, yeah. I see a few raised hands. Yeah, and I'm looking to have somebody other than Mervin. Unfortunately, it's still him. So, Mervin, please go ahead.

Yeah, congrats, Junxiang, on excellent results. Just a few questions. I think it's prior cost of dead guns was 3 to 3.1, delivered 2.9. Do you have an update for this year? On the Bloodsing AI, I'm personally quite excited by it, but at any point, At any point in time, what will you impact occupancy? And is there any extra NLA you think you can activate, especially in front of the property, including the start-up part? And in terms of Iran war, have you seen any impact on retail sales, given that the price is a bit too high today?

Okay. I'll take the easy third question. I'll let Malian do the first question, and then each one can talk about the plus or minus. Okay. In terms of retail sales in March, actually, we have not seen a significant impact. In fact, I think March sales is up year on year. It has decelerated in the sense that the growth rate for January, February is higher than the growth rate for March. But March is still a positive growth rate compared to last year. So it has surprised us as well on the upside. I think a couple of reasons. I think there's also some constraints in terms of flight capacity. So maybe people are not travelling out as much, spending more. And I think in the first few weeks of March, there was not as big of a... In terms of sentiment, I think maybe there was... It has not affected sentiment as much maybe the first two weeks. And people are expecting a war to end quite soon. So that could also be the reason. But in general, I think... if you look at tourist numbers coming into Singapore, that has also improved year on year, quite healthy tourism numbers. So that has kind of provided a lift probably for some of the numbers. I think so, quite a few confluence of factors that helped to drive the first quarter numbers. But I think to your specific question on whether March numbers, we are down, no, they are still up compared to last year.

How about April?

Oh, April? Too early to, I don't think we have the April numbers yet. Okay, maybe William can take the question on interest rate guidance, and then each one can take the question.

Okay, earlier on when we looked at the interest rate guidance, we were seeing around the three levels. But given what we're seeing in the SING dollar floating rates movement in the past two months, it has generally been trending down. So, that kind of, you know, allowed us to look at the overall lower cost of debt of below 3%. So, guidance for this year, again, based on the current levels, will be the high 3%, high 2%. High 2%. That's scary. Yeah. So, depending on where the rates go, right now, I think, yeah, there should be continued, you know, Looking at the year-on-year savings.

Are you seeing tighter credit spreads or just being maintained?

For some of our loan facilities that are on floating rate, we have actually negotiated for tighter credit spread as well. That is around 10, 20 bps. But mainly the cost savings is really from the floating rate movement.

PS1. So during the course of the whole AEI, the reason why it kind of spread out a little bit more, because the work will be done in phases across the different parts of the property, it will actually remain open, and at any point in time I think probably it's about 10-20% of the spaces that will be affected through the course of it. Nothing more, there will be a very small period where there's a bit of overlap, where it's probably closer to 30%, but most of the malls will be open actually. The second part will be on the NLA question. Let's say the NLA will be there about Pretty much similar. While we create additional NLA on the ground floor in some of the spaces that we managed to identify, part of the EEI will also include compliance work where we will have, and also a bit of upgrading work. And second part of it will be that, as we know in Plaza's thing, right, the back end of the mall actually is quite deep. Some of the spaces are pretty deep. So rather than, you know, taking a big anchor that doesn't generate that much rent, right, we may subdivide some of these to create higher value spaces.

And there's no impact on the thermal site of this section, right?

At this point, there's no major impact on the thermal site of this site, the tower site.

and the house side in phase one is actually more along the ground floor where the entrance arrival is okay excellent congrats on the results and recent paraffin acquisition thank you thanks again i'm driving now hey hi hi everyone uh good morning um maybe just um back to the um portfolio refresh opportunities. So maybe your thoughts on partaking in further development projects with sponsors. So after Halgan Central, there's still some quota to work with. So will this be something that you are interested in or prefer to phase out a little bit?

Okay. I don't know whether you're referring to the ratio.

Yeah, very sizable question.

Okay, so I think the way we think about it is, I think firstly we must like the location, and I think outcome was unique in the way because it was underserved, and it is in a very dense residential catchment which we think a retail mall is very likely to succeed. and also the connectivity with the two major MRT lines and the connectivity to the industry, and the size precludes other significant competitors from coming in. So, be sure, I think we haven't looked at it in detail, to be honest, but, I mean, no harm for us to look at it, but then it will come down to a matter of pricing and whether we think that catchment makes sense for us because we don't have something in that area. So Beishaw, of course, would be quite close to Bedok Mall. But Beishaw is also in a slightly more private residential estate. So the residential catchment is not a deep estate. If I'm not wrong, I think the B2 component is also small. It's like 200,000 square feet compared to our town, which is 300,000. So, yeah, but Long story short, I think we will take a look. Question is whether we will consider, well, I think we can consider we have room, but we also have to look at the impact. Obviously, there's no impact on DPU as what we mentioned. There will be an impact on balance sheet. We have very different capital to Alkang. We have different capital to Paragon. And now we have different capital to Plaza State. So we have our hands full probably for the near term part. Let's see the details of the project.

Maybe just one more on the tenant exit at MAC. Is it tied to the geopolitical headwinds or the tenant was already think of an exit? And any divestment overseas since you have done quite a number in Singapore already?

Thanks for raising that question. I was waiting for the opportunity to answer that question. Okay, so the tenant is actually on the airlines, and you know MAC is next to the airport. So I think unfortunately it's not due to any geopolitics, it's not due to any van reasons or whatever, it's due to the fact that they want to consolidate back at the airport, which is obviously a better location for airlines. So that's just unfortunate in terms of the business direction that the tenant took. So that's where we are. In terms of divestment, yes, definitely we are looking at divestment and I think, in fact, we've been talking about this at the last business update and now the Iran war obviously threw a spanner into the works because with interest rate expectations being slightly altered in the European area, it might make divestment slightly more challenging. But nevertheless, I think we are embarking on that process. So, we are starting to sound out and getting our feet on the ground to see whether there is an opportunity. So, yep. For you, I'm good.

Okay.

It's not easy. It's not easy. So, I don't want to also raise expectations. Obviously, you guys know in this current environment, in Singapore, it looks like It's a lot easier for capital market transactions, but I think the same cannot be said for the European region. I think the number of cap market transactions that we've been observing in the market is few and far between. And not at the kind of sizes that we are looking at.

Okay. Thanks, Shun San. Can imagine. Good luck. Thank you.

Rachel?

Hi, Shun San and James. Can you hear me now?

Yes, I can hear you.

Okay, great. Yes. Maybe just a first question on the reversions. I think it's moderated a little bit by first quarter. So I'm just wondering what's your outlook for this year since there was some advance acquisition or the leases that are expiring this year?

Okay, maybe each one.

Yeah. Well, for the reversions, right, generally I think, which I mentioned earlier, for the full year, and we will see how this trend. For the retail, actually, largely most of the reversions have been quite strong. I think it was a little bit pulled down by a very specific tenant in a unique location. By and large, I would say the retail reversions have been okay.

Can you give more colour on this specific tenant?

It's one of the attributes of a tenant into F&B, and because of the location of the unit, it's actually not where the normal walkway is. So that's the reason why for that, in that case, compared to the outgoing use, the reversion is a little bit on the downside.

Oh, okay.

Which more is it? Yeah, definitely. Sorry, sorry. I think she said ask which more. Oh, which more. That's how.

So maybe I will also just add, I think... while we have guided fairly healthy rental reversions, I think one more that we moderate because, I mean Plaza, Fling and Tao, we are likely to go through AEI, so we may have to moderate, because when you do an AEI, obviously in the course of discussion and lease renewal with tenants, we also have to be mindful that they will be impacted by the renovation going forward, so we have to be a bit more flexible sometimes when it comes, obviously this is This is obviously only during the transition. So it could impact some of, but specifically for Plaza Sing and Tao, I think. So there could be some moderation in terms of entry version, which should not be unexpected, but I think the rest of the portfolio should be business as usual. So there could be some impact because of that.

Okay, let's move on to the office reversions. Now that you have sold ASD2, do you expect that the reversions may trend down even more?

No, I don't think so. I mean, if we look at, if we break down our reversions and contributions, I think they are quite evenly contributing. So removing ASD2 should not make a significant impact.

Okay, got it. Then maybe just on the talent sales side, you mentioned that March was up year-on-year, but do you see any impact on the downtown loans? Are they impacted a little bit more from the war, Oaks War?

I think it was the reverse, right? I think our downtown did better than suburbans, if I'm not wrong. Okay, therefore March.

I think suburbans did better.

March, March, yeah. I think downtown actually did better. If you strip out the numbers for much, I believe downtown did better than suburban.

Okay. Okay, maybe there's one last quick one which is on ECB contribution. How much are they contributing in first quarter and how much more should we expect?

How much are they contributing? Uh... Do you have the numbers? I have the numbers but more on the top line because we have to net off I'm just in my mind we have to net off the the the funding costs also.

Can we get back to you on this? Yeah. Because we have to net off funding costs and also provide for tax. Yeah. So, yeah.

Okay.

Okay.

I think the contribution at the top line is probably about, I think maybe about, you want to say about one and a half to two million a month, if I'm not wrong. I'm trying to digest the DPU side and throw down the bottom line, but we need to do some work around that. And it's also been about one and a half to two months, so it's not a full contribution.

We can come back to you.

Okay, thanks Rachel. Can we move on to Liu Qiang please?

Hi, can you hear me? Yes, we can. Yeah, just on the Plata thing, the amount seems quite big and then how confident are we in securing that 6% to 7% ROI? And also given that, does this also mean that any AEI plans for Paragon will be shelved back because of this? Because when I look at Atrium going down and then Plaza seeing occupancy could also be impacted a little bit in terms of performance. So it does seem like we are in a quite uncertain period and then quite a few major assets could be seeing a little bit of downtime. that's the first question and the second is on your retail uh suburban seems to be meeting uh downtown um do you expect this trend to continue in terms of our reversions and also talent sales

Okay, so in terms of the expected return from Plaza Sting, I think I mean, you guys are familiar, we normally don't undertake AEI without a calculation of the financial return and we have put down here that we are targeting about 6-7%. Question is whether we are confident of achieving. I think we have put it onto the slide. We would have put it there if we are not confident of achieving. That's one. Secondly, of course, but Nobody knows. This AEI will take one year. It's also based on a certain assumption, I think. But based on our track record, if you look at some of the past AEIs in Singapore, like, you know, Red Bull City, we have done. IMM, we have done. I think we, safe to say, we have firstly met our underwriting, and secondly, not just here on the right thing, I think part of the AEI, the objective is also to transform them more, to make it relevant and to make it suitable for the current taste and environment and shopping behavior and the new consumer. So all of that is also taken into consideration when you plan an AEI. And I think if you go into, I think that there's no argument that Plaza Singapura has been without AEF for a while and I think it will definitely be helpful to rejuvenate the space and also like what we mentioned is also really to dovetail with I mean we have been very deliberate about this it's not just about you know improving the dynamic and then make it better facade it's also you know we want to also think a few years ahead what will happen to this mall when the pedestrianization of the mall the road in front comes up. So we want to be positioned when that happens. It will transform the area and we want to be there and ready when it happens. And I think our portfolio is large. I think we can definitely cushion if there is a bit of downtime. Of course, when we try to do any AEI, we will try to minimize the impact to our cash flow, which is why it will be done in phases so that the downtime doesn't stretch beyond 10% to 20% of the tenants or more. So hopefully that answers the question in terms of whether we are confident.

Yeah, can I also check if the construction cost has been locked in? Yes. So even if construction cost escalates from now on, your target ROI 6% to 7% is still comfortable? Yeah.

Okay.

So I think we have also been deliberately trying to upgrade slowly the various asset i think you've seen that you know raffle city was upgraded now we are moving on to uh then the question in people's mind is okay is paragon next and whether uh whether this some people may think uh okay uh we see like what you mentioned if we are doing prices doesn't mean we have no capacity to do paragon i don't think that's the case and i don't want to I don't want to jump, I don't want to pre-jump the conclusion that we are not doing anything. I think, like what we mentioned, it's only been about four days since we announced. We want to go in, take a thorough look at what they have done. And it's already an AEI plan in place. No harm and no skin on our nose to take a look at what they have planned. And we will see whether the plan involves and how you do in phases, you know, whatever they have planned or whatever we want to look at with fresh eyes. We also have to, obviously for us, we have to look at it from a portfolio perspective and whether it makes sense for us, both on the asset level as well as the portfolio level in terms of cash flows. So all of that will all have to be taken into consideration. But in any case, so I think Plaza thing starts third quarter of this year. Paragon completion will only be third quarter of this year probably. So by the time we take over, it's not like we're going to do AER on day one. We will definitely have to review the performance, the academics, I mean the dynamics. And then by the time, if and when we do take a decision to do anything, it will probably be like, you know, possibly when you're not sure. I think that's not the pre-conclude that it will or will not happen. I don't think I can answer that question right now.

Okay, the second question is on the retail, the performance within Suburban and Downtown.

So for Captain Sales, I would say that actually between Downtown and Suburban, if I just go back the past few quarters, Sometimes it will be downtown, sometimes suburbans. So actually the two of them are really quite closely matched. And I expect that to kind of go forward in this year also. Of course, naturally, given all these uncertainties in these few months, right, probably the suburban side will probably see a bit more resilience. Because, you know, we saw all these higher costs, operating costs and worries over inflation and stuff like that. Discretionary spending on large items will probably be a little bit higher. things. By and large, I would say both retail and downtown, sorry, for both downtown and suburbans, generally we look at sustainable kind of reversion levels that we go to our tenants. But of course, with downtown, as I think Chuan-Xia mentioned earlier, when we do some of these AEI works, right, some of these impact short-term extensions and stuff that we may do to retain a tenant in the near term to kind of time out the

Okay, okay. Okay, thanks. It's just that I noticed your tenant sales have been quite soft in the past few quarters and then reversions have been going up. So just a little bit concerned on occupancy costs. Yeah.

I think on occupancy costs, year on year, we are quite stable actually. This time around, we are around 17.4%, which ideally is 0.1% lower than the previous year. So downtown, of course,

is actually quite sustainable and i think uh the other thing uh one simple to add that actually two percent two point two percent sales compared to rental reversion of six percent actually not that out of line because actually six percent rental reversion because it's average over three years actually it is quite in line with a two percent sales growth so i wouldn't actually say that it's not in line

Okay, okay, thanks. The last one is, is there any, do you disclose ION tendencies? I think in the past quarter there was like one small footnote. Maybe I missed that, yeah.

Oh no, it's included, it's included. Last time we used to show a footnote as in we strip out the ION first because it was not light for light. But now ION, we have owned it for a full year already. So there's no need to strip out the effects of ION anymore. So ION has contributed ION is in 2025 and 2026 numbers now. So this includes the total sales from ION as well.

Okay. Okay. Thanks. Thanks, Junxiang.

Thank you, Chiang. Can we go on to Brandon, please?

Hey, morning, Junxiang. Just touching on a bit of occupancy, right? Could you sort of guide us a bit on the the forward occupancy for the different retail office, right? Because when I look at this quarter's numbers, it's kind of quite low. In fact, it's like a four-year low, right? When you look at retail office or portfolio. So is there something that you can sort of guide us or is there something that we should be concerned about?

No, so I think quite, I think I spent some time trying to address this point because I expect this to be an issue and to be raised. which is why I think I have addressed it right from the get-go. So it's actually unique to three specific assets that we have and very unique to three specific tenants. And the financial impact is quite small because these are all low-rent spaces. And more than half of it is due to Germany, which doesn't affect our Singapore performance. So I don't I won't take data to read through on the portfolio to answer your question directly. Because at the end of the day, if you look at rental reversion, it's still healthy, which means that we still have the negotiating leverage to negotiate for higher rents. Germany and you need to plug key. Plug key of course is a work in progress until Canning Hill gets completed end of this year.

So if you look at it from a portfolio standpoint, should we sort of expect that 95.2 to sort of take back to your usual 96 to 98% kind of range?

No, I think we can expect to improve. If you ask me whether this is a new steady state, no, the answer is no. I think we can expect this number to improve. For the simple reason, let's say for example, today we were to sell MAC, immediately improves and normalizes to that higher level. But I would say that as a non-core asset, so we shouldn't even use that as a contributor to look at normalized occupancy. But even if we were to include it, we do expect some of these vacancies are very transitory, frictional. We do think that the 95.2 is not a reflection of what we are able to achieve with the current portfolio.

Are you comfortable to share the authenticity of those three unique assets?

Yes, we can. I think MAT now we are just trending somewhere above 70 over percent, 32. Clark Key 84, 34%. Hunan office was 100%. I think one of the towers now had one vacancy. What is Hunan office? 87%. But we are quite confident of leasing out that space. So that's a very transitional vacancy. MAC could be a bit more, could take us a bit longer, but I think we will work hard to try to replace or work at divesting at some point. But yeah, so those are the three assets that probably contributed to this quotas movement. One of which we are quite confident of releasing quite soon, hopefully. But that too, I don't think will actually affect the financial because those are very low rent places anyway, although they are quite large, and hence it contributes to the drop.

Right, right.

Our financial performance is not being impacted. That's the bottom line.

Okay, great. I'm just going to... Can you talk a bit about Bookies Plus? Historically, if you look at CRTT, where you guys... sort of amalgamate your assets and other assets, right? These assets usually get divested. So could we sort of expect the same for Boobies Plus or there should be a wider plan for it given that you really own Boobies Junction?

Sorry, I don't get what you're saying that What are you saying about Bugis Plus? I didn't quite catch your drift.

So historically, if you look at CMT, CRCT, you guys tend to amalgamate the performance of certain assets under other assets. And then after that, subsequently, we see you selling those assets. Should we expect the same for Bugis Plus?

I think we have also shown that we can sell assets that are not in the other category. So it doesn't indicate anything. There was a period of time when there's only so much space and there's only so many buildings you can squeeze into. So some of the smaller assets tend to be parked under others.

It's good to know that it's called, so we shouldn't be... We love the bulldozer.

It's actually a very vibrant area and coming out very nicely. In fact, I see it as a high growth area going forward.

I'll just end with one last question. If there are opportunities to acquire something that's pretty decent, is CRCT sort of open to creating equity more than once a year?

We try not to. I've been reminded by investors to try not to do that. So we're trying not to do that.

Okay, great. Hey, thanks so much. Good weekend. Thanks.

Thanks, Brandon. Can I move on to DJ, please?

Hi, good morning. Three questions for me, maybe I'll take one by one. Firstly, in terms of the FUNAN, can you give some credit to the tenant who is sitting there, what are the reasons? There is almost no time to expect for this property.

It's not a tough question, I'll leave it to each one.

You mean the tenant? Yeah, FUNAN. So for FUNAN, the tenant is a deduct moving. actually it's more of an issue of them trying to consolidate some of their space in terms of their efficiency and their corporate planning. So that was the reason for the move.

And how long do we expect it?

How long do we expect to backfill it? Well, okay, typically I would say that if we start from scratch or a tenant of, because there's a few ways you can do it. I mean if you start the divide then naturally the downtrend is a bit shorter at least for part of the space but for tenants usually of this kind of size if they start to look for space typically they'll be looking at it around six to nine months ahead of time because they have to plan their move from their previous space. So some of the we are already starting talking some interest along the way and it's really down to how it converts as well as how the negotiations with Okay.

My second question is, after sharing my observation, I think, from a class-key perspective, it does look like the impact seems to be structural for some time. I mean, the asset went a major upgrade after COVID, but still seems to be having a lot more of tenant churn over the last one, two years. Maybe what's your thought on this asset, and would you be willing to divest it? And are you seeing tenant sales improve since last year?

Okay. So I think Clark Key I won't say is structural because we have not seen it in its stabilized state. There is definitely a structural difference between the construct of Clark Key and some of the other malls for sure. Definitely slightly different positioning and of course it's not a natural mall per se. And of course the Now currently it's impacted by Canning Hill. I know we've been saying that for the last few quarters, but that is the reality of major construction. We do expect the vibrancy of the whole area will change once you have, you know, these few hundred residential units being filled up and two hotel blocks being completed. So, I mean, hotels generally creates a round-the-clock footfall. So we do expect... some improvements. Whether the improvements will be enough will be one of your questions as well once it becomes stabilised. But we are confident that there will definitely be improvements once that happens. And the challenge with the leasing discussion now is also nobody will comment until they have seen tenant, I mean, no point for me to take the risk today. I might as well wait until six months later when the hotel is completed. So a lot of the tenant churn is also because a lot of our tenants within Clark Key, some of them can be, some of the movements and the margins is also due to us bringing in, you know, shorter leases coming in to fill up the space, create the footfall and vibrancy to that area. But we are doing a lot of things to, I mean, we have a team that is very focused on marketing the asset. If you go to Kratky, there are a lot of marketing activities going on every weekend. We have now customers coming in on every Wednesday. We have just done a cycling crate competition, making use of Kratky's natural outdoor roads to create a kind of a cycling circuit. We are also, this Every time there's major sporting events, we have organized live shows and all of that. So we are making a conscious effort. It's not a natural place where, you know, there's natural food for. So we need to create a more destinational effect to bring in the crowd while Canning Hill is being completed. When Canning Hill is completed, we do expect it to have more natural food for. So we are making very good efforts. And to your second question on whether we will be open to divesting, I think we have demonstrated our willingness to divest anything, I think, if necessary. I will say that, I mean, we have just divested two assets, and one of which is a fairly large and performing well as well. So I think the question to that is anything is possible by including Clark Key. But this is not appropriate as we are divesting Clark Key. Okay. It's telling. If 10% premium, yes. That's what you are alluding to. You hit the nail on the head. I think it's always a matter of pricing. But I think the yield is still decent for Clark Key based on the current value. Okay.

My last question, I think in terms of energy rates, you mentioned that this year, you mentioned this more than last year. Maybe how low is it for this year compared to last year? And if it normalizes, if you have to go for open market and purchase a contract for next year, should we have to expect a jump in terms of electricity costs and energy going down?

Oh, no, thanks for that question, actually. I also want to take this opportunity to highlight that next year, actually, we do expect utilities costs to come down further. The reason is because although it's not been locked in, we have achieved a better formula. The formula for utilities cost is always a function of certain input prices. And of course, oil price and gas prices are a key component of it. So even at today's price, if we were to enter into the contract, we are still achieving savings because of the better formula that we have achieved with our suppliers. So we do expect savings next year as well compared to this year.

So you are not impacted by external environment or even at this higher price, you can still achieve savings?

Yes. So we are impacted because, but what we are saying is that at the same price, at the same input price next year, we will achieve savings because of a better formula.

Okay. Got it.

Thank you. So even though prices have gone up still achieve savings. It takes a very significant increase in the price of oil for us not to achieve savings for next year. And we are not anywhere close to that.

Is this based on the management contract you assigned that we can't see a line?

No, it's based on our contract with our energy provider, utilities provider.

Oh, okay. Got it. Thank you, Professor. Yeah.

One thing is that we procure energy as a group. So we do have quite a bit of negotiating power. So for example, CICT, CLAR, the whole CLI group, we are procuring energy as about contract. So as you can imagine, because even our size, we do have some negotiating leverage. So we are able to lock in a better formula for next year.

Okay, next. Thank you for talking.

Thank you, PJ. Can we go to the Yash?

Hi, this is actually Derek from Morgan Stanley. I just assumed another tendency. Yeah, by accident, by accident. No, I just want to ask a couple of questions on the cost of debt outlook. I think, Lillian, you're alluding to, it seems like you're alluding to about 10 to 20 basis point savings from the current 2.9%. Does that take into account, I presume, the debt paydown from, from using proceeds from the raise, from the active raise, and when you take on fresh debt for Paragon, is that all taken into account already?

No, we have, I mean, depending on, you know, the fixed load assumption for the Paragon debt, we believe that there is some room in terms of floating rate. Because we continue to see the movement over the past months, where sorting rate has actually even gone to the 1%. So if this kind of, you know, continue, there could be even, you know, more savings from that anchor. We haven't taken into account the tariff on debt yet. Because it will depend on the actual fixing structure.

Is that a rough number that you could, I mean, are we looking at 2.5%, 2.6%? I mean, I also assume you'll be, in lieu of the action coming in, you'll pay down debt first, right, with the FB raise proceeds?

Yes, we will. Yeah, they assume that for interest rate for Paragon debt is about 2.6%. to 2.7%. Yeah. So that could, you know, kind of lower the average, yeah, based on this assumption as well.

And that number actually looks high also compared to what you recently raised at 2.18%, right? So could that number also be a lower number?

We will try to, you know, do better. The 2.18% was raised... when the fixed benchmark was actually lower than current. So today, if we were to raise the bonds again, it may require slightly higher margins. So it all depends on, first, the timing, second, the tenant that we want to lock in, and how much is going to be fixed and flowed. But generally, we try to keep, on the overall basis, at least 70% of our debt portfolio on fixed basis.

Understood. And if you were to raise fresh debt right now, what would be the number?

Well, probably the secondary trade close to, say, 2.4, 2.5.

Okay, got it. Thank you. And just last question. question if I may I think I got some inquiries on the active raise why raise at a lower at the lower end of the range the pricing range given the robust take up actually we I would say that this is the low end of the range the low end of range is 2.7%

But you're right. Could we have raised it at say 2%? Possibly. But then the quality of the book could be different. Typically in an equity raise, you guys will be familiar. There will be three main types of investors. The first group is what we call the real estate long only investors. These are the buy and hold investors, right? Because they like the assets. They are real estate specialists. They are long only. They buy because they want to achieve the yield that we provide and the growth that we provide going forward. Then there's the hedge funds and then there is the private bank who may or may not buy and hold depending on the valuation, depending on the momentum and depending on the market conditions. So we typically try to allocate a large, larger part of the book to long only real estate because these are the investors that will stay with us and grow with us. But of course these are, so looking at the book, to encourage a larger allocation to debt, that was the reason why we decided to, but even with the decision, we also are able to bring everybody up from say 2.7% discount to 2.36% discount, which was the final price that we did at. And if you look at all of the equity raise done in the last 20, I don't know, last five years, this is probably the tightest I don't know whether I can think of a title. So I don't think we can say that this is not a tight discount. I think we probably have been spoiling investors a little bit because we went out with a very tight low end in the first place. Most equity offerings will not go out with a 2.7% at a very low end. They typically will go out with 3.5%, 3%, 4%. But we are fairly confident of doing that and we are able to negotiate because we also want to protect our own downside and we are able to lock in the underwriting by the bank at 2.7% because our last equity offering was done at 2.7%. And despite that very tight low end, we were able to tighten it further at 2.36%. And I think the other consideration is we also upsize. It's actually very challenging to upsize the equity offering by 25% and still up Usually you have to choose between the two, price or quantity. I think that's a very standard trade-off. You want better price, you have to sacrifice on quantity. You want a better quantity, you sacrifice on price. And we are able to achieve both. So I will not actually fully agree with the statement that we are not achieving a tight discount. I guess the third thing I will also add, But I think we also want to watch the aftermarket performance. We want to make sure that the momentum is maintained. To ensure a strong market performance, you also have to allocate and price accordingly. And I think if you look at the post-market performance, I think we do think that we did the right thing. following the ESR.

Hi, Moni. Just one question on full-year DPU growth. Because of the upsized equity issuance in Asia Square 2 that will come in before Paragon acquisitions, are the growth levers that you mentioned sufficient to offset this? Or what are the other mitigating factors on a capital management front? such that full year, you're still expecting GPU growth, right?

Thanks. Sorry, I didn't get the... Sorry, can you summarize the question again?

Yeah, so equity issuance was upsized. So that will drive dilution. Asia Square, two loss of income second quarter. These two will actually come in before your Paragon acquisition, right? So full year, what are the mitigating factors? And are we still forecasting GPU growth?

Okay, I get what you're saying now. Okay, firstly, there are two potential things. There are quite a few things, right? One is Asia Square Diversion is unlikely to close before, actually. Asia Square Diversion is likely to close after Paragon Acquisition because the buyer for Asia Square also needs an EGM and their process takes a bit longer. So we are expecting to close probably at least one to two months before that. Two months. So quite counterintuitive, but actually that is better for accretion. Because before they close, we will have to do a bit of a bridge loan. So if we borrow for one to two months bridging, to bridge the funding gap before we divest Asia Square, that cost of funding is actually lower than the asset yield. Because you're still earning MPI as long as AST2 is not being sold, right? So the asset yield at 3% is still better than It's still higher than the funding cost. And bridging loan will be borrowing on float day, which, as media mentioned, is very, still today, still very low at about, you know, the float. Sora is, what, 1% today. And in scrap, you are probably saving a good 1% on the funding cost. So, actually, it's more accretive. Fairly complex intuitive. But, of course, you take a bit of a stretch on the balance. It shouldn't affect debt. Part of the equation shouldn't affect accretion, but it can only improve accretion. Second part, I think what you're driving at is also the equity offering being done before the closing of Aragon. Debt will be dilutive. But of course, we will pay down debt in between. The net effect of both combined together, I think, is this dilute. So we are buying $3.9 billion. Typically, equity offering makes up a larger proportion of any transaction. But in our case, the equity offering, $780 million, is only about probably 18% acquisition size. So the dilution, in fact, is actually very small. And it's only for maybe about two months. And we are not suffering that dilution because we will pay down debt. So based on my calculation, plus the accretion that we will get, from 2.5 billion two months of bridging loan. Actually, the net net is positive. So we will actually not suffer any dilution. If anything, we will still be fully benefiting from that 1.7% accretion for the year.

Got it. Thank you.

Thanks, Shen. We have Marvin, who seems like the last one to go. Marvin, please.

Yeah. There's a question on the retail margins. It's not Q&Q on here and there. What's causing that given you have some interest cost savings?

Interest cost savings will not affect retail margin.

Sorry.

Why did margin go down? Why did margin go down? Let me think. Was there a change in the portfolio constitution? I think I think the reason is the top line came down slightly on a year-on-year basis because we started AEI so like for example I think Tampines, because we did the AEI, I think the margin for Tampines came down because of the top line dropped slightly. So that's one of the key reasons, I think. The other reason, of course, is also Clark Key. Clark Key, the margins came down because of the significant drop in occupancy compared to last year. So these two assets were contributed to the margin compression

Any updates on Junction 8 given the change of more commercial?

You mean like redevelopment plans?

Redevelopment plans or will you take on the office component?

I think that one is I don't think that will happen anytime soon. If anything discussion many, many stakeholders. So we don't have that. We don't have the clarity now. But JunctionAid is doing very well in the meantime. Sorry, short answer. No, we don't have anything to provide at this point. No update to provide JunctionAid.

Yeah. Just back on your office portfolio, We hosted the IOI properties a couple days ago and it said that we could push Asia Square Tower to rent to $13. Is there something you can do on average across your whole portfolio?

Across our portfolio, that's a tough question because our portfolio obviously has different varying locations and Obviously those in, I think IOI's building obviously is newer than ours. Asia Square if you compare it to some of our portfolio is also slightly higher. And I mentioned earlier in my presentation that average rent for Asia Square too is really higher than the rest of our portfolio. If your question is whether we can do it for the rest of... I think selectively possible. We are seeing some of the renewals done at those levels for some of our spaces. But I won't say that we can do it for the entire portfolio because there are also big anchor spaces in some of our portfolio.

And in terms of portfolio allocation, how are you thinking about mix between retail and office? We now have a bit more retail.

Yeah, no, I don't think it was... deliberate. It was more, I think it's a consequence of some of the opportunistic decisions that we've made. I don't think, if you ask us whether, oh, do we design it to be this way? No, we are not deliberately trying to sell office to buy retail. I think we are quite happy with both asset classes. And I think increasingly, the differentiation is not as important. I think what is important for us even merge both the office and the retail component, is what is the most and best construct for our portfolio that will deliver the most stable and highest growth EPU for our shareholders. And I think because we are already so big, so the stability is there. So the question is how to drive the growth. And I think people are more focused on underlying performance, underlying financial performance than the marginal movement between retail and office.

Okay, excellent. Look forward to continue strong results and hopefully high share prices. Thank you.

Thanks, Naveen. Looks like we have no more questions. So I guess we'll end the session here. Thank you for your time. Have a good Friday and a good weekend. Thank you.