CapitaLand Investment Limited

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.