Capitaland Integrtd Unit

Good morning. Welcome to CICG's first half results briefing. Today we are in somewhere special, the Paragon Club. It's a members' lounge reserved for its top-tier members. And if you'd like to return, you can start spending after the briefing. And remember to spend generously to support our economy and, of course, our tenant sales. Thank you very much. Joke aside, we are very happy to have you with us today. And to those joining online, thank you for dialing in. In a moment's time, we'll have our CEO, Choon-Siang, walk us through his key highlights for the first half results. Following that, we'll move on into the Q&A segment with the rest of the management team. And with that, I'd like to hand the time over to Choon-Siang.

Thank you, Alison. Good morning, everyone, and thank you for joining us today. If you're wondering why we gathered all of you here today, it's not because we have a major AEI here to announce. Someone asked me that this morning so I thought I'd get it out of the way. We just wanted to showcase the beautiful property that we've just acquired. Nothing more than that. And I think most of you would not have been into this club before because it's actually quite new. It was recently renovated sometime earlier this year. as part of an amenity perk to some of our higher tier members in the Paragon Club. So before you leave today, please sign up for the Paragon Club membership. For the use of this lounge, I think you just need to spend $25,000 a year. Shouldn't be hard. Two watchers will do the deal. Okay, anyway, without further ado, let's start off with today's presentation proper. You guys would have seen the results that we have put out early this morning. We're very pleased to present the results for our first half of 2026. The past six months were marked by very strong execution of our growth strategy, including portfolio reconstitution. You have seen our announcements in terms of the sale of Bukit Panjang, the bidding for the Hougang Land, and then the acquisition of Paragon, together with the divestment of Asia Square. So we have also very active asset management as well as very disciplined capital management. All of those things have contributed to our very strong results. So these efforts have enhanced the quality of our portfolio and positioned CICT for future growth. So I'll walk you through some of our financial highlights as well as our operational performance. So we delivered a very strong first half as you can see. MPI increased 8.7% year on year to 630 million. Distributable income increased 13% year-on-year to $466 million, while DPU grew 7.1% year-on-year to $6.02. Importantly, this DPU growth was achieved despite the enlarged unit base, following our equity fundraising in April this year. This reflects the strong operating performance of our portfolio, the step-up acquisition of Capital Spring, supported by lower interest expenses. Operationally, occupancy remains high at 95.6%, while rent reversions are healthy at positive 4% for retail and 7.6% for office. At the same time, we continue to maintain a healthy balance sheet, lowering aggregate leverage from 38.5% to 37.4%, while keeping our average cost of debt at 2.9%. As part of our strategy to grow the portfolio both organically and inorganically, we have been actively executing various initiatives. We completed the acquisition of Paragon on 1st July. This strengthens our presence in Orchard Road and adds a freehold premium integrated development to our portfolio. On the digestment front, the sale of Asia Square Tower Tool remains on track with completion expected in the second half of the year. We are also progressing with several AEIs and upgrading initiatives across the portfolio. These are aimed at uplifting our assets to strengthen income resilience and drive long-term value creation. Together, this initiative demonstrates our active approach to growing the portfolio. Our temporary small AEI is progressing well with about 96% of the AEI space committed or in advanced negotiations. We have curated a lineup of brands across beauty, F&B, shoes and bags, and fashion accessories, among other categories. Several brands have already opened. More brands will progressively open through the second half of the year. As more of these concepts come on stream, they will further elevate the mall's retail proposition, deepen stronger shopper engagement, and reinforce the mall's long-term growth potential. Let me take you through the summary of CICT's first half results. Gross revenue increased 7.5% to $846.8 million and MPI grew 8.7% to $630.5 million. This was driven mainly by Capital Springs' step-up acquisition and the contribution from Galileo, partially offset by the divestment of Bukit Panjang Plaza. Distribution income from joint ventures was lower at $16.7 million, down 19.5%, This decline is optical rather than operational, as capital's spring income is now fully consolidated at the MPI level, following the acquisition of the remaining 55% interest. So it no longer flows through the JV line. Next, Distributable Income rose 13.3%. $466.7 million, a strong double-digit uplift. DPU grew 7.1% to 6.02 cents. A robust increase, although roughly half of the growth in the distributable income. The difference is due to the enlarged unit base. On a weighted average basis, units in the issue grew 5.8% to about $7.73 billion, reflecting largely the private placement of 326 million units used to fund our Paragon acquisition. Despite absorbing a 5.8% increase in unit base, we still recorded a 7.1% increase in DPU. For the second quarter, gross revenue increased 7.0%, while MPI grew 9.6%. We have covered the first half performance, so I'll move on to the next slide. Our portfolio continues to deliver income diversification which provides resilience and enables us to capture opportunities across sectors while mitigating concentration risk. We have paid an advance distribution of 3.98 cents for the period from 1st January to 28th April on 8th June 2026. Unit holders may wish to note that the remaining distribution of 2.04 cents will be paid on 25th September 2026. Our balance sheet remains healthy. NAV increased to $2.15 from $2.14 from 31st December 2025. We continue to strengthen our balance sheet through disciplined capital management. With the temporary repayment of debt using proceeds from the equity fund raise, aggregate leverage is reduced to 37.4% from 38.5%. Average cost of debt remains stable at 2.9%. Our debt maturity profile remains well spread out with maturities extending to 2035. This helps reduce refinancing concentration and gives us flexibility to manage funding requirements across different market conditions. Our interest rate exposure remains manageable with 1% increase in interest rates. The estimated DPU impact is about 0.27 cents. On our portfolio and asset performance, occupancy remains high at 95.6%, up 0.4%, supported by proactive leasing and active asset management. Wealth remains stable at about 3 years. Top 10 list of tenants is unchanged. They contribute only 16% of gross rental income and no single tenant contributes more than 5%. As such, tenant concentration risk remains low. Lease expiry profile relatively balanced across the next five years. Lease expiries in 2026 are manageable with 5.8% of the 9% lease expiries already in advanced negotiations. Our tenant base remains diversified across multiple trade sectors and will continue to support our portfolio resilience. Leasing activity remains healthy across both retail and office portfolios and they continue to register high retention rates. For retail, demand in the second quarter is mainly driven by F&B, beauty and health, and fashion accessories. While for office, demand is mainly from IT and telecoms, legal and banking, insurance and financial services. Retail occupancy remains strong at 97.7%, rather than Singapore's retail market occupancy. There is a slight drop in the downtown occupancy, mainly due to the AEI at Plaza Singapore Up and the atrium at Orchard, as well as some naturalist aspires. For the first half, we continue to deliver positive rent reversions across both our downtown and suburban portfolios. Suburban malls achieved stronger rent reversion of 5.1%, while downtown malls recorded 3.2%, resulting in a retail portfolio rental reversion of 4.0%. Our retail portfolio continued to deliver resilient tenant sales growth. Portfolio tenant sales increased 1.6% year-on-year, supported by new store openings, seasonal promotions, and healthy trading across key categories. Fashion and accessories and jewellery and watches were among the key contributors. Downtown malls were resilient, achieving growth of 1.7%, while suburban malls recorded an increase of 1.6%. A slight moderation from the previous quarter, consistent with the broader retail environment. We continue to curate our tenant mix with new-to-market and new-to-portfolio brands and concepts across F&B, hobbies and leisure and entertainment. Our office portfolio remains resilient, with occupancy improving to 94.4%, up 0.7% from the previous quarter, with uplifts across Singapore, Germany and Australia portfolio. In Singapore, average office rents continued the upward trend, reaching $11.03 per square foot per month. Across our Singapore Grade A office assets, expiring rents in 2026 are largely below prevailing market rents. These positions are as well to capture positive rent reversion when leases are committed. Leasing discussions are already underway for majority of the near-term expiries. Looking ahead, CICT's growth trajectory remains firmly on track. We have clear income drivers that will continue to support growth, including progressive income contribution from Galileo, the addition of Paragon following its completion on 1st July, as well as the continued flow-through of positive rental reversions achieved across our portfolio. At the same time, we remain disciplined in managing our costs and capital. Energy rates for our Singapore portfolio have been hedged through to mid-2027, providing greater certainty over key operating costs. Supported by a strong balance sheet, a diversified portfolio of high-quality assets, we are well positioned to navigate market uncertainties, capture growth opportunities, and deliver sustainable long-term value to our unit holders. I'll conclude the presentation here. Happy to take any questions. Easy.

Hold your horses. May I invite the rest of the management team onto the front? Okay, so now let's come to the most anticipated part of the briefing, the Q&A segment. Before I start, I'd like to introduce the management team. So on Choon-Siang's right, we have our CFO, Wong Mei Lian. And on Choon-Siang's left, we have Head of Investment, Jacqueline Lee. And to her left, we have Head of Portfolio Management, Lee Yi Zhuan. Okay, a bit of housekeeping before we start. We will take questions one person at a time. If there are more than... and we'll ask that you only ask two questions per round. If you have further questions, we'll come back to you. And in keeping with the tradition, we will have Mervin Kigasol with the first question.

The floor is yours. Mervin from JPMorgan. Congrats, Choon-Siang, on an excellent set of results. Keep up performing expectations. Thank you very much. My first question, obviously, We have very strong results over the last few years. Is this the best we've seen? Will things start to moderate from here? Second question, any updates on Aga Yan's lease at Capital Sky? And in terms of tenancy, also Suburban seems to have slowed down a little bit in the second quarter, relative to the first quarter. Thanks, what's happening there?

Okay, I'll take the easy first question and then Yi Zhuan can take the hard questions. Okay, in terms of performance to date, I think based on pure numbers, it is our best first half, I think, ever. But let's not celebrate too early. We are waiting to see, hoping that the performance continues for the rest of the year. But as we have highlighted, we do have some growth drivers. I think first half results have not captured, I mean, to answer your question on whether this is the peak, we don't think so because this set of results have not captured some of the growth drivers that we have embedded as part of our initiatives that we have some of the acquisitions that we have done in the past as well and I think I've alluded to that in the last slide as well I mean Paragon has not been accounted in the first half numbers and that should be quite a strong driver even the 1.7% accretion that we have articulated when we did the acquisition So that should bode well for the second half results. Secondly, Galileo. I think that has contributed to some of the performance in the first half and it will continue to drive the performance for the second half because that was not fully accounted for in the numbers last year as we have fully handed over to the tenant pretty much early this year only. There was a little bit of income last year but not that much. Third, Thirdly, I think organically we have rental reversions are still positive. That will continue to help drive the growth for the organic portfolio. Fourthly, companies more. There was some downtime in the past few months because of the AEI. Lot 1 as well. Those will progressively start to contribute in the second half of this year for Tampines Mall and I think for Lot 1 we should expect the contribution from early next year. So there are still quite a few drivers that we have put in place that will continue to drive the performance of the REIT going forward. And we have not gone into interest expenses. I think Mei Lian and the team has done a very good job managing our interest rate exposure. We are now below 3% on average, and our marginal rate is still below that. If you look at our borrowing rates today, we're definitely borrowing below 2.9%. So although we are getting closer to our marginal rate, so the rate of decrease in interest expense will definitely come down, but we still expect it to inch lower going forward. Oh yeah, there's a second question.

Alianz and Sales. For Kepp Sky, right, for Allianz, we are already in talks with some tenants, prospective tenants. So it includes some tenants while we're looking at expansion space within the building. So hopefully we have some good news to share in due time. And for sales, for second quarter sales, it's true, it's a bit slow. I mean, the travel, tourist arrivals have been softened. We also see, you know, consumers' sentiments have also softened a little bit and it kind of translates in the number for second quarter. But generally, overall, it's still relatively resilient. So is this the peak of moderating? I would say that probably you will see a bit of moderation in the near term, but it should pan out well in the full year perspective.

Thanks, Choon-Siang and John. Do we have the next question? Rachel, please go ahead.

Hi, good morning, Choon-Siang and team. Congrats on the very strong results. So my first question is on Paragon Mall AEI. What are your thoughts about it? You have hold it for like a one plus month already if you can give us some details. Second question is on your platform divestment of assets. Any chance on divesting your overseas assets or still very much Singapore non-core assets?

So I think for Paragon, I don't think we have very much more to, I think we put out a statement earlier on the Metro when Metro announced that they will I think the position remains the same so we are reviewing what we want to do with the space as discussions are still ongoing so I don't think we have a definite plan to announce yet but there are a few things that we are looking at I think we have also mentioned in the statement Some low-hanging fruits like connectivity to the neighbouring buildings to improve the footfall. I think we are also looking at sprucing out some of the basic amenities. This is a case in point. Actually, there are some ongoing AEI that the previous management team has already done, which is, for example, this Paragon Club that was recently completed. But of course, I think on top of everyone's mind is what we are going to do with the metro space. Unfortunately, I don't think we want to get into a discussion on that as discussions are still ongoing with both Metro and other potential tenants. So there will definitely be some reconfiguration of the existing space. But in what form and in what format, I think, give us some more time before we are ready to make a full announcement on the AEI plan on that space.

What was the second question?

Oh, divestment. I think divestment remains quite similar to what we have said before. I think we want to focus on divestment of Germany. Unfortunately, I think the environment is not so easy with the higher inflationary and interest rate environment in the Eurozone. So I think that becomes a bit more challenging. But definitely we are We are definitely looking at starting a process over there, so we will see whether that results to anything. But there's always nothing to comment or announce until there's something to.

Thank you. Do we have the next question?

Having said that, I think that's not... Sorry, just add on. I think on the divestment, actually we have done quite a bit of divestment in the last... three or four years, although the headline has been around the acquisition of Paragon. Actually, let's not forget that actually we divested Asia Square Tower too, which is still in the progress of happening. We divested Bukit Panjang Plaza at a very attractive premium to valuation just February this year. Last year, we divested a service apartment tied to the Capital Spring, which allowed us to acquire the 55% of... So a lot of things were done that actually Darth Peel quite nicely with the whole acquisition story that we have been writing over the last 24 months. And then the year before that, of course, we also divested 21 Collier Key. So you can see that actually we have done a very systematic portfolio reconstitution, getting out of assets at a low 3% to mid 3% yield and acquiring assets at a much higher yield. So I think all of that has together helped to drive our DPU growth in a cumulative manner over the last few years quite significantly. Sorry, let's go on.

You can go ahead.

Hi, Choon-Siang. Congrats on the good results. Just want to check your views on WeLock putting out some of the sale of assets in Orchard Road. Is there any synergies that you see? together with your portfolio and would this have also had some impact on your valuation on your orchard assets you know by the end of the year and then second second question is of on the Australia portfolio can you give us some updates on the office market there what's happening there okay okay I'll take the real log question and then maybe each one can take the Australia so I think on real log

Are there any synergies? Even if we have plotted, will there have been synergies? Because we didn't buy it, so there's no synergy between us and Hong Kong Lend.

I think they also have another one that's up for sale also, potentially.

You mean Scott Square? Scott Square is not connected to ION though. But do you know the asking you for the asset? I think it's sub 2%. Although there are some, I think they have received some offers, but I think the yield will be sub 2% on the asset basis. But it's freehold, so I think it attracts a different set of buyers for their asset that potentially are buyers that are looking more long-term hold. Okay, so So the question is whether we're looking at asset, probably not because of the EU, right? I don't think anybody, any of our investors would like us to look at something like that. Wheelock, yeah, I think Wheelock has always been there, competing with Aion in a way, or maybe competing is not the right word. Actually, there's also a, I mean, it does help if Wheelock do well, it doesn't mean that Aion will not do well anyway. Anyway, Wheelock has always been there. sitting side by side to just because the ownership change doesn't necessarily change the dynamics of the two malls unless there's a major redevelopment that happens. But I think we are very far from that scenario. So yeah, not sure if I answered your question on that. There's not much more to add. I don't know what the buyer is going to do with the asset. I think on an asset basis, it won't change the dynamics of that whole area, I think. because they have co-existed side by side for a long time already. If anything, I think Aion probably adds to the value of your log more than the other way around. Okay, I don't know. Does that answer your question?

As for Australia, Unfortunately, there's not much to share, different from the last quarter in the third Australian market, not much has shifted actually. If you look at the CBD office market, it's generally still very centred around the core CBD, very premium assets. So those definitely have seen improvements in rent and we are also seeing signs that the incentive level for those has come up a little bit to the low 30s, 30%. But unfortunately for the rest of the fringe CBD, your North Sydney, your Midtown is a little bit stabilizing, benefiting a little bit of flow through from your core CBD. North Sydney is still having a vacancy kind of issue, because not fully absorbed at this point, there's a little bit of pressure in terms of vacancy, so rent has been relatively stagnating. And so for our own portfolio, the thing is that the team has been doing pretty well defending the occupancy of 101 Miller as well as 66G. We have also seen a little bit of improvement in 100 Arthur occupancy wise. So we are working hard to try to stabilize the occupancy while we wait for the market to turn.

Can we have the next question from Vijay, then we'll go on to Geraldine. Then Joy will come to you.

Hi, morning Choon-Siang and team. Congrats and a good set up as well. I have three questions. Maybe firstly on Germany, what's the cash occupancy or that is your at this point of time and what would it go to in the second half? Earlier there was a discussion on putting these assets on divestments, German portfolio. Has there been any updates on this? Secondly, in terms of Singapore office portfolio, I noticed there have been some last-minute movements in the Tanjabahar area, Allianz, Deloitte. etc I mean what's driving this is this purely rents or is there some other bigger factors why this tends to move into newer buildings in this market third finance cost I think team has done really well what's the guidance should be expected to go up thanks it's a lot to digest I think for the first question on what's the first question on Germany right divestment of Germany

So I think the cash occupancy of Galido actually is almost 100%. 97, 98%? Short of a small amount of space, it's pretty much fully handed over to the end tenants already. So that's the first part. Divestment, as I mentioned earlier, we have started a process, but more on the M.A.C. which is the main airport because we have not fully handed over Galileo and we have only just completed it so we want to make sure that we see through that handover so no hurry in any case that's almost 100% occupied and we're earning good income from that asset so no hurry to divest. So we want to focus on, if you want to look at testing the market, we'll probably look at the airport asset first. In terms of, there's a question about Tan Chong Paga, right? I think on the tenants moving out. I think it's very circumstantial and opportunistic. I think maybe Yichuan, you can elaborate on some of those. I think specifically asking about Ah Leong's and Deloitte, right?

I think for Ah Leong's case, it's pretty much a case where firstly, some of the buildings are new to the market, right? And there's a lot of people starting to build up their occupancy. They can offer very competitive rents. So definitely at times, certain tenants will actually fit the kind of profile where they will move for rents. That's one of the considerations. At the same time, getting a better quality asset in a way. But location probably not so sensitive. So in the Lord's case, probably similar where they are actually moving to something where the direction of how they want their office and the location is one of the triumphant factors. So then the next question is why some of these tenants can't come in to us also when some of these bigger size we always have this problem where at this point our occupancy is relatively healthy so actually we do have a few tenants in the market up there located 100,000 square feet for example and those are not what we can accommodate so there's always some of these musical chairs so right now if you look at which office buildings now can accommodate big size right Shaw Tower and Capital South Central. Sometimes it's not just fully because of the asset or the location right it's really down to whether the availability of space and so what's driving some of these movements right I think in market everybody is very aware that actually if you look at new supply in the next three to four years it's actually quite limited in CBD So now a lot of corporate real estate, they are struggling with this dilemma. On one hand, the cost of moving is very high. On the other hand, they are aware that if they need certain size, they need to make a call at this point. So even for landlords like us, we are already talking to tenants in 2027, 2028, from both trying to get tenants to join us, but on the other hand also to be defensive in intention. So we are speaking to some of these tenants really early. So a lot of decisions they are also forced to make early because if they want to wait for another year that space may not be available in the next year especially if they are very particular about quality or location So some of the tenants also have been coming to us to try and see you know whether or not they can actually secure their expansions and renewal spaces within us and so some of these movements that we have seen you know like just now we started off with one of the cap sky tenants right some of these movements are actually good for us because they actually allow some of the tenants within our own buildings to grow like capital spring i also face an issue where when a lot of tenants when they sign at the and so on. So I think it's really important for us to be aware of that. I think it's really important for us to be aware of that. I think it's really important for us to be aware of that. I think it's really important for us to be aware of that.

We're not too concerned about it because I think this is really timing, right? I think every time there's a new building like Shaw, you expect a little bit of a musical chest but I think Shaw is pretty much I think 60-70% filled already so I think the remaining spaces they will not be able to cut rent to try to entice people because they probably need to make the underwriting work. And I think Exit rents for some of these tenants, A Liang specifically for example, is quite below where the building parking rent is. So I think we are quite confident that we will be able to lease out with positive rental reversions if we need to fill up the space. In fact, I think the momentum is there. I think we have seen our office occupancy moving up as well. So the leasing momentum is there across all of our buildings and we expect this momentum to sustain for the next few quarters because I think now most of the new buildings have already been spoken for in terms of the anchor tenant. So I think the supply continues to be tight. We do expect occupancies to continue to improve. I think that was the third question on financing cost. Maybe Mei Lian can take that.

On financing cost, first half is 2.9%. So between first Q and second Q, it's relatively stable. But going forward for this year, in second half, we do see that we have to take up more loans for the acquisition of Paragon. and because it's happening ahead of the divestment of Asia Square, there is a fair bit of floating rate loans that we've taken. So that has the effect of lowering the cost of debt in the quarter prior to the completion of AST tool. So that would sort of have some effect of allowing the average cost of debt to inch down slightly

Jardine Morning, Choon-Siang. Thanks for taking my questions. Maybe just two quick ones. I think first on reversions, I think retail is down from your usual 5% or higher. So what's driving that? Is it macro? Is it spending? Concerns on RTS? And with Paragon and your AI competitions, are you expecting that to come in a bit higher? For office as well, I think next year you have some quite large anchor leases to renew. Are you expecting that to stay or Go even higher. So that's my first question. I think second on pipeline development and AEI looks very fruitful from now to 2030. Are you actively looking to add on to that?

I think for rental reversion, it has softened a little bit. I think it's partly due to a few large leases. Yisheng can comment on that also. There is also a bit of the effect of the AEI because when we are going through some of the AEIs, of course, some of the renewals will not be able to be as aggressive as for a normal mall. So I think I'll let Yichuan elaborate on that. And for rental reversions, maybe I'll touch on the second question first before I hand it over to him. In terms of our pipeline, as you rightly pointed out, I think we have a very strong pipeline. We already have the outcome development. We have some AEI, we have Plaza Singapura AEI potentially in Paragon. So we are, I think ideally we want to have a consistent So that you know there's an entry and exit in terms of cash flow. That's what we are trying to do. Build up a consistent portfolio of AEI so to speak, maybe two or three, so that you can recycle them every two to three years so that the cash flows can match. I think we are open, I think we still have some capacity in terms of our balance sheet, in terms of our resources and in terms of our ability to commit because Tampines Mall and Not One will get completed end of this year anyway so that you will free up some capacity in terms of both management resources as well as financial resources and our development limit is not anywhere close to the threshold yet by virtue of the fact that we have such a large asset base But I think all this is very opportunistic. Of course, as with all things, we look at everything with very keen financial eyes and perspective. We only want to do things that ensure a certain rate of return to our investors. So we'll see what comes up. If there's anything interesting, we will definitely want to participate if it makes sense.

So for the reversions, it's true that this profit is a little bit lower. It's really quite specific to a couple of assets and leases in the downtown where we are undergoing AEI. So that kind of helps to pull down everything. The sub-urban is helping to, on the other hand, pull up, maintain some of these. So sub-urban rent reversions is still relatively healthy. Overall, I think at this point in the market, Retailers are under pressure in terms of their margins, manpower cost, operational cost, and we always stress that when we look at some of these rent reversions, we want to make sure that the trade mix is correct, the tenants is correct, and then when we look at the reversions, we just want to hope that it's actually something that's sustainable, that can align you growing your business with Lux.

It's still within our range of needs and go digits. 4% for, I don't know, it sounds so doom and gloom, but 4% to 7% is not too bad. If you look at the GDP numbers that came out yesterday, 5.9% GDP growth in second quarter, forecast of 4.5% to 5.5%, I think all of this will have positive spillover effects to retail spend in general. I think if you look at retail sales, it's been up quite consistently despite what's been happening around the world in terms of geopolitical tensions. But Singapore seems to be holding out quite well, both in terms of GDP growth, retail sales, and overall economic environment. I think generally, I think the mood is actually quite optimistic and bullish is my sense.

Hi, Joy from HSBC. Choon-Siang, we're still seeing you bidding for the Bayshore plot as well. So I guess from a development perspective, what What percentage of a balance sheet would you be happy to spend on a development project? And also just broadly, if you think about investing for growth going forward, how would you stack core assets, development, AEI, and where you're seeing best returns at this point? Thank you.

I think our regulatory limit is 10%. Fortunately, we have a very large asset base, so we are nowhere close to that. I don't think there's a target we're trying to hit. If you ask me 12 months ago, maybe the number is zero. But I think it really depends on the opportunity. I think OutGound was quite a unique opportunity. Be sure we did participate, but I think it's not It's slightly different. I think our approach to the BHO building is a bit different. I mean if you look at the pricing that we enter at and all that, it's actually quite different from how we price outcome. It reflects our desire for that site as well. So just because we bid for a site doesn't mean it's a must-win site also. So then we just price accordingly based on the attributes, the attractiveness of that location. So so in that sense we we do view outcome as a more attractive proposition to say Beishong right because it's a much larger and much more there's a bit more scarcity element in that location so yeah so how we bid also reflects our risk appetite for that location so just because we bid doesn't mean that we are trying to grow our development pipeline right So that answers your first question.

I think the second question was on...

Okay, so I think if you look at how we look at investment returns, naturally AEI offers the best return, usually, because we have always talked about ROI of about 7%. Unfortunately, the capital deployed for AEI usually is quite small. So even if you get 7% on $100 million, it's not as meaningful as 5% on $3 billion, for example. And there's only so much you can do for AEI. We cannot do 5 AEIs at any one time. So that, to me, forms the base of our core value add. Development provides a better return than, say, buying. So I think to us, development will never make up more than, by virtue of the fact that we are limited anyway, it will not make up more than 10% anyway. So it will continue to be a very small part of our portfolio. So I would say that the bulk of our portfolio is going to come from organic, inorganic in terms of acquisitions, with a small contribution kicker coming from development. It's not going to be our key focus for us.

Okay, Shen please. Can we pass the mic to Shen?

Hi, morning.

I just wanted to ask about 2027 DPU growth. Because this year, we look pretty much set. But going to next year, it's a higher base.

I'm assuming there's lower interest cost savings and so on. So what are the growth drivers that you're working on? Any downside risks that we should be aware of? Thank you.

Okay, so I think it won't be that different from... Okay, let's... So rental reversions continue to be positive this year so that will drive next year's growth. Need single digits so you will still and it's not that different from last year I mean in terms of rental reversions I think those will continue to underpin the organic side of the growth which call it you know low single digits one and a half to two percent for organic. This is how I typically respond to your outlook question. and you guys are used to it right now. We'll start off with organic, then we'll talk about AEI, and then we'll talk about inorganic, and then we'll talk about capital cost. But what are the new things, right? Because this year is kind of spoken for. We do have AEI coming up for two. One is Tampines and Lokman. Of course, the capital deploy is not that big. So we're talking about, we probably deploy about 50, 60 million, 7% return, you get about another four or five million. That's half a percent, right? It's only that half a percent. Paragon, you have six months this year, but you get 12 months next year. So you get half the accretion that we talked about, which is 1.7% for a full year, so you get 0.85% for a half year. We're just talking about big numbers. Then we have, so this continued, so it's not like we can't see the drivers. We continue to see the drivers for 2027. Actually, it's 2028 that we are planning for now. I think next year we still have some drivers. The other one, of course, is interest costs. I think there is some room to bring it down slightly. Probably not at the... I mean, it ended last year at what, 3.6? 3.4. Now we're at 2.9. I think we can't expect another compression of 0.5%. Next year, where will we end it? Never ask the CFO. She'll never give an answer.

Yeah. Yeah.

I don't know if we have any more room to cut rates. I think at this current juncture, limited room to cut rates. Hope that interest rate will stay stable. And we continue to work on improving the spreads that we are getting financing on, whether bond spread or loan spread. So that would help to some extent, but I would say not to the extent that we saw versus last year.

And I think Sora continues to be anchored at around 1 to 1.1%. Doesn't seem like it's going up. So we still have some floating portion or so. So I guess you will still get some marginal drops. I think 0.1% drives our DPU by about what? 1% thereabouts. So at that all together, you kind of get the kind of potential growth that we're looking at, I guess, for next year. Any risk? Of course, there's always risk. Okay, I mean, we are doing an AEI for, I'm not saying risk, but there will be some downtime for some of the assets also. So not to pay in an overly bullish picture in terms of our TPU growth. We are embarking on a major AEI for Plaza Singapura. So there will be some cash flow impact over there as well. Hopefully mitigated by some of the inflows coming in and some of the other growth drivers that we have. The biggest risk will always be interest rate to me because that is the single biggest driver of I think in a way that risk has already been priced in in the current environment since the Iran war I think the market has already priced in a certain elevated interest rate environment to last a bit longer. So that's, I think economically we've talked about how the economy is doing relatively well in Singapore. I think the supply situation in real estate looks very well controlled as well, both in terms of office, CBD office, as well as retail. So I think supply is in our favor. The other thing that actually we haven't touched on is some of our operating costs is managing quite well. There is generally an increase in OPEX but I think our utilities cost next year will come down because of the way we have hedged our utilities cost next year so we do expect fairly significant savings in terms of utilities cost so that should mitigate some of the OPEX increases and overall achieve better margins for us.

I just have a quick question on ION. I think one or two quarters ago there was a big swing in the numbers if you include or exclude ION on the operating metrics side. Was it rent reversions or tenant sales, right? I just want to have an update on what's the current performance, whether it's tracking in line and also post the AEI for Paragon, can the parking rents for these two assets be closer to each other?

Okay, so I think what you're referring to when we present the numbers is the sales. But that's because we include and exclude ION because of a like-for-like comparison. Because in 2024, we did not own ION, right? So when we include ION, then it's a big jump in sales numbers on a consolidated basis. But we always strip out the effect of ION just to have a like-for-like when we compare. But that is not so relevant this year anymore because we have owned ION. Aion since November 2024. So when we compare sales numbers this year, we don't have to strip out the effects of Aion. Maybe we have to do it for Paragon next year going forward. Yeah, so Aion as a more is doing well this year. It's tracking well in terms of sales to your second question. So we're not too, we're actually quite happy with the performance of Aion. It continues to drive of course you won't see the big delta that we see last year because but last year was because it was an inorganic driver right because 1324 we didn't own Aion this year is more organic growth but the organic growth yeah Aion is still quite strong um third question was whether the gap between Aion and Paragon will narrow uh no i don't think just because it changed ownership you expect the rents to to to be the same uh to narrow uh because the tenant base It's still locked in, right, for now, between Aion and Paragon, and it reflects the unique characteristics of the location. After AEI. Oh, after AEI. Oh, we haven't even talked about what AEI is yet, so it'll be hard to address that question. No, I don't think so. I mean, I think Aion has a very unique locational advantage that Paragon does not have. regardless of how we value Paragon. Paragon has unique characteristics that Aion also doesn't have. Proximity to Mount Elizabeth, we have our own medical centre and that medical centre itself actually drives some of the rental growth as well. which ION doesn't have because ION is 100% retail. So we are in a way an integrated development where the medical center traffic also helps to drive some of the performance of the mall. But underlying the performance of the entire asset is also the rental growth and the medical center which is actually stronger than the rental reversion for retail components. But if you ask me whether Paragon will become like an ION in terms of rent for retail, I think it's not so easy because like what we mentioned because of location. I mean ION sits on top of MRT station which Paragon unfortunately does not have that advantage and there is ultimately a difference because of the footfall, the natural The driver of footfall is linkage to a lot of this transit and infrastructure.

Perhaps we can turn our attention to the online questions. Can we have Mei Peng read out for us?

We have received a total of three questions. Two are from the Straits Times, Benjamin. His first question is that it seems that the trend of a major department stall Being a mall's anchor tenant is on the wane, with Metro leading Paragon and Isetan closing its Tampines Mall out last year. So what is the strategy going forward for an anchor tenant, and will you also be exploring a new concept for Paragon and or other malls to retain footfall? So that's the first question. The second question is, will you be exploring converging some of the malls to office spaces like what has been observed in other Orchard Roads most recently? Second question. The third question is from Mr. Yap. Our usual question, what is the status of the Aion Orchard text transparency?

Oh, okay. I'll take the easy third question first. Answer is no update on the text transparency for Aion. Will we convert some of our more space to office like Orchard Central? Answer is probably no because our retail space is quite valuable. I think that conversation is only relevant if the retail space in question is not working out well. Because actually rent for retail is always higher than rent for office. So you will never convert to office unless the underlying rent for the retail space is actually lower than the office rent which is actually Quite a big gap. So I think generally, no, because most of our video spaces are actually quite fully occupied. Okay, the hard question, leave it to Yi Zhuan. The first question.

On the departmental side, I think just like cinema, there's always trends and how things are going. For departmental stores, it used to play a very important role in anchor the variety of things they bring to the mall and of course then you drive the football and give stability and in exchange actually sometimes most of the time rather the event is on the lower side of things right. In the current format of stores right We have a very strong operator who have very direct access to a lot of all these brands. If you look at companies more right, when we took out East Day Sun, we replaced with a lot of beauty brands and Lux beauty brands for example. So we have all this access. There's a lot of these brands actually we can actually reach out to them directly. And then the inherent question is, What role does the departmental store play? Eventually, this is something that the departmental stores themselves have to come and think through how they want to reposition. It's not to say that there's no place for departmental stores. So it's just a different format. I mean, there are still some departmental stores around Singapore that are doing still okay. In fact, if you look at some of the overseas market departmental stores, it's still a very key part of the overall shopping experience. But at least within the Singapore context, its ability to drive food for experience everything is something that they have to keep up. If not, you know, there's a lot of all these things that we can do at a mall level. So some of the AEIs that we have actually shared recently, We actually move a lot more into experiential dining, experiential concepts. And in some of the places where we talk to tenants, some of the new tenants, we really try to look at not just beyond selling a product itself, but quite the kind of experience that they're trying to sell. And then on our end, we try to curate that holistically on a mall-level basis. So this is how we kind of see things that we can pivot over time.

I think Rachel, you can have the next question.

Thanks. Maybe just a few more questions. On Relog Place, do you see Hong Kong Land as a big competitor to you? Because they do have connections with the luxury brands as well. So are they going to revamp the mall and be a competitor to you? Second is, I think we didn't really speak about acquisitions. I mean, you have done big acquisitions last year, this year. Are you going to see another big one next year? Sponsor or third party, still Singapore? And last one, I think MAC occupancy dropped to 75%. Could you give us some color? And dropping to 75% occupancy, can you assist our MAC?

Okay. Do we see Hong Kong land as a competitor? I think... No, I think we can co-exist. Like I said, Vulo has always been there as a competitor to Aion. Whether you call it competitor or you know, I don't think it makes a difference if the ownership changes unless they somehow revamp them more. But I mean they haven't said what they're going to do with the asset so we don't know also. If they keep it as it is, I don't think it makes a difference. Is it easy to revamp the mall? Not so easy also, I think. Because Willow Rock doesn't have the frontage, Orchard Road frontage, if you look at it. They only have a small sliver of frontage to Orchard Road, which will be quite challenging to attract luxury brands. Because they all want the Orchard Road frontage. So we don't know, to be honest. We'll have to see how... But you know, malls in Orchard Road, just because another mall next to you do well doesn't mean you do worse actually. There's a little bit of complementarity to, it actually adds to the vibrancy when your adjacent mall does well also. I mean, if you look at, you know, Wisma, Taka, and Aion as a collective belt, actually everyone doing well benefits the others because it just brings traffic to the whole area. So today I think we are talking about, you know, the whole of Orchard Road competing against Marina Bay, competing against Suntec City, Vivor City. So I think it's actually good that we have some rejuvenation of Orchard Road. If Hong Kong Line is able to attract a new footfall to Willock, I think that's actually good for the area overall. So I don't see that as necessarily a bad thing. Every time there's a rejuvenation of an old asset on Orchard Road. In fact, we welcome it. Whether it's Hong Kong Line or somebody else, I think the better... and more refurbished assets are. Whether there are new concepts, I think it's better for all of us. Next is... Oh, Mac. Mac occupancy. I think we can still... I mean, it doesn't preclude us from looking at it. It's all a matter of pricing, right? The question is whether... We are able to get the pricing that we get. So we don't know. I mean, the market has been challenging for a while. So the question is, is there a right time? And will it ever get to 100%? We don't know. So I think there's no harm testing the market to see what kind of offers we can get. End of the day, it's not a big asset. so then we have to make an assessment depending on what the what are the kind of uh crisis that we see in the market um yeah acquisitions oh i also want to know acquisitions as you know we typically can't really comment that much unless there's something tangible um but I think I will rather answer it by giving parameters. I think if there's any acquisition, it's most likely going to be in Singapore. I don't think we are looking at any acquisitions in Frankfurt. So we do recognise that investors are invested in CICT because of our exposure to Singapore. So we want to continue to remain, make Singapore a dominant are all part of our portfolio. So the question is, what other assets can you buy? I think there are quite a few things in the market. Office has been quite like this. I think most of you are aware there are quite a few assets in the market in terms of office. I mean, of course, we will take a look if it makes sense. With the interest in Singapore assets, the pricing seems to be getting a bit more and more challenging. People seem to be prepared to pay higher prices for some of these assets, which bodes well for existing assets. Given that we are the largest landlord, I think any increase in asset values generally is overall good for our portfolio. But it also makes it harder for us to acquire because the numbers are harder to make it work. We'll review the opportunities that are in the market to the extent that makes sense. But like I said, we already have, you also already pointed out, we have done quite a few large acquisitions. I think that I'll digest a little bit. Yeah.

Any other questions? Sorry, Marvin. He beat you to it.

Hello, hi. I'm Joby from Davis, Singapore. Thanks. Just two questions here. It's been some years since CQ at Clark Key has reopened. Some would say that the final piece is complete now that ZOOC has reopened and refurbished. How is that property performing compared to your other assets downtown, both in numbers and also has the day-to-night proposition played out, especially the night part at Clark Key? And based on your team's prior experience in repurposing space at other malls with AEI, what is your plan to refresh the large spaces left behind by tenants? So looking at Plaza Sing for example, we've seen other mall owners use very creative ways to replace cinemas that have left space behind. So what is your plan of attack for the cinema space at Plaza Sing?

Do you want to take the question?

Sorry, the first question. CQ and Plaza. Is that the final piece of the puzzle? I would say no. It's always a work in progress. I would say, in fact, quite a country with ZOB reaffirmed their long-term plans with CQ and then the recent renovation that they have done. It's just going to help us put some of the pieces together for next growth when we look at Canning Hill completing end of this year and some of the tenants coming through. and just beyond ZOOP, actually some of the tenants that has already bid in Clark Key itself has also been quite positive in the directions that we are heading and actually some of them are actually expanding or trying to expand their presence within Clark Key itself. So it's something that definitely we will get. From a numbers perspective, we talk about occupancy, we talk about numbers, definitely there's room to improve and hopefully next year we will kind of see from this come true. But of course, we are at a very tricky part of the transition in terms of nightlife and daytime trade. So changing the perception takes time. Getting the right trades, building up all these, it's something you have to invest a bit of time in it, which means that rather than just pulling tenants who are happy to come in at regardless of price and rent, we want to really curate the right tenants, at least to anchor the starting point. So once we get that right, the right brands will come through. and then I think on the sites beyond Quality Ski Sing, I think what is less visible to a lot of people unless you actually actively go there is the amount of effort, the marketing effort has been done to actually do activations. So nowadays if you go on the weekends, in the morning you see crowds there doing exercise, doing the favourite types of events, they bring pets there. At night you also start to see that Zoop with the reopening, the queue is pretty long, so hopefully it sustains that also. and beyond that like I think you all have probably seen Luke's News release themselves beyond just traveling a destination they are also looking at corporate events and they are not just the only tenant there right actually like a few other tenants are also looking at the afternoon corporate crowds so how do they actually tackle those pieces so overall those will continue to build the second question is with Plaza Sing Okay, then it goes back to the cinema space, how we actually repurpose some of these. So for Food Level 7, we are actually going to do something a lot more experiential, dining as well as some of the entertainment. You will see that coming through. I always share, I mean, looking at just replacing it on its own is not always the hard part of the question because conversion of cinema, of course, is going to cost a lot of money. On the second part is that when you find a replacement, does it actually add on to the mall or actually takes away? So cinema is not that nobody is going to cinema. It's not that people are not paying rent. They are still paying decent rent, right? And if the substitute is not going to be better, then there's no point. So we are aware that CENIMA is on a certain trajectory in terms of the relevance. The question is at which point do we do the switch over for the different assets that we have. Yeah.

All right. Okay, moving. Ken has the last question.

Maybe you allow me to speak more than one. Capital incentives, we mentioned that they seeing maybe 9% to 10% drop in electricity cost this year. and next year they also expecting a 30% drop in electricity cost due to the Kaplan group buy or bulk purchase. But are we seeing something similar for CICD as well? On Paracon, when does the Mark & Spencer lease end? And for this property itself, where do you see the greatest opportunities? There's upside, obviously everybody's focused on the macro space. You see upside in the medical suites, office, Baseblend, F&B, Kids Offering, which I think all of us love. And anything else you want to mention? Thanks. Yeah.

Thanks, Mervin, for letting us talk about our bullish side of the business. So electricity costs, you're right. I think Kla has talked about the reduction. I mean, in terms of the electricity cost, this year it's going to be some savings compared to last year. It does help drive some of our numbers as well. and the reason is because we actually enter into a different hedging contract that allows us to lock in rates that are a bit lower than what they used to be. And next year, I did mention this earlier as well, that we will see some significant savings. I think in terms of the percentage numbers, I think headline rates will come down to similar levels to what Clara has suggested. because we all procure from the same and we all get the same rates. So tariff-wise, we will see quite significant drops in terms of our tariff rates. Is it up to 30%? Yeah, about. Yeah, thereabouts. We are getting the same rates as them. Second question was on Oh, Mark and Spencer.

Mark and Spencer just renewed 3 years, so it will be a while before we have a renewal discussion.

But on the upside, biggest upside from Paragon is also your related question. I think the obvious one obviously is Metro that everyone is looking at. whether it's going to be how much upside we don't know as I said it's but I think the rent is not demanding so but as with any reconfiguration it's not just about the rent uplift it's also about the downtime it's also about because of course departmental store always takes up the deepest and they take up a whole space right so if you need to reconfigure them you may need to create walkways and all that so you might do some NLA so we have to look at what's the best way to do it But we have done this many times obviously before, and we have done that relatively successfully at Raffles City when Robinson passed, so it won't be the first time we are looking at something like that. but anyway we are exploring quite a few options so hard to tell what's the upside from that without knowing what's the concrete details but I think outside of metro actually the biggest upside I see is actually the medical block because of the healthy rental reversions which I have mentioned previously as well and it's actually not small because it's actually about 30% of the NLA and the rental reversion actually is quite healthy. It's probably in the double digits compared to the retail spaces which tends to be... The retail side of the business tends to be quite in line with the rest of our retail space which is trending about mid-single digits kind of rental reversions which is quite in line with sales numbers to maintain the occupancy cost.

Lastly, Choon-Siang, would you like to share some closing remarks?

Thank you very much. I think it's a very good round of discussion as always. I think we have arranged properly so after this we can have a quick tea break. Thank you very much again for all your questions. Please feel free. I think we will hang around, mingle. If you have any more questions, I'll be happy to take some of your other questions as well. Thank you very much.

Thank you everyone.