Link Rl Est Invt Tr Uts

On the stage, we have our Chair of the Board, Mr. Duncan Owen, Executive Director and Chief Financial Officer, Mr. Ko Shung Un, Executive Director and Chief Investment Officer, Mr. John Saunders. So on the screen, you may find today's agenda. And without further ado, let me hand the floor over to Duncan to give an overview of our results.

Thank you. Thank you, Christy. Good afternoon, everyone. Whether you're in the room at our offices in the Quayside here or watching via the webcast, thank you for taking the time to join this session. We're here to report the full year end results for LINC REIT 2025, year ending 2026. But before we cover the details of our results, I'd like to just start speaking on behalf of the board and management to say that we've been listening carefully, reflecting on the views of our unit holders and other important stakeholders. Our response during the final months of 2025-26 and going into the new financial year has been to go back to basics, focusing on our key competitive advantages as owners and operators of retail malls and car parks in APAC. What that means is focusing on our core assets and our core skills. This is why in January's announcement we confirmed that no less than 80% of Link's balance sheet capital would be invested in core competency and currently we indeed have over 90% of our assets in this core area. Whilst we will continue with partnerships, principally for value add opportunities with higher returns, these activities should not ever be more than 20% of the balance sheet and they will normally be a lot lower. Our immediate focus is therefore now on reinvigorating the existing core portfolio, divesting non-core assets, which means the sale of mainly offices and warehousing, and buying back shares where pricing is attractive for unit holder returns. Back to Basics is also about streamlining our management structure and adopting a more disciplined approach to capital allocation. Turning to the headline numbers for our full year results ending 2026, the overall net property income is down 3.7% year on year, due primarily to negative reversions in our Hong Kong and Chinese mainland portfolios. Our distributional amount per unit reduced by 6.4% to HK$6.5 billion with a final dividend of HK$2.54 per unit. In anticipation of the negative reversions in the core retail business, we have undertaken significant cost optimisation which KS will update you on in some detail further. It's worth noting that there are encouraging signs that the wider retail sector in Hong Kong is now recovering in consumer confidence and investor interest returns. Whilst we're seeing rental levels begin to stabilise, negative rental reversions however will persist at around the same level during the year that we're in now ending 27 as compared to the year end we're reporting on now in 26. This is because the renewals in the current financial year will normally be for leases which were commenced approximately three years ago at higher rental levels due to post COVID optimism at that time. Our cost optimisation efforts will help partially offset the impact of these negative versions on earnings and distributions. We also remain watchful and prepared for continued growth in e-commerce. We've taken steps to reposition our offering and capture revenues where possible from the changing environment and John will speak later about these initiatives. It remains to be seen how deeply e-commerce will penetrate Hong Kong, given the relatively compact nature of the city's communities and the convenience of our mouths. The ultimate level of penetration that e-commerce achieves may not reach the same heights as whoever has seen in other Western economies. Having said that, it is a threat that we are taking very seriously. It remains just for me to say in the mid to long term, we are confident and passionate about the outlook for Link. We enjoy exposures to Asia's growing consumer markets and remain a high-quality operating business with a strong balance sheet, an increasingly clear strategy, high levels of corporate governance, and capacity to attract high-quality international investors. Thank you for your continued support. I'll now hand over to KS and John to run through our results in some detail.

Thank you, Chair. Good afternoon, everyone. Great to have you with us today. As Duncan has mentioned, we have been managing the challenges in Hong Kong and the Chinese mainland retail markets. Overall, NPI was down year on year, mainly due to negative reversions in our core Hong Kong and Chinese mainland retail portfolios, amid continued competition from e-commerce, payment wage increases, and weak consumer sentiment amid macro volatility. Kapak income remained broadly stable, with tariff growth from initiatives such as dynamic pricing offset by a decline in ticket volumes. Our international retail portfolio saw positive rental reversion and continued strong momentum. While we are seeing market rents are beginning to stabilise, negative retail reversions in the Hong Kong retail portfolio are expected to continue into 2026-27 at levels similar to 2025-26. On the cost side, we surpassed the original annualized savings target of HK$200 million in the second half of 2015-2016, with the benefits flowing directly to the bottom line to support GPU. We will enjoy the full-year benefits in the year ahead as we move forward with a cost base that better fits our expected revenues. On the portfolio side, we are staying disciplined, actively managing our assets and recycling non-core assets. Our recent divestment of the swing-buy at Thompson Plaza stick, which we agreed to sell at a premium of S$250 million, underscores our commitment to optimise our portfolio. John will talk more about this. Looking ahead, our priority is to stabilise earnings over 2627. I should note, however, that external factors such as the evolving US-Iran situation could influence the outlook. Rest assured, our team is monitoring developments closely. With that context in mind, let me walk you through the key figures. MPI was down by 3.7% year-on-year due to negative reversion in our core Hong Kong and Chinese mainland retail portfolios. To mitigate this impact, we reduced staff and GAN costs by 14.5% year-on-year through a broad-based organizational streamlining. As a result, we managed to limit DPU decline to just 6.9%, with a final distribution of HK$2.54 per unit. Total portfolio valuation is to HK$216 billion, reflecting lower rental assumptions in certain markets which we will elaborate on later. We continue to maintain a robust capital position amid the challenging and volatile macro outlook, through disciplined capital management, Effective interest cost control and maintaining an optimal fixed rate hedge ratio. This enabled us to lower our average all-in borrowing cost to 3.4%. Overall, our financial position is robust with net gearing at 23.9%. Now, moving on into more detail on key operational and financial highlights. We retain high occupancy levels in our retail portfolio. In Singapore and Australia, we achieved near full occupancy and double-digit positive rental reversions during the period. Meanwhile, the office and logistics portfolio remained steady, supported by high occupancy and leasing demand amid competitive supply. We have benefited from a lower highball locally and have prudently managed our interest rate exposures, with expectations of diverging monetary policies across APEC. Asset valuations continue to diverge across markets, reflecting lower market rents in Hong Kong and Chinese mainland, while holding up better in Singapore and Australia. I'll now turn to the portfolio breakdown. As of March 2026, total valuation of the LR portfolio stood at HK$216 billion, down about 4% year-on-year. Core retail and kapak assets continue to form the backbone of the portfolio, accounting for 90.4%, with the remaining 9.6% comprising other assets including offices and logistics. Geographically, Hong Kong and the Chinese mainland retail remain the key markets, representing around 82% of the portfolio value, while international retail assets in Australia and Singapore make up around 8%. Looking more closely at valuation adjustments, movements were mixed across the portfolio. Non-retail assets generally recorded more significant declines, while international retail assets saw valuation gains, particularly in Singapore and Australia. Ongoing weakness in rental performance across Hong Kong and the Chinese mainland has weighed on valuations, while stronger rental trends in international markets have supported valuation stability in local currency terms. We expect valuations to continue to normalize over the coming months, given their lagging nature relative to underlying performance and market conditions, with changes reflecting the prevailing operating environment. Our capital position remains robust, supported by disciplined capital management, effective interest cost control, and a high fixed rate hedge ratio. As of end March, net gearing remained at a healthy 23.9%, while average borrowing cost improved to 3.4% through proactive interest rate and financing arrangement. During the year, we refinanced around HK$25 billion at very competitive rates at unprecedented credit margins, including the pricing of US$600 million senior unsecured notes at a coupon rate of 4.875% in February. This extends LinkGrid's debt maturity profile and further diversifying our funding sources. Our fixed debt rate ratio is within the prudent range of 50-70% at 60%, reflecting our continued careful management of interest rate exposure and heightened uncertainty over future rate movements. Over the past 12 months, total debt increased slightly from $53.5 billion to $56.7 billion, partly due to currency translation effects. Our debt maturity profiles remain healthy, with the average standard lengthened to 3.5 years, and well staggered over the next 12 years. Strong A-range ratings across all three agencies support favourable funding terms and future financing flexibility. With that, I'll now hand over to John for the portfolio highlights. Thank you all.

Thank you very much, KS. I'll now walk you through the Linkrete portfolio highlights, starting with the performance of our Hong Kong retail segment. Hong Kong retail occupancy remained solid at 97.8%, although revenue declined by 3.9% year on year, and rental reversion reported a negative 8.2%. Overall tenant sales showed improvement, with the decline narrowing to 1%. Food and beverage delivered 1.2% growth, while supermarkets and foodstuffs saw a marginal dip of 0.5%. The overall decline in Lynx tenant sales reflected softer performance in the general retail segment amid continued increase of competition from Chinese mainland e-commerce platforms. But overall occupancy costs stayed at a very healthy 12.7%. So taken together, these metrics do suggest that while challenges persist, resilience remains evident in our core retail portfolio. We continue to proactively refine our tenant mix to stay ahead of evolving market trends and we'll share more details on these initiatives in the next slide. I'm very pleased to say that our leasing team signed 207 new brands and 587 new leases during the reporting period and tenant retention Remained extremely healthy at more than 80%. We have also been seeing the green shoots for Hong Kong's recovery and its economy. And we've been seeing that in our own portfolio in terms of both stabilizing spot rents and also in terms of improving tenant sales. In response to continued e-commerce disruption, we're actively reshaping our trade mix towards in-person experiences and service-led offerings. These include fitness centres, learning and interest classes, game and family entertainment, but with a reduced emphasis on categories such as fashion and electronics. At the same time, we're strengthening our focus on health and wellness to better serve our communities, including the addition of fitness and elderly care facilities to address Hong Kong's ageing population. We have also capitalised on growing demand from Chinese mainland brands, Introducing new operators across key segments whilst refreshing the tenant mix and replacing underperforming tenants. Meanwhile, our tenants have also been responding at pace by simplifying their own supply chains. As an example, supermarket retailers selling daily needs produce where a kilo of bok choy might have had many intermediaries between farm and shelf a number of years ago, but now today is being directly sourced. Also today, much of the fulfillment of online grocery or food and beverage retail is happening directly from the stores in our own malls. And I'm pleased to announce that we have launched our own pickup and fulfillment service, Link Collect, which opened in April. The service is all about meeting the needs of our communities, and most importantly, keeping shoppers in our assets. Rather than letting our shoppers leave the malls to go to pick up sensors outside, It allows us to retain the footfall and encourage ancillary spending, perhaps a drink or a bun, when people collect their online purchases. It also enables us to reinvigorate quieter areas of our centres while providing, most importantly, information about e-commerce patterns and trends, which will allow us to be better educated and refine our strategy and our mix. Revenue from car parks and related businesses remained broadly stable. While monthly income softened due to lower ticket volumes, the increased hourly income helped offset much of the impact. We continue to enhance the car parks and overall experience across our malls using real-time analytics at scale. This enables us to further improve car park efficiency while delivering greater flexibility and value for our shoppers. And with rising EV adoption, Demand for charging-enabled parking continues to grow. And with Link as a leading provider of public EV charging facilities, we are well positioned to benefit from both the longer dwell times, which support parking demand, as well as mall footfall. In parallel, we refined our promotional parking arrangements as part of our ongoing optimization efforts, transitioning to a nominal $5 per hour charge. We continue to progress asset enhancement with a HK$600 million pipeline to upgrade and reposition our properties, ensuring that they remain fresh and relevant, and well aligned with the needs of the communities we serve. In the second half of 2025-26, we invested HK$67 million to revamp Yat Tung shopping centre, as shown on the slide. We have upgrades to the façade and common areas, which enhance the community experience, while improvements to the trade mix and activation of common areas created additional sales opportunities. And all of this resulted in an expected ROI of around about 10.6%. During the year, we also revamped the Choy Ming Fresh Market, Le Yumen Plaza, and we completed placemaking at both Temple Mall and T-Town. Now turning to Chinese mainland retail, A subdued operating environment continues to impact performance across our portfolio, with overall rental reversion printing at a negative 14.3%. Performance across Tier 1 cities was mixed. Shenzhen and Guangzhou recorded modest growth, while Beijing remained under pressure, and Shanghai's recovery was gradual. The Chinese mainland retail portfolio, though, maintains strong occupancy supported by solid leasing momentum. During the year, we signed leases with over 174 brands driven by demand from lifestyle, retail and casual food and beverage. We continue to make considerable efforts on strengthening the positioning of our Chinese mainland malls through ongoing tenant remixing, layout reconfiguration, asset enhancements and introducing new concept tenants to enhance offerings. Across Singapore and Australia, our international retail assets achieved near full occupancy and extremely good double digit rental reversions, underscoring strong leasing demand and the strategic positioning of our malls there. The Singapore retail market is supported by recovering tourist arrivals, a resilient labour market and steady income growth. Meanwhile, Australia remains strong, supported by population growth and real wage gains. However, looking ahead, we are mindful of the impact of increased inflation and rate hike concerns Which could potentially pressure some household budgets and therefore spending in our malls. Regarding our office and logistics assets, occupancy remained high despite new supply coming to market. And this reflects the enhancements we've been made to common areas which have been well received by tenants. Now turning to the Quayside, you'll all be more than well aware that JP Morgan has informed us that it will not be renewing its lease upon expiry in late 2028. However, we've already commenced proactive leasing initiatives to secure replacement tenants. We continue to build the third party capital partnerships to enhance optionality and drive returns. And now next, we will turn to the outlook and the key focus areas. So to recap, we're focusing back to the basics on developing our core capabilities in actively owning and managing retail assets across APAC. We will continue to simplify our portfolio through recycling our non-core assets to be in line with our message of being predominantly an Asian mall operator, whilst adopting a lean operating model with broader deployment of digitalization and automation to remain cost disciplined. Where capital is deemed surface to near-term requirements and our unit prices at an attractive valuation, we will buy back units to drive unit holder returns. The recent disposal of Swing Buy at Thompson Plaza illustrates this approach and we intend to deploy proceeds to buying back units upon the completion of the sale. Through these efforts, we are focused on ensuring that our unit holders continue to enjoy strong total returns as well as setting the foundations for a positive next chapter for LinkREIT. So now, let me pass the mic back to Duncan for an outlook and closing remarks.

Thank you, everyone. Before we move into the Q&A, just a few words on the macroeconomic environment and the outlook for Link and what it means. Clearly, the macroeconomic environment continues to be turbulent. We see a continuation of trends, including a fundamental reorganisation of global trade, more reliance on domestic production and rapid enhancement of AI. The medium-term fundamentals for real estate in Asia-Pacific, however, remain resilient, benefiting from urban population growth, In the key developed market, strong intra-Asian trading, growing tourism and rising investments in the technology sector. What is increasingly clear is investors will gravitate towards owners with quality assets and operational strengths to actively manage through the cycle. Focusing on Link, we are therefore encouraged that confidence and investor interest in Hong Kong is improving. Tenant sales continue to recover and we are seeing rental levels stabilised. We'll also enjoy the full impact of our cost optimisation initiatives this year in the following year ending 2027. However, while the market rental level is stabilising, we do anticipate and would reiterate that the negative reversions in Hong Kong and Chinese mainland retail portfolios will persist through 2026 to 2027 as we finish renewing the final leases that were agreed some two to three years ago in times of higher optimism post-COVID. The team continues to drive new revenue initiatives such as our car parts segments and we will work to sell non-core assets using proceeds to buy back units and reinvest into our existing core portfolio. We're now more confident that we will be able to keep our earnings stable and protect the dividend per unit in the year ahead. Thank you and let's open the floor now for some questions and answers.

Okay, thank you gentlemen for the presentation. Just a second. So when you ask questions, remember to say your name and the company that you represent. And for those who join us online, you can also use the Q&A function to key in your questions. Okay. Now, let me call first. JPM.

Thank you for the opportunity. I'm Carl Chen from JPMorgan. I have two questions. The first one is probably for Duncan. Can you give us an update on the CEO search? So that's the first question. And the second question is probably for John. Can you comment a bit more about the tenant sales trend for the past two months? Do you see a further acceleration in the tenant sales compared to, let's say, the first quarter of this year? Thank you.

Okay, thank you for the question. The CEO search, I think as we've said before, there's a comprehensive independent search seeking It has continued to take some time but we have made some significant headway. There have been a high quality list of candidates which has been reduced over time. I think the guidance we gave was it could take several months to identify the right party and the process and then we could find they have an extended notice period of 12 months before they formally join. I think the original timetable is still Broadly speaking, one that we would hope to stick to, which is probably at some stage during Q1 or Q2, we would have a new CEO. But that may be calendar year next year. So that would mean that we, with notice periods, et cetera, we'd need to be announcing at some stage over the summer period here. So I don't think there's any change. We have had, I think, one or two people aware from market rumors, one or two candidates that would be quite developed. But we... We're currently at a relatively advanced stage, but you can never tell with these things. John?

Yeah, sure. So, I mean, overall, what I would say, if you look at, before I answer the question about the recent point, you know, certainly F&B has been recovering through the course of the year. So we're now back into positive territory on that. Supermarket and food stuff, which in 24-25 was quite sharply negative, is all but flat now. The area that's being challenged still is general retail, which as you experts would know, includes all sorts of things, including households and also fashion, etc. And that's the area that is still showing negative, but it is less negative. By negative five and a half is was by the end about three and a half. I think rather than give the specific number on each of those, maybe I can give you the color and the context to say that yes, it does seem that that trend of positivity does continue. I think there was quite a lot of You know, the holiday period, there was good tourism here. Generally, sales are improving. We know, of course, that because we don't have such an exposure to things like electronics and iPhones and jewelry and stuff, that as much as we were sort of safe and secure lagging into the downturn, it's been a little slower to recovery. But there is a trend there. We are seeing green shoots. We are seeing stabilizing rental levels and continued improving sales. So yeah, let's say that we're cautiously optimistic, cautiously.

Thanks for the opportunity. This is Cindy from City. I have two questions as well. First is on your non-core asset disposal. Can you remind us the structure between your definition of core and non-core assets? Have you set any numerical targets for the non-core asset disposal? What do you think could be the primary challenges for you to execute this strategy? For instance, Do you see sufficient buyer interest or what type of pricing are you looking at? And can you also give us an update on the status of 100 Market Street after it visited for sale since March, I think? And the second question is on your buyback. I see at your result announcement that you mentioned accelerating unit buybacks. So how should we understand the acceleration? And just now you mentioned one condition is Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts

Very simply, there's 5% or 10% of the assets that are considered non-crawl. The majority of those would be obviously anything that's not in APAC and obviously anything that's not a retail mill. So that's at a very simple high level. At a high level regarding those share buybacks, it might be something that KS will add to. My statement, I think you were referring to at the right pricing levels, is simplistically looking at the cost of capital and We're cautious that if share price moves further above where we thought we could get better returns elsewhere, we might not do share buybacks, but at the moment we would think that there's a plausible case for it being attractive to the unit holders. It's really key that we would be buying back shares purely for the economic return to the benefit of the shareholders. Not to try and get a response in share price going up, not to get any other particular outcome to do with dividends, etc. It's what will make economic returns from a total return from a total cost of capital. So it's a pure economic decision. John on sales?

Yeah, sure. I mean, the chairman's put it quite well. There are two lenses. There's the lens of geography. So if it's not in Asia, then that means it's non-core. And then there is the asset class lens. So if it's not a mall, that potentially means it's non-core. So as the chairman said, if you look at roughly 5% to 10% of the balance sheet at any one time, which we always look at because I think it's good capital management and investment management to always look at whether things earn their keep, if you like. Then that means the focus is on things that aren't walls and things that aren't in Asia. I suppose the 100 Market Street question, yes, there is a process ongoing. It is still ongoing. I don't think it would be right when one is in the middle of a process in a commercial negotiation. I think other than to say that it continues as a process. And we'll update you as soon as we have further information on that. I mean, a good question, challenges for sale. I mean, obviously, when we disposed of Thompson Plaza, that's another definition in terms of, you know, it's not that it's non-core, but if somebody offers you a great price and you think it way beats your average cost of capital going forward, you have to look at that as well. I think the key challenge to disposal as you say is making sure there's enough liquidity in the market and we continue to monitor that but you know we're running processes and you know so far so good and we'll continue to update you Supplementing Duncan's response on the buyback I think Cindy per the announcement we have intention to use the Thompson Plaza proceeds

Rl Est Invt Tr Uts

I have a follow up question regarding on the buyback for example like the Thompson Plaza I think we are using 100% of the proceeds for using buyback but how about how should we think about the percentage of the proceeds in the future for example when 100 Market Street being done will all of the proceeds being used for buyback not until the dividend yield for example reach our cost of equity discount valuation level that's the first question And I think the second question is, I see two numbers in here. Number one is we are identifying around 10% of the non-core, but at the same time, you also mentioned 80% of our assets willing to invest in the core areas. So we just want to gauge what's the difference between the 10% and the remaining 20%.

Okay. Definitely, KS can expand on the question about the buyback. I think the percentages are used in slightly different contexts. There is a range of 5% to 10% of assets that we might reasonably expect would be sold. What we're saying to unit holders, investors in the fund, separately to that, so full stop after that point, separately to that, no less than 80%, but we can reasonably expect 90% plus at the moment, will continue to be invested in retail malls as the core in APAC, of which the majority are in Hong Kong and the Greater Bay Area. So hopefully that clarifies any confusion on that point. KF?

So I think Mark you are still trying to I guess figure out the difficult questions that we will not be able to disclose but I think where we want to be honest is as this deal is being done and as we assess where the capital needs are and where the unit price is and where the cost of capital relevance is then I think we will make that announcement so keeping our fingers crossed I think Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts

Okay, before I go on with those here, maybe writing on the questions that Mark asked just now regarding the buyback. So there's one question online from Sam Wong, Optimist. Can we confirm the process of prioritise for buyback over M&A until it is otherwise more accrued? So this question is addressed to John.

Look, I think we've said, and we will continue to say, there's one question about value of shares, but I think that's the basics of the understanding of cost of capital. If you're looking to take your money, do you invest it? and return to shareholders, unit holders, or do you look at new acquisitions? And I think you have to have a strong understanding of that cost of capital. So, you know, for now, I think what we would say is that, you know, where we are right now, the intention is that we would be putting that money back, that the Thompson Plaza proceeds would be used. I mean, KS, you might have an additional conversation

I think Sam thanks for the question I think if we could quantify what that number is in terms of total shareholders return expected for M&A deal that you have hypothetically planted then clearly the board will have to decide how to look at it at that point and where the share price is I mean it's back to which one gives the best returns to shareholders Just to clarify I think it might help to add for Sam just

We're not currently considering particular M&A and anything that would be considered in the future would have to be absolutely compelling. I think it would be fair to say we would consider it a high bar.

Hi, Carl Choi from Bank of America. A few questions. First, I just wanted to get a little bit more color from Duncan about your comments on, more comments about achieving stable earnings in fiscal 27. And, you know, I think rental reversion sounds like it's still going to be somewhat quite negative. And so, you know, do you expect cost savings to be much more than expected to get to more of a flattish kind of earnings, or maybe you have a relatively broad range for stable? And second question is, Just a quick one on car parking. Just wondering if you have seen any negative impact in terms of car parking usage from higher gas prices recently. And third one is a very technical one. I think in the past, if I'm not mistaken, you only executed share buyback when you have completed your script dividend program. Is that still the case here this time? Thanks.

Okay. I'll deal with the first. I'll let John deal with the car parking. I'll let KF deal with the script. The first was...

Broadly directed at me and if I could just make sure can you just repeat the first in Apologies, I know you've lost the microphone just when you mentioned table earnings since rental reversions are likely to be similar to 2026 levels so that seems will seem to suggest that the earnings everything else being equal would be you know down somewhat maybe a mythical digit rate of the operating leverage of financial leverage and I'm just wondering if I'm not missing anything perhaps on the cost side would be a lot maybe you see some more cost savings coming through fiscal 27 at least your anniversary the 200 million plus such savings but anything beyond that or what you mentioned stable earnings is relatively sort of broad range okay so we can't be too specific about the earnings there is a range but there are a number of levers that the team will use to save costs

It depends on how many shares are in circulation at the time. It depends on the cost savings. Cost savings alone will never match top level rental income moving down and revenues moving down. They're one of a number of levers that management would use to try and protect earnings and maintain them as close to stable as possible. So there is a little bit of a range in that. But clearly, if you've got a circa 2.5 dividend this year, there'd be a range around that and costs and levers and how many shares and what else is done in terms of elsewhere where income might be going up in other regions. We'll counterbalance that and mitigate it to a degree. So it's a real balance. I think the only point I'd make before I hand John the car parking is I think most people understand that there is some sensitivity. Whilst market rents are stable, So if your market rents 100 today, it's pretty stable. If a rent three years ago was dealt at 105, then the reversion is back down to 100. But that's only for one part of the portfolio, of course. It's not as simple to say it's a third a year, but it's only for one part. But we expect we're moving towards the end of that period of declines. If you think of leases of typically two or three year leases, you would work out that that lag impact on rents, on revenue stabilising is that sort of time zone. And we've obviously incurred it a little bit for a year or so now already. John?

Yeah, I could give you a very simple or a very complicated answer. Basically the simple answer is no, there's been no effect in the near term. Obviously we'll continue to monitor it. But obviously what I would also say is there are other things going on in the parking business as well. On the positives, you know, metered parking in Hong Kong has basically doubled in price. The illegal parking penalty has also gone up. And the other very interesting development, of course, is the number of EVs, because with over 70% of new cars being EVs, our public housing estate tenants, who are primarily the users of our car, most of our car parks, you know, they're the buyers of cheaper secondhand cars. So roll the clock forward two, three, four years, suddenly having that big concentration and network of EV starts to look like quite interesting optionality. And then the final point about parking, I would take the opportunity to raise is the $5 privilege parking, which replaces the free parking. And I would say so far, it's early days, but the results of that seems to be positive and sticky. So I'm pleased that we've done that.

Buyback during the DRIS window is usually not recommended because you start to mess with the outstanding shares and then of course the ultimate DPU and you have to do a lot of announcements and all. So I think by practice most companies will not touch the outstanding units during the DRIS period and then after that we will consider ourselves our blackout. Thank you.

Hi, this is Jack Liao from DBS. I have two questions. I recall before COVID, the rental sales ratio could be as high as 14-15%. Now it has already improved to 12.7% with the rental cuts. At what level of Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts It seems to be the opposite of the share buyback.

I'm not sure there is a magic number that you say, right, if we hit this, then definitely we get positive reversions. But obviously, positive reversions are really a combination of You know, the leases that are expiring, some of which this year are expiring from that period immediately post-COVID, where you had, you know, quite a lot of optimism, not all of which came through, combined with the spot rent, the market rent. I think the way I would answer it, because there is no magic number, in the same way there's no magic number with the office market, say, but, you know, if you're at 15%, you're not going to get rent increases, but if you're at 2%, you definitely will. But where the crossover is, in a way, who knows? But I think the right way to look at it We are seeing stabilization of the market rent, and we are in the zone where there aren't really any impediments to that carrying on, so long as the general economic growth in Hong Kong carries on, so long as the general retail sales trend in Hong Kong carries on. And obviously the magic question is, well, exactly when do reversions turn positive? Again, that's hard to answer because it depends how quickly, what the delta of change is basically in that market rent. But in recap, what I would say is I think we're in the zone now. We're seeing the rents stabilizing and we just need to see that Hong Kong's economy and Hong Kong's retail sales continue in that positive path. We're heavily, heavily focused on the Hong Kong portfolio. So whatever that trajectory is, we intend to be on the absolute front foot of it. But it requires some continued help from the economy.

On the share buyback and the DRIS, I think over the years, at most AGMs, before we reactivated DRS, unitholders sent to us, please leave that option there. It's a service to unitholders' convenience that if they want, they can reinvest. And I think we have kept it there, and the feedback from the investors, depending on different levels of discount, has generated different amount of subscription. I don't think it's in huge conflict with the buyback, because the DRIS in itself is a very small number, and I'd say it's purely an option and a convenience to unit holders. If we take it away and put it back, I think it's very noisy, and then we'll decide how to work on it. the discount to reflect the capital needs at the time.

Okay, maybe let's address one question online first. So, John Lam from UBS, his question says, how do you see the impact of e-commerce penetration? Do you see it as a structural trend that may last for a few years until it is similar to mainland China in terms of the e-commerce penetration level?

John, do you want to say that? Yeah, sure. I mean, I think e-commerce isn't going away and I don't think we've reached full penetration yet. That's certainly the case. So, you know, we continue to evaluate the impact and the implications. But I think our strategy is to embrace, not to avoid. That's one of the reasons, prime reasons why we've done Link Collect. Link Collect allows us to keep the footfall. We should never be, you know, we have this unique situation with many of our malls where the Customers of our tenants live above the shopping center. We should never allow them to leave because, within reason, because obviously that's then losing footfall and losing the ability to generate sales. The most important thing about LinkCollect is it gives us just a much, much better insight into what part of the basket is being affected. And I think if you're armed with better knowledge allows you to make better decisions. So there will be a change. There's been a change already. If you think about where the mall mix was and the kind of tenants we had, somebody like Japan Home Stores, you look how their footprint has shrunk within our malls and how other things have come in to take over. So having that knowledge gives you the ability to mix better because there will continue to be penetration. There's a question, of course, at what number it gets to, at what percentage it gets to. Will it be the same as China? Because Hong Kong's a little bit different and the distances are so small, will it be less? But in some respects, I think that's the wrong question to try and figure out, because I think we just don't know. The real question to figure out is make yourself a subject matter expert through things like BlinkCollect, and then you've got You mentioned more focus to diversify to other experience categories.

Can you provide further breakdown of the general retail categories? And the second question is on the cost savings, which is in excess of HK$200 million. How much further cost savings expected ahead?

Maybe question one for John and question two for KS.

Yeah, look, I think if you're going to alter the mix in that way, It's not just general retail, although general retail is the part that's been hit the hardest. You're going to alter the mix, then you've got to have things basically that are experiential. You've got to have things that can't be done online. So as we know, if you're ordering bulk dry goods or if you're ordering homewares and things like that, frankly, that's pretty easy to just go on taobao or ping.org and just do that. I think Rl Est Invt Tr Uts But the rest of it is really to do with the experiential stuff. So education, gymnasiums and experiential food and beverage. It has to be something that you need to do or you want to do in person. That's basically the name and the trick to it. But we'll continue to evolve that.

So if we look at the cost savings achieved, We set a target of $200 million, we delivered slightly beyond that and we are starting to see the annualized savings that will come through this year. I think that said, just by the act of all of us having to meet here today and saving at hotels cost, and you get to see us in real formal working environment. I think we are at this mode whereby we are looking at all possible places to be able to save and we can, I guess, I think the headcount and streamlining continues over time as we start to look for other ways whereby some of these task-focused AI tools like Copilot that all of us are starting to use can get our team to do more with less. And we will continue to look at that. But I think I'll shy away from giving a big target number. The easy part of the last two years has been done. And we are now looking at exec staff to say, if we do something, there will be a trade-off. And we have to decide whether that benefit makes sense.

Next question is from . So he is asking, what is Your expectations on the trend of the rental in your Chinese mainland portfolio in the upcoming year?

John? Yeah, I mean, obviously, there was a strong negative reversion, but a lot of that was to do with Zhongzhongquan. We know there's been competition there, and we've had to significantly release and remix that mall. So actually, if you took out the effect of that single property, the reversions would be more like minus 3.3%, not minus 4%. 14.3% and there are there are still challenges I think hopefully if we've got through the impact of that specific asset then that's already from you know from a reversions point of view going to make a big difference closing the rest of the gap you know that perhaps is a little bit more challenging the retail market is still a little weak in China so we'll have to see but I think the key message is an awful lot of that was down to one property that we have now largely re-let and re-mixed.

Thank you. Any more questions from the floor?

My question is about the credit rating. So if you look at that, I think Past years, we observed the NAV per shares coming down and the portfolio value coming down a bit. Which means that the buffer in terms of your credit rating is also lowering a bit. How we see the potential risk of that? Is there any things we can do in addition to that? Rl Est Invt Tr Uts Rl Est Invt Tr Uts

I think what you have seen us and maybe we are a bit lucky is that we have been able to refinance in advance to bring ABC down and that brings interest coverage up and that then wisens up the buffer again. So the other matrix clearly is the LTV. I think today at about 25, 24 on the net basis, there is still enough buffer for us to be comfortable to say we still have a strong balance sheet and credit rating is not at risk. So I don't think that is a major concern today, unless you say things continue to get worse with interest rate going up, valuation keeps coming down. I think that is one part in absolute that everybody gets hit. Then you say across Hong Kong, all the developers and where am I competitively? Other than one or two guys with net cash, I think at S&PA we are probably in the upper quarter. So again, from competitive pressure, then the banks and the credit provider has the same effect at all. Who else is still competitively better credit So I think that game is both absolute and relative. So at this stage, I think we are still in a pretty comfortable zone. I don't think we are today with where we are seeing the stabilizing of the rents in the market that we are like where we were two years ago. So I think it's okay. Let's see how. In terms of, if we say rates move, I think we model it out because of the hedge, because I think Rl Est Invt Tr Uts Rl Est Invt Tr Uts

Hello management. I got maybe two more questions. I think maybe the first one is for Duncan. You mentioned you want to provide a pretty good unitholder return, right? Do you internally, maybe on your mind, do you have any target for total shareholder return want to deliver to unitholder annually? I think that's the first question. And second question is regarding on the reversion. FY27, we basically guided the reversion will be largely a for the magnitude, but how about in 228, do you think under the current condition, we should be able to achieve a neutral rental reversion for Hong Kong retail? Thank you.

Okay, I will have a second to John. The first is, it's a moving target, depends on cycles, the cost of our own capital and what happens through time. What we want to do most of all is create a sustainable pattern of economic return for unit holders of which a significant path through time can be by the distributions. So I think it's a moving target. Do we have one? I could give you one today and it might be different next year and it would have been different last year. So I don't think you would expect any fixed target. The closest that we would get as a guide is pre-leveraging. We'll often look, as we work, males to have high single-digit returns. And so it all depends on what the capital upside or downside is from that in the term of the cycle and what the positive carry is on the debt or not, if that hopefully gives you some colour. John?

Yeah, I mean, look, I can tell you what I do know. I know that the reversions for the rest of this year are probably going to be fairly similar to where they are, which I know you know already. The challenge with trying to predict next year is for this year, you know, a lot of the leases are written and a lot of it's already written in stone. But actually, we're, you know, a lot of the future is not written for next year. So we're reliant, some of it is because, you know, you have a certain embedded rent level. It will certainly, things I can tell you, it will certainly help that we get over this Hump of the big reversions from the post-COVID leases. And I can reiterate that rentals, spot rentals do seem to be stable. And therefore, it really comes down, quite frankly, to how much growth you get in the spot rent. You all run the model, you know the maths. That's what's gonna determine Exactly what point we get we get positive, but as I said you before it is encouraging that spot rent levels are stabilizing It is encouraging that we've seen continued growth in both Hong Kong's economy and sales Any further questions from the floor if okay

Thank you. This is Carl from JPMorgan. Maybe just one follow-up question on the cost savings. So we're expecting around $200 million of cost savings this financial year. Does that include the salary for the new CEO? And then for the next financial year, because the new CEO will be onboarded, so should we expect the cost to be roughly stable or actually there may be a bit of increase in terms of cost when the CEO is onboarded? Thank you.

Do you want to answer this? I don't think we'd want to second guess what the running cost of a CEO would be, but it would be what you might reasonably expect for a company of our size and what the previous CEO earned in his last stage of his tenure. We business plan for all things. So there would normally be an allowance for that, but KS may want to make a wider comment on costs moving forward.

So the answer is that clearly this year, next year's numbers, we have not included the full cost. We've budgeted half year or something in our plan. Then like Duncan said, depending on the quality of candidates, the numbers might vary. And let's see, I think there is this small moving part in the scheme of things, but I Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts

There will be a new strategy going forward for this new growth initiatives. Thank you.

Again, one for John, but the key, the core competence and what we do is own and operate our own mouths. And we said 80, maybe 90% of that. So I mean, that's quite a good indication. And that must be a priority. We do see all sorts of benefits in having investment partnerships, as I said in my entry from And it can be a very effective way of aligning ourselves with long term investors to get access for our balance sheet to investments we might otherwise not be able to do.

Yeah. So, you know, there are clear benefits to having third party capital. I think the way we describe it and have for a little while now is good optionality. But sort of as somebody mentioned earlier on about, you know, buying things and other stuff, the, you know, What the chairman asked me how I'm getting on with a lot is divesting non-core and focusing on the Hong Kong portfolio. He does ask about third party and there are options on there, but I get a lot more questions. The majority of questions are about divestment and non-core and focus on the Hong Kong portfolio.

Thank you. Maybe I will ask the last questions online then. So there's another question from . He's asking about how we're going to handle the efforts in .

Well look, we're continuing to work on it. We've done a lot of leasing and there was significant competition and it did lead to vacancy and now we've closed up a decent amount of that vacancy and so we're continuing to push hard. I'm not going to say Rl Est Invt Tr Uts