CapitaLand Investment Limited

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

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

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