Good morning. Welcome to CICT's First Half Results briefing.

Today, we are in somewhere special, the Paragon Club. It's a member's lounge reserve 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. Jokes 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 to the Q&A segment with the rest of the management team. And with that, I would like to hand the time over to Choon-Siang.

Thank you, Allison. Good morning, everyone, and thank you for joining us today.

If you're wondering why we gather 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 have just acquired, nothing more than that.

And I think most of you will not have been into this club before because it's actually quite new. It was recently renovated sometime early 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? 2 watches 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 6 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 position 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.

NPI 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 $0.0602.

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 CapitaSpring 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 divestment front, the sale of Asia Square Tower 2 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, these initiatives demonstrates our active approach to growing the portfolio. Our Tampines Mall 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 malls 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 NPI grew 8.7% to $630.5 million.

This was driven mainly by CapitaSpring step-up acquisition and the contribution from Gallileo, 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 CapitaSpring income is now fully consolidated at the NPI level following the acquisition of the remaining 55% interest, so it no longer flows through the JV line. Next, distributable income rose 13.3% to $466.

7 million, a strong double-digit uplift. DPU grew 7.1% to $0.0602, a robust increase, although roughly half of the growth of the -- in the distributable income.

The difference is due to the enlarged unit base. On a weighted average basis, units in 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 NPI 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, enables us to capture opportunities across sectors while mitigating concentration risk. We have paid an advance distribution of $0.0398 for the period from 1st January to 28th April on 8th of June 2026.

Unitholders may wish to note that the remaining distribution of $0.0204 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 has 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 $0.0027.

On our portfolio and asset performance, occupancy remains high at 95.6%, up 0.4%, supported by proactive leasing and active asset management. WALE remains stable at about 3 years.

Top 10 list of tenants is unchanged. They 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 5 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 remained strong at 97.7%, well above Singapore's retail market occupancy.

There is a slight drop in the downtown occupancy, mainly due to the AEI at Plaza Singapura and The Atrium@Orchard as well as some natural lease expiries. 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 jewelry 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 continue the upward trend reaching $11.03 per square foot per month. Across our Singapore Grade A office assets, the expiring rents in 2026 are largely below prevailing market rents.

This positions us well to capture positive rent reversion when leases are committed. Leasing discussions are already underway for a 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 Gallileo, 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 cost 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 unitholders. I'll conclude the presentation here.

Happy to take any questions.

Hold your horses. May I invite the rest of the management team on to the front.

Okay. So now let's come to the most anticipated part of the briefing, the Q&A segment.

Before I start, I would 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 you have more than -- and we'll ask that you only ask 2 questions per round, you have further questions, we'll come back to you.

And okay. And in keeping with tradition, we will have Mervin Song, with the first question.

The floor is yours.

Mervin from JPMorgan. Congrats Choon-Siang on excellent set of results, keep outperforming expectations.

So 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 Allianz lease at CapitaSky? And in terms of tenant sales for suburban seems to have slowed down a little bit in the second quarter relative to the first quarter.

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 we -- 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, given the 1.7% accretion that we have articulated when we did acquisition.

So that should bode well for the second half results. Secondly, Gallileo, I think that has contributed to some of the performance in the first half and it will continue to drive the performance for 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. Thirdly, I think organically, we have rental reversions are still positive that will continue to help drive the growth for the organic portfolio.

Fourthly, Tampines Mall, there was some downtime in the past few months because of the AEI, Lot One as well. Those will progressively start to contribute in the second half of this year for Tampines Mall.

And I think for Lot One, 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?

Yes, there's the second question. Allianz and sales...

Right. For Allianz, we are already in talks with some tenants on prospective tenants.

So it includes some tenants who are looking at expansion space within the building. So hopefully, we have some good news to share in due time.

And as for sales, for second quarter, sales is true, it's a bit slow I mean, the travel tourist arrivals has been softened. We also see consumer sentiment has 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 or moderate thing.

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's perspective.

Do we have the next question? Yes, Rachel.

Congrats on 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 1-plus month already, if you can give us some details.

Second question is on your divestment -- your thoughts on divestments of assets. Any chance on divesting your overseas assets or still very much Singapore non-core assets?

Okay. So I think for Paragon, I don't think we have very much more to -- I think we put up a statement earlier on the Metro when Metro announced that they will stop their large-format stores in both Paragon as well as Causeway Point.

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 are -- we have a definite plan to announce yet. But there are a few things that we are looking at.

I think we have mentioned in the statement some low-hanging fruits like connectivity to the neighboring buildings to improve the footfall. I think that we are also looking at pushing 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 my mind what we're going to do in 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 that's -- 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? Divestment.

I think divestment remains quite similar to what we have said before. I think we want to focus on the 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 little more challenging.

But definitely, we are definitely looking at starting a process over there. So we will see whether that results to anything.

But as always, nothing to comment or announce until there's something to...

Do we have the next question?

Having said that, I think that's not. Sorry, just to add on.

I think on the divestment, actually, we have done quite a bit of divestment in the last 3 or 4 years, although the headline has been around the acquisition of Paragon. Actually let's not forget that actually, we divested Asia Square Tower 2 which is still in the progress happening.

We divested Bukit Panjang Plaza at a very attractive premium to valuation just February this year. Last year, we divested a serviced apartment tied to the CapitaSpring, which allowed us to acquire the 55% of -- so a lot of things were done that actually dovetail 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 the 21 Collyer Quay. So you can see that actually, we have done a very systematic portfolio reconstitution, getting out of assets at a low 3% to 3% and mid-3% yield and acquiring assets at a much higher yield.

So I think all of that has together help to drive our DPU growth in a cumulative manner over the last few years quite significantly. Sorry, go on.

You can go ahead.

Congrats on the good results. I just want to check your views on Wheelock putting up 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 Orchard assets by the end of the year?

And then second question is on the Australia portfolio. Can you give us some updates on the office market there?

What's happening there?

I'll take the Wheelock question and then maybe Yi Zhuan can take the Australia. So I think on Wheelock, are there any synergies?

You mean if we have bought it, would there have been synergies because we didn't buy it, so there's no synergy between us and Hongkong Land.

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

You mean, Scotts Square. Scotts Square is not connected to ION.

But you know the yield that they're asking you for the asset. It's -- I think it's sub-2%.

Although there are some -- I think they have received some offers, but I think the yield is sub-2% on as is basis. But it's freehold.

So I think it attracts a different set of buyers for the assets that potentially buyers that are looking more long-term hold. Okay.

So the question is whether we're looking at asset, probably not because of the yield, right? I don't think anybody -- any of our investors would like us to look at something like that.

Wheelock, yes, I think Wheelock has always been there, competing with ION in a way or maybe competing is not the right way. Actually, there's also -- I mean, it does help if Wheelock do well, it doesn't mean that ION 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 2 malls, unless there's a major redevelopment that happens. But I think we are very far from that scenario.

So yes, I'm not sure if I answer your question on that. There's not much more to add.

I don't know what -- 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 coexisted side-by-side for a long time already.

If anything, I think ION probably adds to the value of Wheelock more than the other way around. Okay.

I don't know if that answer your question.

As for Australia, unfortunately, there's not much to share different from the last quarter in terms of Australian market, not much has shifted actually. If we look at the CBD office market, it's generally still very centered around the core CBD, very premium assets.

So those definitely have seen improvements in rents, and we are also seeing signs that the incentive level for those has come off a little bit to the low 30%. But unfortunately, for the rest of the fringe CBD, your North Sydney, your Midtown, your Southern -- actually, Southern is actually not doing that well.

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 Victoria Cross is not fully absorbed at this point, there's a little bit of pressure in terms of vacancy.

So rents has been relatively stagnating -- sorry, yes, stagnating. And so for our own portfolio, good 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.

I have 3 questions. Maybe firstly, on Germany.

What's the cash occupancy of Gallileo 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 has been some large tenant movements in the Tanjong Pagar area, Allianz, Deloitte, et cetera. I mean, what's driving this?

Is this purely rents or is there some other bigger factors why the tenants moving to newer buildings in this market. Third finance cost.

I think team has done really well. What's the guidance, should we expect it to go up?

It's a lot to digest. I think for the first question on -- what was the first question on Germany, right, divestment of Germany.

So I think the cash occupancy of Gallileo actually is almost 100%, 97%, 98%, maybe. I mean it's fully handed -- short of a small amount of space is pretty much fully handed over to the end tenants already.

So that's the first part. Divestment, as I mentioned earlier, we have started the process, but more on the MAC, which is the Main Airport because we have not fully handed over Gallileo.

So we -- and we have only just completed it. So we want to make sure that we see through that handover.

So we are in 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 divesting the market, we'll probably look at the airport asset first.

In terms of Third question on Tanjong Pagar, right? I think on the tenants moving out.

I think it's very circumstantial and opportunistic. I think maybe, Yi Zhuan, you can elaborate on some of those, I think specifically asking about Allianz and Deloitte, right?

I think for Allianz case, it's pretty much a case where, firstly, they -- some of the buildings that is new to the market, right? And there's a lot of starting to build out the occupancy, they can offer very competitive rents.

So definitely, at times, certain tenants will actually fit the profile where they will move for rents as one of the consideration at the same time, getting a better quality asset in a way, right? But location, probably not so sensitive.

So in Deloitte's case, probably similar where they're actually moving to something where the direction of how they want their office and the location is one of the driving factors. So then the next question is why some of these tenants can't come into us also when some of these bigger sizes.

We always have this problem where at this point, our occupancy is relatively healthy to actually, we do have a few tenants in the market out there looking at 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 for big sites, right, Shaw Tower and Keppel 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 3 to 4 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.

And some of the -- so even for landlords like us, right, we are already talking to tenants in 2027, 2028 from both trying to get tenants to join us is one. But on the other hand, also to be defensive in retention, right?

So we're speaking to some of these tenants really early. So a lot of decisions, they are also kind of forced to make early because if they want to wait for another year, the space may not be available in the next year or so, especially if they are very particular about quality of location.

So some of the tenants also have been coming to us to try and see whether or not they can actually secure their expansions and renewal spaces within us. And so some of these movements that we have seen, like just now we started off with one of our CapitaSky tenants, right?

Some of these movements are actually good for us because it actually allows some of the tenants within our own buildings to grow. Like CapitaSpring, I also faced an issue where a lot of tenants -- when they sign at the peak of COVID or post-COVID, right, where everybody is very cost conscious and everybody is work from home, they kind of underprovide for the space, right?

They really -- and when they don't need expansion space now, they struggle to expand within the same building. But everybody is trying to consolidate at the same time the space requirements.

So every time when we have new builds like this, we have some of these pressures, we expect some of these musical chairs that will happen, and that's what we are seeing in the market now.

We're not too concerned about it because I think what Zhuan said, I think this is really timing, right? I think every time there's a new building like Shaw, you will expect a little bit of a musical chair.

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 that exit rents for some of these tenants, specifically, for example, is quite below where the building passing rent is. So I think we are quite confident that we'll 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 are seeing quite -- you 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 occupancy to continue to improve. I think there was a third question on financing costs.

Maybe Mei Lian can take that.

Okay. On financing costs, first half is 2.9%.

So between first Q and second Q, it's relatively stable. But for -- 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 have taken. So that has the effect of lowering the cost of debt in the quarter prior to the completion of AST2, yes.

So that would sort of have some effect of allowing the average cost of debt to inch down slightly.

Geraldine?

Maybe just 2 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 AEI completions, 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?

Okay. So I think for rental reversion, it has softened a little bit.

I think it's partly due to a few large leases, and Yi Zhuan can comment on that also. There is also a bit of the effect of the AEI because when you -- 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 Yi Zhuan 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 Hougang 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 flow of AEI so that 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 2 or 3 that are -- so that you can recycle them every 2 to 3 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 Lot One will get completed end of this year anyway.

So that it 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 real return to our investors.

So I'll leave it at that. So we'll see what comes up.

If there's anything interesting, we will definitely want to participate if it makes sense. Zhuan maybe you can just...

So for the reversions, yes, it's true that this quarter is a little bit lower. It's really quite specific to a couple of assets and leases in the downtown, right, where we are undergoing AEI.

So that kind of helped pull down everything while the suburban is helping to, on the other hand, pull up -- maintain some of these. So suburban rent reversions is still relatively healthy.

Overall, I think at this point in the market, retailers are kind of under pressure in terms of their margins, manpower costs, operational costs. And we always stress that when we look at some of these rent reversions, right, 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's in line with growing their business with us.

Yes. It's still within our range of mid-single digits.

4% for -- I don't want to sound doom and gloom, 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 up quite well, both in terms of GDP growth, retail sales and overall economic environment.

So I think generally, I think the mood is actually quite optimistic and bullish is my sense.

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 -- how much -- what percentage of our balance sheet will you be happy to sort of spend on the development projects? And also just broadly, if you think about investing for growth going forward, how would you stack sort of core assets development, AEI and where you're seeing best returns at this point?

I think -- I mean, 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 0. But I think it really depends on the opportunity.

I think Hougang was quite a unique opportunity. Bayshore, we did participate.

But I think it's not -- it's slightly different. I think our approach to the Bayshore bidding 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 Hougang. 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, right?

So in that sense, we do view Hougang as a more attractive proposition to say Bayshore, right? Because it's a much larger and much more -- there's a bit more scarcity element in that location.

So yes, 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.

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 a ROI of about 7%. Unfortunately, the capital deployed for AEI usually is quite small.

Even if you get 7% on SGD 100 million, it is not as meaningful as 5% on SGD 3 billion for example, right? There is only so much you can do for AEI.

We cannot do five AEIs at any one time. That to me forms the base of our core value add.

Development provides a better return than, say, buying a core asset outright, but it comes with its own risk and timing constraints as well. I think to us, development will never make up more than, by virtue of the fact that we are limited anyway, will not make up more than 10% anyway.

It will continue to be a very small part of our portfolio. I would say that the bulk of our portfolio is still going to come from organic, inorganic in terms of acquisitions, with a small contribution kicker coming from development.

It is not going to be a key focus for us.

Okay. I just wanted to ask about 2027 DPU growth because this year we look pretty much set, but going to next year is a higher base.

I am assuming there is lower interest cost saving as well. So what are the growth drivers that you are working on?

Any downside risks that we should be aware of? Thank you.

Okay. So I think it will not be that different from.

Rental reversions continue to be positive this year, so that will drive next year’s growth. Mid-single digits.

I mean, it is not that different from last year in terms of rental reversions. I think those will continue to underpin the organic side of the growth, which call it low single digits, 1.5% to 2% for organic.

This is how I typically respond to your outlook question. You guys are used to it by now.

We will start off with organic, and we will talk about AEI, and then we will talk about inorganic, and then we will talk about capital costs. 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 Mall and Lot One Shoppers’ Mall. Of course, the capital deployed is not that big.

We are talking about, we probably deployed about SGD 50 million, SGD 60 million, 7% return, you get about another SGD 4 million, SGD 5 million. That is half a percent, right?

Slightly less than 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 are just talking about big numbers.

So it is not like we cannot see the drivers. We continue to see the drivers for 2027.

Actually, it is 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.

We ended last year at what, 3.6%? 3.4%.

Now we are at 2.9%. I think we can expect another compression of 0.5%.

Next year, where will we end it? Never ask the CFO, she will never give answer.

Yes. It is great.

I think that doubt we have any more got to cut rates. I think at this current juncture, limited room to cut rates, hope that interest rates 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.

Yes. I think SORA continues to be anchored at around 1% to 1.1%.

It doesn’t seem like it’s going up. So we still have some floating portion also.

So I guess you will still get some marginal drops. I think 0.1% drives our DPU by about what?

1% thereabouts? Yes.

So add that all together, you kind of get the potential growth that we are looking at, I guess, for next year. Any risk?

Of course, there’s always risk. Okay.

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 paint an overly bullish picture in terms of our DPU 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. I think in a way, that risk has already been priced in in the current environment.

Since day one, I think the market has already priced in a certain elevated interest rate environment to last a bit longer. I think economically, we’ve talked about how the economy is doing fairly well in Singapore.

I think the supply situation in real estate looks very well controlled as well, both in terms of CBD office as well as retail. I think supply is in our favor.

The other thing that actually we haven’t touched on is some of our operating costs we’re 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.

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.

Yes. You can have the floor.

Pass the mic to you, [ Ye Kheng ].

I just have a quick question on ION. I think 1 or 2 quarters ago, there was a big swing in the numbers if you include or exclude the ION on the operating metrics side, was it rent reversions or tenant sales, right?

I just want to have an update on like what's the current performance, whether it's tracking in line? And also post the AEI for Paragon, can the passing rents for these 2 assets be closer to each other?

Okay. Okay.

I think what you are referring to when we present the numbers is the sales, but that is because we include and exclude ION because of a like-for-like comparison, because 2024, we did not own ION, right? So when we include ION, then it is a big jump in sales numbers on a consolidated basis, but we always strip out the effects of ION just to have a like-for-like when we compare.

That is not so relevant this year anymore because we have owned ION since November 2024. So when we compare sales numbers this year, we do not have to strip out the effects of ION.

Maybe we have to do it for Paragon next year going forward. Yes.

So ION Orchard Mall is doing well this year. It is tracking well in terms of sales, to your second question.

So we are actually quite happy with the performance of ION. It continues to drive.

Of course, you will not see the big delta that we saw last year, but last year was because it was an inorganic driver, right? Because 2024, we did not own ION.

This year is more organic growth. But the organic growth at ION is still quite strong.

The question was whether the gap between ION and Paragon will narrow. No, I do not think just because they change their ownership, you expect the rents to be the same, to narrow, because the tenant base is still locked in, right, for now between ION and Paragon, and it reflects the unique characteristics of the location.

After AEI.

We haven't talked about at AEI yet. So to be hard to address that question.

No, I do not think so. I think ION has a very unique locational advantage that Paragon does not have, regardless of how we value Paragon.

Paragon has unique characteristics that ION also does not have. Proximity to Mount Elizabeth.

We have our own medical center, and the medical center itself actually drives some of the rental growth as well, which ION does not 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 component. If you ask me whether Paragon will become like ION in terms of rent for retail, I think it is not so easy because like what we mentioned, because of the location.

ION sits on top of an MRT station, which Paragon unfortunately does not have the advantage. There is ultimately a difference because of the footfall, the natural driver of footfall.

It is linkage to a lot of this transit and infrastructure.

Perhaps we can turn our attention to the online questions. Can we have [ Mei Ping ] read on for us?

Yes. So we have received a total of 3 questions.

Two are from The Straits Times Benjamin. His first question is that it seems that the trend of a major department store being a mall anchor tenant is on the way with Metro leading Paragon and Isetan closing its Tampines Mall outlet 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 converting some of the malls to office spaces like what has been observed in other Orchard Road malls recently? Second question.

The third question is from Mr. Yap, our usual question.

What is the status of the ION Orchard tax transparency?

Yes. Okay.

I'll take the easy question first. Answer is no update on the tax transparency for ION.

Will we convert some of our mall 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 trend, which is actually quite a big gap. So I think generally, because most of our retail spaces are actually quite fully occupied.

Okay. The hard question.

I'll leave it to Yi Zhuan for the first question.

On the departmental store, I think just like cinema, all these, there is always trends in how things are going. For departmental store, it used to play a very important role in anchor the variety of things they bring to the mall.

Of course then drive the footfall and give stability. In exchange, actually sometimes, most of the time rather, the rent is on the lower side of things, right?

In the current format of stores, we have a very strong operator who have very direct access to a lot of all these brands. If you look at Tampines Mall, when we took out Isetan, we replaced with a lot of beauty brands and luxe beauty brands, for example.

So we have all this access. There is a lot of these brands actually we can actually reach out to them directly.

The inherent question is what role does a departmental store play? Eventually, this is something that the departmental stores themselves have to come and think through how they want to reposition.

It is not to say that there is no place for departmental stores. No, it is just a different format.

There are still some departmental stores around Singapore that is doing still okay. In fact, if you look at some of the overseas market, departmental store is still a very key part of the overall shopping experience.

But at least within the Singapore context, its ability to drive footfall experience, everything is something that they have to keep up. If not, there is a lot of all these things that we can do at the mall level.

So some of the AEIs that we have actually shared recently like Plaza Singapura, we actually move a lot more into experiential dining, experiential concepts. In some of the places when we talk to tenants, some of the new tenants, we really try to look at not just beyond selling a product itself, but what is the kind of experience that they are trying to sell.

On our end, we try to curate that holistically on a mall level basis. This is how we kind of see things that we can pivot over time.

I think, Rachel, you can have the next question.

Right. Maybe just a few more questions on Wheelock 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 we 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 sell MAC?

Okay. Do we see Hongkong Land as a competitor.

I think we can coexist. Like I said, Wheelock has always been there as a competitor to ION.

Whether you call it competitor or I don’t think it makes a difference if the ownership changes, unless they somehow revamp the mall. But 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 Wheelock doesn’t have the 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.

We don’t know, to be honest. We’ll have to see how -- but 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. If you look at Wisma, Takashimaya, and ION as a collective belt, actually everyone doing well benefits the others, because it just brings traffic to the whole area.

Today, I think we are talking about the whole Orchard Road competing against Marina Bay, competing against Suntec City, VivoCity. I think it’s actually good that we have some rejuvenation of Orchard Road.

If Hongkong Land is able to attract a new footfall to Wheelock, I think that’s actually good for the area overall. 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 Hongkong Land or somebody else, I think the better and more refurbished the assets are, the better their new concept, I think it’s better for all of us.

Next is 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?

Question is whether we are able to get the pricing that we get. So we don't know, but it's -- I mean, the market has been challenging for a while.

So question is, is there a right time to -- and will they ever get to 100%, we don't know, right? 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 are the kind of pricing that we see in the market.

Yes. Acquisitions, I also want to know.

Acquisitions, as you know, we typically can't really comment that much unless there's something tangible. 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 recognize that investors are invested in CICT because of our exposure to Singapore. So we want to continue to remain -- make Singapore a dominant 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.

both office have been quite active. 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. But 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 our existing assets in terms of -- I mean, given that we're 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. So we don't know.

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 rightly pointed out, we have done quite a few large acquisitions.

I think that will digest a little bit. Yes.

Any other questions?

Hi, it's Jovi from The Edge Singapore. Just two questions here.

Thanks. Just two questions here.

It’s been some years since CQ @ Clarke Quay has reopened. Some would say that the final piece is complete now that Zouk 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 Clarke Quay? 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?

Looking at Plaza Singapura, for example, we’ve seen other mall owners use very creative ways to replace cinemas that have left space behind. What is your plan of attack for the cinema space at Plaza Sing?

Thanks.

Zhuan do you want to take the question?

Okay. Is that the final piece of the puzzle?

I would say no. It is always a work in progress.

I would say, in fact, quite the contrary with Zouk. You know how they reaffirm their long-term plans with CQ and then the recent AEI renovation that they have done.

It is just going to help us put some of the pieces together for our next growth when we look at CanningHill completing end of this year and some of the tenants coming through. Just beyond Zouk, actually some of the tenants that have already been in Clarke Quay itself have also been quite positive in the directions that we are heading.

Actually some of them are actually expanding their, or trying to expand their presence within Clarke Quay itself. It is something that definitely you will get.

From a numbers perspective, we talk about occupancy, we talk about numbers, definitely there is room to improve. Hopefully next year you will see some of this come true.

Of course, we are at a very tricky part of the transition in terms of nightlife and daytime trade. Changing the perception takes time.

Getting the right trades, building up all these is 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 regardless of the price, right, and rent, we want to really curate the right tenants, at least to anchor the starting point. Once you get that right, the right brands will come through.

I think on the sites, beyond all this leasing, 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 that has been done to actually do activations. Nowadays, if you go on weekends, in the morning, you see crowds there doing exercise, doing their various types of events.

They bring pets there. At night, you also start to see that Zouk with the reopening, the queue is pretty long.

Hopefully sustains that also. Beyond that, I think you all have probably seen Zouk’s news release themselves.

Beyond just clubbing destination, they are also looking at corporate events. They are not just the only tenant there, right?

Actually, a few other tenants are also looking at the afternoon corporate crowds. How do they actually tackle those pieces?

Overall, those will continue to build. The second question is with Plaza Singapura.

Okay, then it goes back to the cinema space, how we actually repurpose some of these. For whole 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 have always shared, 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? Cinema, it is not that nobody is going to cinema.

It is not that people are not paying rents. They are still paying decent rents, right?

If the substitute is not going to be better, then there’s no point. We are aware that cinema is on a certain trajectory in terms of the relevance.

The question is, at which point do we do the switchover for the different assets that we have?

All right. Mervin can ask the last question.

Maybe you will allow me to speak more than once. CapitaLand said as Reid mentioned that they’re seeing maybe 9%-10% drop in electricity costs this year.

Next year, they are also expecting a 30% drop in electricity costs due to the CapitaLand group buy or bulk purchase. Are we seeing something similar for CICT here as well?

On Paragon, when does the Marks & Spencer lease end? For this property itself, where do you see the greatest opportunities?

There’s upside, obviously everybody’s focused on the Metro space. Do you see upside in the medical suites, office, basement F&B, kids offering, which I think all of us love.

Anything else you want to mention?

Yes. Thanks, Mervin, for letting us talk about our bullish side of the business.

Electricity costs, you are right. I think CLA has talked about the reduction in, I mean, in terms of the electricity cost, this year it is going to be some savings compared to last year.

It does help drive some of our numbers as well. 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.

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 CLI has suggested because we all procure from the same and we all get the same rates.

Tariff-wise, we will see quite significant drops in terms of our tariff rates. Was it up to 30%?

Yes, about -- we heard about 30%. We are getting the same rates as them.

Yep. Second question was on Marks & Spencer.

Marks & Spencer just renewed three years. So it will be a while before we have a renewal discussion, yes.

But on the upside, biggest upside from Paragon was also your related question. I think the obvious one obviously is Metro that everyone is looking at.

Whether it is going to be how much upside, we do not know. As I said, but I think the rent is not demanding.

But as with any reconfiguration, it is not just about the rent uplift, it is also about the downtime. It is 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 lose some NLA.

So we have to look at what is 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 Robinsons left.

So it will not be the first time we are looking at something like that. Anyway, we are exploring quite a few options.

So hard to tell what is the upside from that without knowing what is 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 is actually not small because it is actually about 30% of the NLA. And the rental reversion actually is quite healthy.

It is probably in the double digits compared to the retail spaces. 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 rental reversions, which is quite in line with sales numbers to maintain occupancy cost.

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

No. Thank you very much.

I think we -- it's a very good round of discussion, as always hope you guys -- I think we have a range of property tours 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 hand around [indiscernible]. If you have any more questions, I'll be happy to take the other questions as well.

Yes. Thank you very much.

Thank you, everyone. We'll see you soon.