Judy Tan: Good morning, everyone. My name is Judy, the Head of Investor Relations for Frasers Centrepoint Trust. Welcome to FCT's Second Half and Full Year Financial Results for the Financial Year 2025. With me today, we have got our senior management team, Mr. Richard Ng, our CEO; Ms. Annie Khung, our CFO; and Ms. Pauline Lim, the Managing Director for Investment and Asset Management. Without further ado, I'll pass it on to Richard to kick off today's briefing.
Richard Ng: Thanks, Judy, and a very good morning to all of you. Thanks for joining us in this call. Okay. Just to start off with, maybe we can give all of you a quick recap of what happened for the full year financial FY '25. Of course, one of the key aspects is the acquisition of Northpoint City South Wing, which we announced in March of this year. And coupled with the divestment of Y10, that kind of helped us again to proactively reconstitute our portfolio. As we have shared before, the idea is for us to grow, but at the same time, to continue to strengthen the portfolio that we have, and we have done exactly that, right? As part of that acquisition, we also did EFR fundraising. We raised about over $420 million. It was a very successful EFR. And at the same time, we raised another $200 million via the perpetual securities. Financial position, very healthy at 39.6%, and cost of debt has come down on a quarter-on-quarter basis. For this quarter, it's at 3.5%. And later on, we'll talk a little bit more about cost of fund and also our refinancing plan. The operating performance continued to be very strong as demonstrated in the positive rental reversion, shopper traffic and also tenant sales. Hougang Mall AEI Is ongoing, and it's actually on track in terms of timing, in terms of cost. And happy to say that over 80% of the entire AEI spaces has already been pre-committed. Next slide, please. Okay. So again, very high-level numbers. DPU came in at $0.12113. That is 0.6% higher compared to full year FY '24 at $0.12042. Our aggregate leverage is below 40% at 39.6%. Cost of debt overall for the full year is at 3.8%. And if you compare that to FY '24 of 4.1%, so you have seen a downward trajectory for overall cost of debt. Net asset value came in at $2.23 compared to $2.29, a slight drop from FY '24. Okay. Operating highlights. Just wanted to stress a little bit in terms of the committed occupancy. Overall, the asset is again performing very well in terms of occupancy, but you could see on the slide there or the chart there shows a 1.8% gap, and that is partly contributed by the 2 -- or it's contributed by the 2 spaces that we have taken back from Cathay. That accounts to the 1.8% that you are seeing there. Otherwise, occupancy rate would have been at 99.9% again. Shopper traffic and tenant sales, you can see the next chart. Shopper traffic has gone up for the full year, year-on-year at 1.6%. And tenant sales, we grew by 3.7%. Again, quite a strong sales that is -- strong performance from our retailers as well. Rental reversion came in pretty strong at 7.8% versus 7.7% that you saw in FY '24. And as I mentioned just now, Hougang AEI is very much on track to complete by September 2026. Targeting an ROI of 7% based on $51 million CapEx, we are still again on track to achieve that. More than 80% of the spaces has already been pre-committed, as I indicated upfront just now. A little bit on the big picture, general macroeconomics. The advance estimates for Singapore economy came in at 2.9%. Of course, if you compare to the 4.5% in previous quarter, you could see a drop in that. But actually, the numbers came in higher than the market estimates. So actually, it's a positive note. What is also interesting is the inflation continuing to ease, down to 0.5% year-on-year in August. Again, this is helpful for us because easing of inflation is also helpful in terms of the cost perspective for our operation as well as also for our retailers. Overall market for retail sales seems to have kind of rebounded even from the overall RSI perspective. So for August, it's a 4.6% growth year-on-year, pretty strong. And if we take the RSI year-to-date from January to August, because they always release the numbers 1 month later. So we only have up to August. So we can only measure January to August. For RSI, the overall number came in at about 1.2% growth year-on-year. And if we were to take the same period for FCT's portfolio from January to August, our growth is actually at 4%. So we are ahead of the general market performance. Rental (sic) [ retail ] rents continue to track positively. Suburban prime rents grew by 0.5% quarter-on-quarter and 1.7% year-on-year. So this actually kind of bring us to the next slide also looking at the supply side of things. So overall, again, very limited stock that's coming on stream. From now to 2028, we are looking at about 1.2 million square feet of total spaces that's coming up. But if you just focus strictly on suburban, we are looking at about slightly over 340,000 square feet of space. And even for that matter, it's not looking at any significant mall. For example, you have Lentor Modern Mall coming up next year, 90,000 square feet; another one, Parc Point Neighbourhood Centre in Tengah, it's about 75,000 square feet. So there are pockets of neighborhood malls coming up. So nothing significant on this list at this point in time. Next slide, please. So this is the overall picture. Very limited supply, strong occupancy, and that's the reason why for CBRE in their forecast of rental trajectory is still on an upward trend or whether it be suburban or Orchard Road and of course, on an island-wide perspective. The next segment is going to -- we are going to go into the financial highlights. I'll hand over to Annie. Annie, please.
Shyang Lee Khung: Thank you, Richard. Good morning, everyone. Let me take you through the financial highlights. Gross revenue for the second half is 14.3% as compared to corresponding period last year. This is mainly because of the Northpoint City South Wing acquisition, completion of the AEI at Tampines 1, partially offset by the Hougang AEI, which commenced in April 2025. If you exclude the effect of these 3 malls, gross revenue is about 2.1% higher, mainly due to the higher occupancy and a higher rent across all malls -- most malls. Property expenses for the second half is about 20.1% higher compared to same period last year. Excluding the 3 malls, property expenses is about 5.1% higher due to the higher property tax. The second half, the NPI is about 12% higher compared to last -- same period last year. If you exclude the effect of the 3 malls, it is about 1% higher, okay? Distribution from investment is 3.5% higher mainly because of the better performance from Waterway Point and NEX. DPU for the second half is 0.6% at $0.06059. Next slide, please. On a full year basis, the gross revenue is also higher mainly because of the same reason as previous slides. If you exclude the effect of the 3 malls, gross revenue is about 2.4% higher, mainly because of the higher pricing rent across most malls. Property expenses is about 13.5% higher compared to last year. If you exclude the effect of the 3 malls, it is about 4.7% due to the higher property tax, marketing as well as the higher net allowance of doubtful debt. NPI is about 9.7% higher than last year, and it's about 1.6% higher if you exclude the effect of the 3 malls. We recorded a higher distribution from investment by 37.1%, mainly due to the full year contribution from NEX, which was completed in March 2024 as well as some inclusion of the one-off distribution from JV during the year. With the 2 half DPU of $0.06059, it brings us a total of $0.12113, which is 0.6% higher than last year. Next slide, please. The higher balance in the total assets and liabilities as at 30th September 2025 is mainly because of the inclusion of the Northpoint City South Wing. Net asset value is lower at $0.0223, mainly because of the enlarged unit base following the equity fundraising during the year as well as the effects of the mark-to-market recognizing the derivative financial instruments. Next slide, please. Okay. As briefly mentioned by Richard, as at 30th September 2025, aggregate leverage is 39.6%, which is 3.2 percentage points lower than last quarter. This is mainly due to the repayment of loans from the proceeds from the issuance of the [ perps ] as well as the divestment proceeds from the Yishun 10 in the last quarter. The interest coverage ratio is healthy at 3.46x. And average cost of debt for full year is at 3.8%, but on a quarter basis, it has dropped to 3.5%. Average debt maturity stood at about 3.16 years. And the hedge ratio for the -- as at year-end is higher compared to last quarter at 83.4% due to the repayment of variable borrowings during the quarter. Credit rating remained unchanged at Baa2 stable from Moody's. Next slide, please. Okay. For the capital management front, we have diversified sources of funding where we issued a 7-year $80 million bond as well as the $200 million perpetual securities during the year. For the debt that is maturing in FY 2026, borrowings is in Q2 2026, and we are in the advanced stage of refinancing of these loans. Next slide, please. Aggregate appraised value for the total portfolio, including the 50% of NEX and Waterway Point increased by 16.8% as driven by the acquisition of Northpoint City South Wing as well as stronger performance. The cap rates adopted by the valuers remain unchanged as compared to last financial year, which is in the range of 3.75% to 4.75%. Next slide, please. DPU of $0.05963 will be paid on the 28th November 2025, and this is for the distribution period from 4th April to 30th September 2025. Yes. I will now hand over to Pauline for portfolio highlights. Thank you.
Pauline Lim: Thank you, Annie. Good morning, everyone. I will just do a deep dive into the various performance metrics that Richard touched on earlier. So in terms of committed occupancy, the portfolio stands at 98.1%. It would have been 99.9%, if not for the re-entry of the 2 cinemas at Century Square and Causeway Point, right? And if we actually take into consideration the cinema space, the 2 assets, Causeway Point and Century Square, would actually be reporting at 100% occupancy as well. And we are in advanced negotiations and planning for the repurposing of this space, right, okay? And I think one of the observations is for the cinema space, because of the lower-than-average rent, it does give us certain opportunities to reposition the mall better. Next slide, please. All right. In terms of NPI, I think one of the key observations is that the NPI actually generally increased or improved on a year-on-year basis for all the assets. And that's with the exception of Century Square and Causeway Point, which maintained largely neutral compared to last year. And that's notwithstanding the fact that we had that vacancy as well as the arrears from the cinema space in these 2 properties. So very strong top line growth across the portfolio. And this is reflective of the strong operating performance in terms of footfall, in terms of sales, which allows us to achieve very good healthy reversion. Okay. Next slide, please. Okay. So now we cover reversions at 7.8%, which is a good reversion for the entire FY '25. I think one of the observations is that this reversion has actually maintained at the strong level over the 2 consecutive years. We do see reversions coming in at this level for FY '24 as well. The other observation is that we have achieved positive rental reversion across all our malls within the portfolio. Next slide, please. Okay. This slide shows the trending of the portfolio occupancy. I think a couple of observations. You will note that the occupancy cost of our portfolio at 16.1% for FY '25 is below the pre-COVID levels. And this is reflective of the fact that sales growth for our portfolio has been strong. And that enables us to maintain the healthy EOC and trading performance of our retailers, notwithstanding the good rental reversion that we have negotiated from our leases. And in a way, this is reflective of the success of our focus on driving footfall as well as sales conversion. Next slide, please. I think Richard touched on this earlier. So on a quarter-on-quarter basis as well as year-on-year basis, we do see the strong growth in the traffic, the footfall coming to our malls as well as the conversion into healthy tenant sales growth as well. Next slide, please. All right. Observations from this slide, we do not see any tall towers going forward over the next 3 years. So as you are aware, our average lease tenor is 3 years. So for the next 3 years, no concentration in terms of lease expiries. So this bodes well in terms of the cash flow from our portfolio. Next slide, please. Yes. Again, coming back to the resilience of our income and valuation. By AUM across the assets within the portfolio, we do not see any significant concentration risk, right? And also at the mall level in terms of the trade mix, there is no concentration or rather that we do see a higher proportion of essential services at 54% GRI. And I think over the course of the past few years, we've seen the resilience from the suburban retail sector, and that is largely due to the fact that it has a large component of essential services, which caters to the daily needs as well as the necessities of the population that we serve. So we see a resilience at both the balance sheet as well as the P&L level. Next slide, please. Okay. In addition to achieving good rents for our portfolio, we are also very cognizant of the sustainability of our retail offering. So there is a focus on refreshing our trade mix to delight and also to keep up with the latest retail trends. On average, we are looking at about 20% refresh rate for leases that comes up. And over the course of FY '25, we have brought 76 new-to-portfolio tenancies. The other observations are that this refresh is actually across all our malls, and it's a variety of trade. So no concentration -- no particular concentration in one particular sector, right? So it's, of course, F&B and the various retail offering. Next slide, please. Okay. For this slide, we wanted to showcase some of the promotions, events and placemaking activities that we had undertaken over the course of this year and in particular, the last quarter. So on the left-hand side, you see some of the promotions as well as the activities during -- for SG60 during the National Day celebration. And a large part of our focus is to actually work hand-in-hand with our retailers to magnify the outreach to our shoppers, right? And we are positioning our malls given its strategic location within the heart of the heartlands as the social hub within that particular catchment. And this is to build that loyalty and sense of place with our shoppers. Next slide, please. Okay. Update on Hougang Mall AEI. I'm very pleased to update that the progress of the AEI has been good in terms of timing, in terms of meeting the financial underwriting. So like what Richard mentioned earlier, 80% of the overall AEI spaces have been pre-committed to date. And if we look at Phase 1, which has just TOP and spaces are being handled over to the new tenants, we've achieved a pre-commitment level of close to 100%. So in terms of downtime, that has been mitigated. And also the focus on refresh is seen in the new-to-Hougang concepts that we have actually brought into. So out of the pre-commitment, we have brought in about -- this 40% represents about 30 new-to-Hougang concepts that we are bringing to HM post AEI, okay? And the other focus for the AEI would be refreshing some of the amenities. The mall is new. So part of updating the retail experience will also be refreshing some of the key touch points like the lobbies as well as the restroom. Okay. Next slide, please. So with this, I will hand over to Judy to take us through the ESG.
Judy Tan: Yes. Thanks, Pauline. On the ESG front, we are pleased to share that in recognition of FCT's progress towards sustainability, we have been recognized as the Regional Sector Leader (Listed) in the Asia, Retail category in the 2025 GRESB Assessment, right? And this is also the fifth year in which we have attained a 5-star rating, and we have also increased our score from 91 to 93, okay. This slide showcases 2 of the initiatives that we have implemented actually in FY '24, both first of its kind, including the Singapore's largest single solarization for retail malls. And right now, we have got this program implemented across 8 malls, producing over 1,400 megawatt per hour of renewable energy, translating to, of course, savings as well as carbon emission reductions for us. And of course, on the Singapore's first-of-its-kind food valorization program as well, we have actually reduced about over 258,000 kg of food waste reduced. So all initiatives that contributes towards carbon emissions reduction. On the community engagement front, of course, Frasers Property is all about inspiring experiences and creating places for good. And this slide basically just shows my read of all the different activities, placemaking initiatives that we had during the year to engage and reach and excite our shoppers as well as the communities. And in particular, for the SG60 community campaign, we actually donated a total of $200,000, working hand-in-hand with our shoppers as well as tenants. We also wanted to highlight this initiative that we had where we actually ran a dive into sustainability campaign in our malls to actually encourage shoppers to come forth, donate their bottles, their used bottles. And we actually rewarded shoppers $2 FRx gift vouchers for every 5 bottles recycled. And during this period, not only did we do good, we also saw an increased traffic to our malls by over 20%, right? So for this initiative, that actually got the Frasers Property Singapore to be recognized as a Runner-Up by the Singapore Retailers Association Retail Awards under the Green Initiative Award of the Year. Next up, I will hand it over to Richard to give his concluding remarks, looking forward.
Richard Ng: All right. Thanks, Judy. Next slide. Yes. Okay. So again, we have shared with you the set of results and how do we get there? Of course, from the perspective of our portfolio itself, both organically, AEI and also in terms of acquisition, we have done a lot of good work this year, and that, by itself, actually helps in giving us a boost in terms of our overall performance and also the DPU. The market has continued to be very strong, very resilient because of tight supply and at the same time, strong demand. And this is something that we continue to see, and we believe that the positive trajectory will carry us through to the FY '26 as well. We spent a lot of time sharing about placemaking, ESG and so on. And this is fundamental for us because our malls are located in strong catchment area with a very strong community feel, right? So we want to make sure that this is a place where we can continue to drive traffic, bring in more people, more shoppers into our malls. And ultimately, this will then help to result in a better sales performance for retailers and by itself will then give us a better performance for our overall portfolio, right? With that, I'll end my presentation and happy to take questions from you guys. Thanks. Back to you, Judy.
Judy Tan: Thanks, Richard. Okay. Right now, we'll go on to question and answers. And then, of course, we've got a couple of analysts already raising up their hands. First up, can I invite Yew Kiang from CLSA to unmute himself and post his questions, please?
Yew Kiang Wong: Can you hear me?
Judy Tan: Yes.
Yew Kiang Wong: Richard, can you share the tenant sales for this FY and this quarter for Causeway Point and Northpoint?
Richard Ng: For Causeway Point and Northpoint specifically, okay, I will not be able to give you specific, but what I can share with you is perhaps I'm not sure, but maybe you're alluding to the impact and so on of people going to JV. But what we have seen is over the last -- from 2019 to now, both malls have actually -- in terms of sales has delivered more than double digit, right? For Causeway Point, I'm looking at slightly over the middle double digit, more than 10%. For Northpoint City, it's more than 20% from 2019 to this period. And if you look at the annual growth rate, it's about 3% to 4%.
Yew Kiang Wong: Okay. So the double digit is over that since COVID, is it from 2019?
Richard Ng: Yes, from 2019 to now, right? Yes, so despite -- there's a lot of talks about people -- more people shopping in JV, et cetera, but what we have observed at our most modern malls, they -- the sales continue to improve, right, between 3% to 4% annually.
Yew Kiang Wong: Okay. Okay. And then any plans on Central Plaza?
Richard Ng: Okay. Central Plaza is something that we have been talking about for a very long time. A couple of reasons, right? One reason is, firstly, it's an integrated development part of Tiong Bahru, right? It actually fits into Tiong Bahru very nicely, providing access for the people in the office to support the retail. And we get to control the type of tenants that comes into the office as well. That's one key aspect of having it as an integrated development. Secondly, we also recognize that there are still some potential for us to look at decanting some space, better utilization of space, right? So there's still some GFA that we probably could harness as part of an integrated development. Once you sell it off, you will lose some of this. Thirdly is, again, the management of the entire asset is important for us. If you do look at selling out Central Plaza, you lose control of the carpark because that is actually, again, a MCST -- it becomes an MCST asset, right? So certain component, we feel it's important for us to put it together as an asset -- an ongoing asset performance. On the other hand, we also recognize that Central Plaza is an office building, not really our core asset. But if you look at the asset itself, it's performing well, but we still feel that there's opportunity for us to continue to push the performance a little bit better, right? So we look -- we will always be looking at the possibilities of what do we do with the asset. But as of now, I would say that there's still room for us to further improve the performance, both in terms of occupancy and in terms of the rent.
Yew Kiang Wong: Can you sell this to the sponsor and then technically, it's still under the family. So MCST issues and all, so we're more stricter then.
Richard Ng: I can't speak for the sponsor whether this is an asset that they will consider. But we are always open. We are always exploring possibilities, alternatives, use and so on. But as of this time, we don't see this as something that is right on top of our agenda.
Yew Kiang Wong: Okay. Last question. FY '26, what's your focus going to be?
Richard Ng: Focus, of course, we acquired South Wing, right? We also mentioned there are certain things we want to do at South Wing. We want to improve the performance organically while we continue to look out for some AEI opportunities. So that's one, right, because we acquired this asset this year, we want to make sure that it delivers what we have set out to do. Secondly, there's actually a lot of opportunities in terms of AEI. One is the big one is NEX that's coming up. We have obtained the written permission. So we are still targeting our June, July commencement of AEI. That's a big one, right? It's talking about massive 50,000 type of square NLA square footage. That will take us for 2 years. The other one is, of course, focusing on repurposing or backfilling the cinema space as soon as we can, if possible. If not, then we look at the best alternative use for that space, and there could be some level of AEI required in order for us to repurpose the space.
Yew Kiang Wong: So fair to say for FY '26, you are focusing on organic improvement operational rather than M&A?
Richard Ng: Acquisition M&A is always opportunistic, right? It's something that we can't control what comes out to the market, what's available in the market. And even if whatever that's available in the market, whether it fits our portfolio structure, the type of assets that we want, whether the pricing is something that we can afford, right? But what we can always focus is something controllable, and those are the controllable aspects.
Pauline Lim: Richard, can I supplement your response to Yew Kiang's first question in terms of sales growth. So Yew Kiang, if I may refer you to the circular or the presentation that was done for the acquisition of South Wing. So we did have a slide that actually shows the growth in the retail sales, the retail sales index of South Wing versus some of our dominant malls, which includes Waterway Point as well as Causeway Point. From there, you see that the growth trajectory, right, since 2019 to 2024 has been very strong, right? And 2024 can be taken as a reference point, right? I think Malaysia -- Singaporeans have been going through across the border all this time, right, and when the exchange rate was very favorable and so forth. So that's one point. I'll be happy to send you that slide for your reference, right?
Yew Kiang Wong: Okay. I'll look for it. If I can't find, get Judy.
Pauline Lim: Sure, sure. I think the other point is also if you look at the performance metrics, right, of Causeway Point and Northpoint City in terms of occupancy and all that, that has been -- that's at 100%, right? So in a way, it ties back to the sales performance. I think retailers would not be renewing or so keen to take up space if they are not trading at a healthy level. So I'll leave these thoughts with you.
Judy Tan: Next up, we've got Geraldine from DBS.
Geraldine Wong: Maybe just following on to Yew Kiang's question, strategy for 2026 is organic. But if the right asset comes along in the market that you like and thinking about how your share price has done really well to trade 10% above book, would you then want to be a bit more aggressive in taking on an acquisition at this point in time or still too early?
Richard Ng: Okay. Geraldine, I think, again, going back to acquisition, there are many components to consider when we look at a specific acquisition. Of course, firstly, it's opportunistic, right, if there's opportunity available in the market. And then we have to evaluate the asset, whether we think that the asset is something that can improve the portfolio further. We look at the bottom line, whether there's opportunity to further improve the performance of the asset or if the asset has really been significantly optimized. And definitely, in terms of the pricing, I mean, we do note that there are instances where a seller bids very aggressively, right? I mean if you look back, for example, at Seletar Mall, nobody really knew what's the final price because it's not publicly available. Of course, you hear in the market and so on. But if those numbers were true, it was very, very aggressive, something that I think would be very difficult for ourselves to be part of it because we believe if we buy something, I mean, there must be value. It may not be immediate, but at least, over time, the performance of the mall must be commensurate with the pricing that we go into. So those are all the considerations. So there isn't a short answer to it and say, yes, we will do it or no, we wouldn't do it. But if all those factors, having taken into consideration, are favorable to what we have today and something that we believe is going to be positive for our shareholders, of course, we will be interested to look at it.
Geraldine Wong: Okay. Everyone is taking a look at the current mall. Maybe a second question, if I may. The AEI opportunities at Northpoint as well as NEX, the increased NLA, so if you are thinking about ROI margins, are they going to be much meatier than the 7% that you have at Hougang Mall?
Richard Ng: I think typically, we try to at least target that range, 7% to 8%. When it's meatier, it also comes with a meatier cost as well, right? So it's a balance about both. And when we upgrade the malls, we take the opportunity to also improve a certain component of the mall as well, right? So for NEX, it's a very big AEI. Not only we see it as an opportunity for us to improve the performance on a near term, but whatever that we are doing, we believe is going to be good for us on a longer term as well, improving circulation, making space available -- bigger space available for us to do other activities in the mall, et cetera. So by and large, we will still look around the between 7% to 8% kind of return.
Geraldine Wong: Okay. Maybe just squeezing in a very quick last one. In terms of occupancy cost for Causeway Point, Northpoint City, our portfolio average is at 16%. But for these 2 malls, are we above at or lower than the portfolio average?
Richard Ng: Okay. If I can remember, Causeway Point is below. I think Northpoint City is also below, if I remember correctly, but definitely not higher than what we have on the average.
Geraldine Wong: Okay. So a very good place to do business. I hope the market dynamics will run its course.
Judy Tan: Next up, we've got Terence from JPMorgan.
M. Khi: Richard, congrats on the good set of numbers. I just wanted to ask on Cathay. I understand that on a year-on-year basis, actually, the NPI has been quite flattish for the 2 malls impacted by Cathay, Causeway Point and Century Square. But on sort of looking at the second half, we saw maybe like a 2% drop versus second half last year. So can I just get understanding that Cathay was not contributing to NPI in second half? Or was it only -- or was it for the full FY '25?
Richard Ng: Okay. Cathay's contribution, I would say, kind of pretty much reduced significantly as we progressed through the year, right? When the first round when we came out with the -- serving the notice, et cetera, right, this is -- that's when they really stopped paying the base rent, but they were still paying some contribution. But that kind of slowed down and trickled down significantly. So by and large, I would say the contribution, it's very minimal, if any, towards the second half. And you're right, the drop that you saw is mainly contributed by Cathay.
M. Khi: Okay. That's actually very -- that's a very good number to start with for second half NPI. I think it's not a very significant drop. I think it's -- most of the other malls will be able to carry it. Also asking about Cathay, I wanted to understand what are you looking at? Are you trying to bring in another cinema tenant? Or are you trying to repurpose for other users? Could you give us a sense?
Richard Ng: Okay. I would say that we are currently exploring various options. If there are operators today that are prepared to consider the space and they can come in and operate very fast, that's one alternative that we could consider. But at the same time, that if we feel that certain -- okay, there are 2 spaces we are looking at, right? If the spaces presents a very strong opportunity for us to kind of repurpose the space and then can bring in a strong tenant, a strong anchor tenant to kind of anchor that space and that gives us a longer runway in terms of sustainability of the traffic, the mall and so on, then that's another consideration. So I would say, at this point in time, we are actually very excited with a few options that we have on hand. Some of them, because of the repurposing requirement, will take a bit longer because you need to engage authorities, et cetera, and so on. And we should be able to come back and give some sensing definitely by the first quarter in terms of the direction we are heading. And if, let's say, there's any opportunity to probably replace with an existing tenant on a one-on-one basis or that somebody can kick in faster, that will be even better for 1 or 2 of the space.
M. Khi: Okay. That's great. Also, I noticed or I understand that there was a one-off distribution from JV this year, FY. Could you share on the amount of the one-off?
Richard Ng: JV, I would hand over to Annie to give a little bit more color on that.
Shyang Lee Khung: Yes. Terence, yes, the one-off distribution is from NEX is due to the excess cash at the entity level, which we assess that is no longer required and it is distributed as a dividend.
M. Khi: And can you share the value? How much? And this came into DPU, right?
Shyang Lee Khung: Yes, it's about $9 million, the one-off distribution.
M. Khi: $9 million. And was that in second half or in first half?
Shyang Lee Khung: Yes. I think most of it is in the first half. Some came in the second half.
M. Khi: Okay. That's great. And maybe a final question for me, 3.5% fourth quarter funding costs, what's the expectation for next year, FY '26?
Shyang Lee Khung: Yes. At the current rate level, we are looking at about 3.3%, 3.4% for the next year.
Judy Tan: Next up, we've got Rachel from Macquarie.
Lih Rui Tan: Can you all hear me?
Richard Ng: Yes, Rachel.
Lih Rui Tan: Congrats on this good set of results. Maybe just firstly, in terms of reversions, I saw that actually second half probably moderated a little bit. So if you could guide us what you're looking at on reversions for next year?
Richard Ng: Okay. We did share that this number, again, is a very strong number that you could see. And first half was stronger compared to second half, partly due to the constituent of the leases up for renewal, right? Sometimes when you have more specialty, for example, that leases comes up in the quarter itself, probably the reversion could be a little bit more aggressive because smaller spaces and so on. So it's a combination of the profile of the expiry that we have between first half and second half. So going forward, and this is something that we shared before, we believe that going forward, on a more sustainable basis, we are probably looking at about mid-single-digit positive rental reversion.
Lih Rui Tan: Okay. And can I just ask on -- in terms of the tenant sales, I think it's been very strong in the fourth quarter. But is there any impact from the Tampines Mall being included? If we were to still exclude Tampines, what kind of tenant sales will we be looking at? And what's your opinion? I know this year, we have a lot of government vouchers, but if government vouchers was to taper off, what's your view on tenant sales moving forward?
Richard Ng: Okay. I -- first and foremost, I think definitely, Tampines 1 has also helped to contribute towards the strong sales that you saw. But even if we strip out Tampines 1, the sales were still positive for the rest of the portfolio. You're right, to some extent, this year, we had a lot of goodies, a lot of handouts, SG60, CDCs and so on. And we believe that even come, I believe, end of the year or January, there's another tranche right, CDC voucher that's not been distributed. And probably some of these so-called handouts or incentive goodies may last a little bit longer because I don't think it's easy for them to just wean off or cut off immediately. They probably have to wean off over time. But fundamentally, I think what's important, Rachel, is also looking at the big picture, right? So those one-offs and others, yes, you get it, it's fine. It's a bonus. But what's more important is the underlying macro perspective. What we are seeing is, firstly, it's increased population base, right? So -- and that actually is a fundamental, right? You have bigger numbers and also the income level of our people are growing, right? And this is largely supported by, again, your -- what do you call that, Judy, the progressive wage model.
Judy Tan: Progressive wage model, yes.
Richard Ng: Progressive wage model. So that, to me, is actually more significant and more sustainable, right? Because if you look at how the progressive wage model works is, there is a kind of minimum starting point and there is a fixed growth for the different sector of worker, right, that you see, whether it be cleaning, security, retail worker, F&B operators, landscaping, M&E engineers for the lift and escalators. So -- but if you just take an example, right, you just take an example of a general cleaner, from 2023 to 2029, the same person will likely almost double the salary, right, for this period itself. So to us, this is actually a very important aspect that is going to kind of underpin the growth that we expect from our suburban malls because, by and large, most of this progressive wage are targeted at the mass market, and that's the market that we are serving. So while we get the one-off, the goodies, that's good. It's helpful. But I believe the growth in population and also the growth in this ability to spend, that will again be the one that underpins the performance of our malls.
Lih Rui Tan: Okay. And my next question really is on Isetan. I think we saw that they are exiting Tampines Mall. Could you give us -- remind us again when is the Isetan lease expiring in NEX? And has negotiations been going on? Are they talking about exiting or downsizing?
Richard Ng: Yes. So for this, maybe I would ask Pauline to share some color.
Pauline Lim: Rachel, I think because of some privy details, I cannot say much, right? But what I can say is we do have plans for this space, and it's positive plans. And you are aware that we are doing the AEI, right, for NEX as well.
Lih Rui Tan: Even the lease, when they are expiring, like 1 year or 2 years?
Pauline Lim: The lease will be coming up next year, next calendar year, yes.
Judy Tan: Next up, we've got Terence from UBS.
Terence Lee: Terence from UBS. Just using the closure of Gong Cha as an example, and I'm going to presume for FCT that any bad debt exposure is probably quite low. But more broadly, my question is, have we hit the point of saturation for certain trade categories, be it bubble tea, the coffees or even potentially even some of the Chinese restaurant chains?
Richard Ng: Okay. Yes. Okay. The first part of the question, Terence, our actually arrears is very minimal, except -- the exception is cafe for a different reason and perspective. But by and large, we follow pretty strict guideline and processes, whereby if the tenants do not pay up within a certain period, we will actually engage them, send them certain notice and we will repossess the unit within a certain period of time. So that's how we managed to keep our arrears actually on a very thin level. If you look at Gong Cha or many other news that you have seen in the market of closure, people exiting and so on, I think this is part and parcel of F&BC, right? You do get certain products, certain brands that have been here for a while. And Gong Cha, in particular, I -- what I read was more because the brand itself -- I mean, the owner of the brand itself wanted to exit and then potentially come back again at some point in time, but that's news. But in terms of F&B operator, I think you see there are certain brands, certain products, they are probably very trendy at certain point in time, and that set can run out -- run its cost, and then they are no longer here. But then you see another new concept will pop up. And that's the beauty of F&B, right? Something that it's changing because the tastes change, the preference change, and competition is also there, right? So the stronger one, the better ones come in, and then you see those who are not able to keep up or their products are deemed less exciting or maybe in terms of taste and so on is not as good, they will then be the ones that has to review their product or they may exit the market. But then the new ones will come. So be it bubble tea is not new, we used to have -- back then, I used to say that Waterway Point has the most bubble tea operator. We have about 6 operators. But now you reduce to about maybe 3. That's one example. Coffee chains, similarly, you have different types of coffee, different operator, different type of taste that appeals to different shopper, right, a different customer. Again, is it too many? The market will dictate whether there is too many or they still see opportunity to grow new offerings. And that is no different, right? So the long and short of this is that what we see is a lot of movement, a lot of churn, but the demand for F&B space continue to be very strong. And that is from our own perspective as an operator, we see that is, again, a sector that has continued to develop, continued to evolve, but we see very strong demand.
Terence Lee: Got it. And just circling back to the question on acquisitions. I mean now that Northpoint City is, I guess, underway, is it then reasonable to expect that FCT will have to start looking overseas to acquire?
Richard Ng: Not really. We still have joint ventures partners in 2 assets, right, Waterway Point and NEX. So we'll continue to cultivate the relationship with our partners. And hopefully, at some point in time, they may look at redeploying their capital. They may look at exiting the malls at some point in time. And if you add those 2 together, it's close to $2 billion. So significant size opportunity that's still available for us in mid- to longer term. But what we are focusing a lot is just now they're talking about what do we focus on '26, FY '26, what's the main focus and concentration. There's a lot of areas that we think we can still harness a lot of value we can still create based on our existing portfolio. So there's actually a lot of work for the team on the ground. AEI, it's one big area that we are focusing on. And AEI is one that we believe will continue to, again, give us value. Tampines 1 has been proven to be very successful. Again, for Hougang Mall, Pauline has shared the performance in terms of the leasing commitment, very strong, which we will see contribution once it's fully completed. NEX is going to be the next one to go. And we are now looking at also plans for the other malls in the portfolio. So we are continuing to work on it. So we are actually kept very busy while at the same time, looking out, if there's any opportunity that comes to the market, we'll evaluate it and see if it makes sense. So the long and short of it is, we will stay pretty focused on what we have today.
Terence Lee: Got it. And earlier, there was the guidance on where funding costs would trend towards, 3.3% to 3.4%. I just want to understand the thinking behind the fixed hedge profile. Is it a plan to keep it at a relatively high level such that the flow-through is rather, I guess, muted? Why is it this thinking?
Richard Ng: Okay. Maybe I'll just give you a color, then Annie can chip in as well. I mean you are seeing a little bit of elevation in terms of hedge portion now at this point in time because when we bought over South Wing -- Northpoint City South Wing, we took over the debt for the asset, right? But we do have a refi coming out in January, February for the FY '26. Once that is done, we will probably review the hedging again and it is likely to come down from this level.
Judy Tan: Next up, we've got Derek from DBS. Derek, would you like to unmute yourself. We can't hear you for now.
Geraldine Wong: Judy, I think there's a problem with Derek's mic. So maybe I can ask his questions on behalf. So I think first is on tenant sales. If you can give us some color what is lagging?
Richard Ng: You mean what trade is lagging, is it?
Geraldine Wong: Yes, yes, the trades that are lagging.
Richard Ng: Okay. Pretty much most of the sectors are actually performing positively with a few exceptions. Maybe to just give a little bit of color. Department store, I think it's a little bit of a drag. Books and gifts, it's a bit of a drag. Infocom, a little bit. Fashion accessories, it's seasonal. So by and large, I think these are the few sectors that we saw a little bit of a drag. But the rest seems to be pretty positive.
Geraldine Wong: Okay. I understand. Yes. Maybe, Richard, the second part, maybe some idea on Metro, what to expect and when is the expiry?
Richard Ng: Okay. Metro, again, it's a case of we are evaluating the options. We are working with the tenants to see what are some of the ideas, concepts that they could be able to introduce. I think there's a lot of news articles on the collaboration with Shinsegae and others, retailers in Korea. So we would like to find out what is it that they are able to bring to the market. And specifically, if we continue to work with them, what can they bring to Causeway Point. So it's an ongoing conversation. But at the same time, we also recognize that they take up a significant space. So it's a question it's about having Metro, not having Metro; having Metro, but maybe rightsizing Metro. So those are the possibilities that we are exploring. That's not a finality at this point in time.
Geraldine Wong: Okay. Just one quick last one. For your leases expiring in 2026, where will it be and which malls?
Richard Ng: It's pretty much cutting across all malls because our leases are on 3 years basis, right? So just now when we shared the lease expiry profile, it's quite evenly spread. So we do have expiry across the whole portfolio.
Judy Tan: Next up, can I invite Brandon to unmute himself to ask the questions, please?
Brandon Lee: Richard, I just want to ask you on the tenant sales growth, right, if you were to exclude the T1 and all the cinema, everything, what's the net growth for FY '25?
Richard Ng: Okay. It's slightly below 2%.
Brandon Lee: Slightly below 2%?
Richard Ng: Yes.
Pauline Lim: So that includes the drag from the cinema because we haven't taken out that.
Richard Ng: Yes, yes, yes. When taken out the cinema.
Pauline Lim: So probably about 2-ish.
Richard Ng: Yes. Okay. Yes.
Brandon Lee: So it's 2-ish percent?
Richard Ng: Yes.
Brandon Lee: Because if you are looking at your forecast on this reversion going to next year, right, and looking at your occupancy cost relatively flat, right, so basically, your outlook on tenant sales growth is quite muted. Is it -- can I sort of get a forecast on that, implied?
Richard Ng: No, not really. I think we still continue to expect positive sales coming in from our retailers. But it's a case of, again, depending on the composition of your type of leases that's coming up for expiry. And of course, I would also like to say we typically will build in a little bit of conservatism when we look at the expiry or the reversion for next year, right? So which is why we say it's about mid-single. We have been doing 7.7%, 7.8% for the last 2 years, right?
Pauline Lim: So Richard, maybe I'll supplement that point, right? So Brandon, I think we are not relying solely on organic growth, per se, right? There's a lot of proactive tenancy management, if I may say, right? Proactive tenancy management in terms of working with the tenants, existing tenants to drive their sales, right? I spoke about the refresh rate, which means that we are constantly looking at weeding out or changing out some of these weaker performances and bring in the more trendy and more sought-after brands, right? So that is also part of the active management as well. It's not so much just relying on the organic growth of our existing pool of tenants, right? And with the AEI, it gives us that opportunity to actually do more of that refresh, right? So I think we should take all of this into consideration.
Brandon Lee: Okay. And just on the revaluation, I realize this second half, we didn't provide the cap rate. So what's the trajectory from FY '24? And also what's the revaluation loss of the $11.1 million due to?
Richard Ng: Okay. You're talking about trajectory from FY '24 in terms of the cap rate or...
Brandon Lee: Yes.
Richard Ng: The cap rate stayed constant.
Brandon Lee: Okay. So -- and I think all the malls saw partial [ wither out ], but then you still recognized a loss, right? So what's driving that?
Richard Ng: Yes. Okay. Maybe Annie could give a bit of color on that.
Shyang Lee Khung: Yes. Okay. Brandon, you can see that there's $11 million loss, but actually included in this $11 million loss is an accounting fair value loss of about $41 million, which arose from the acquisition of Northpoint City South Wing because of the accounting treatment of it treated as acquisition. So if you exclude that accounting item, there's actually a fair value gain from the investment property of $30.7 million. Maybe I should also add to say that the fair value loss accounting includes the transaction cost that was also capitalized. Yes. So you should strip out the accounting loss and look at the true fair value gain of the investment property, which is about $30.7 million.
Brandon Lee: Okay. Okay. So basically transaction costs of Northpoint. Okay. And just last one, right, which I think if you look at your portfolio today, right, just looking at it from a divestment and acquisition standpoint, right, would you be open to still owning or acquiring more or divesting malls where the size is like below sort of a 200,000 square feet kind of range?
Richard Ng: Okay. By and large, our preference is definitely moving towards stronger, bigger, more dominant mall as what we have been doing for the last couple of years. So today, we have 4 of the top 10 largest mall in Singapore. But those opportunities comes far and few in between, right? Then the next level we look at is probably the likes of our 200 over 1,000 square feet malls. And then the last category will be the 100 over 1,000 square feet malls. So again, if we have an opportunity to reconstitute, to replace something stronger, of course, that is something that we would seriously look at as part of the overall reconstitution and strengthening of our portfolio.
Judy Tan: We've got Jonathan from UOB Kay Hian, who has got a question.
Jonathan Koh: Congrats on the good results. Could you touch on AEI for Northpoint City? In the past, you've talked about a holistic AEI. Could you touch on some of the key enhancement that you are planning? Next, right next to it, Yishun 10, would that be redeveloped into residential? And how does that impact your AEI and give us some sense of timing?
Richard Ng: Okay. So maybe we can look at the 2 questions there. The first one is probably easier to explain that Yishun 10. Yishun 10, we have divested to Frasers FPL. So they did have some announcement in terms of their plans on that. You can look that up. We are not sure exactly what will be undertaken. What we know is that in the past, we have kind of engaged the authorities before. It's not going to be another mall that's coming out. So it's not going to be a fully new mall that's going to be developed. So that's one thing we know. But beyond that, we do not really know what ultimately will come out there, right? So that's for Y10. And it will not affect any of our decision as to what are we going to do with South Wing. So for South Wing, when we did the acquisition, we spoke about a couple of pockets of opportunities that we saw and something that we're going to take -- undertake over a period of time. So one of them, which is organic, something that we feel that we could improve in terms of the performance at the mall level, whether it be OpEx or revenue. So this is something that is work in progress. We also identified some opportunities for maybe re-leasing about 5,000 square feet of NLA. That is work in progress because in order to do that, we need to go through several rounds of approvals and getting agreement and consensus from the various authorities. So that's work in progress. So that will take a little bit longer, but the work in progress now really is to tighten up any bulk purchase arrangement and getting the best outcome in terms of the mall performance at this point in time.
Jonathan Koh: I presume timing-wise, more likely FY '27?
Richard Ng: For the AEI itself, the 5,000 square feet we talk about? Yes, slightly. I don't think we will get everything through in FY '26.
Jonathan Koh: Okay. And just...
Richard Ng: It will commence probably in FY '27.
Jonathan Koh: And just a brief follow-up. Isetan, what is the square footage that they occupy at Tampines 1?
Richard Ng: Isetan is not in Tampines 1. Isetan is in Tampines Mall, which we don't own.
Jonathan Koh: Okay then. So I thought -- it was mentioned, I thought maybe related. Okay. No worries. Thank you.
Judy Tan: We've got from Rayson from HSBC, who's got questions.
Rayson Khoo: Just a few questions. Firstly, just looking at the Hougang Mall AEI, more than 80% committed. I think it probably moved about like 6% or so versus the last quarter. And then if I recall correctly, for Tampines 1's AEI, you were actually more than 90% committed before the works commencement. Just comparing this to pre-commitment rates, is sentiment getting a little bit weaker for the Hougang space? Are you reserving some of the space tactically for like certain trades? And then just on top of this, if you can just share how your tenant curation strategy takes into consideration the upcoming mall beside it?
Richard Ng: Okay. So maybe I'll share my perspective and then Pauline can also jump in. So if you look at the overall pre-commitment, I think it's very strong because we kind of have different phases, right? So the first phase that's going to be opening at the end of this year is actually almost 100% short of one small lease that's currently under negotiation, which I think probably negotiation is really done, probably documentation. So the first phase is fully committed. The second phase is going to go on until towards the later part of FY '26. We still have a bit of time. So the question is sometimes you want to make sure that you also get in the type of trade that you want, and that negotiation can take a little bit longer than usual. But getting over 80% pre-commitment, I think it is still a very healthy, strong kind of indication in terms of demand for the mall, right? The second question you have is in terms of what is going to come up. We don't really know what the final form product that's going to come out in the new GLS. But what we can do is look at ourselves and how we can, in a way, strengthen Hougang Mall. And that's part of the reason why we are doing this AEI. We have expanded one of our key anchor that's a library. We brought them up to the highest floor. We gave them more space because for library to stay, it's an important component because library, despite whatever people talk about reading and so on, they actually bring in a lot of traffic. They also help us in terms of placemaking activities and so on. So it's a very ideal case for us to strengthen our positioning by also locking in some of our anchor tenants. We are also working with another anchor, our supermarket operator to see how we can improve the supermarket itself. So those are various components that we look at positioning ourselves with to complement whatever that's going to come out in the future on the GLS side.
Rayson Khoo: Okay. And right. Just another question on the management fees in units because I think it's about 50% for this FY. And then if we're just looking at FY '26, which is going to be very AEI focused, should we expect the management fees in units to exceed 70%, which was when T1 was undergoing the AEI? Or would you like prefer to just phase out the AEI instead?
Richard Ng: Okay. I don't think it will reach that level. Probably it will be higher. We could expect it to be higher than this year, but maybe not that level. But then again, it depends on, again, at which point in time we're going to commence our next AEI, right? Say, for example, at NEX, that will bring into play again in terms of our requirement to use some of our AM fee in unit. Where we can, we, of course, try to spread it out, but sometimes because of timing, because we believe that we want to capitalize on the opportunity faster as well. So there could be an overlap, right? Because the faster you complete, the faster you can also generate the income, right? And especially when there are strong demand of retailers wanting to come to a mall like NEX, we want to get it done. We want to start fast because we see a lot of opportunities coming up there. So -- but by and large, I think it's likely to be slightly higher than what it is for FY '25, but may not reach the level -- may not reach that level that you mentioned.
Judy Tan: Okay. Next up, we have Vijay from RHB. Vijay, if you like the ask the questions?
Vijay Natarajan: A couple of quick questions from me. Can I know what is the outstanding rental arrears from Cathay at this point of time? And should we have to assume that this won't be recovered? Also, earlier, you mentioned in the plans of repurposing the space, if somebody can take it up as it is, then it would be a faster way to recover the space. So are you looking at a cinema operator to replace the Cathay?
Richard Ng: Okay. Maybe I will tend to answer the first part first. I think it's something that it's out in the market that we actually sent in an SD probably about 2 months ago. Pauline, was it 2 months ago?
Pauline Lim: About July.
Richard Ng: Yes. Okay. Yes. So about maybe slightly over 2 months ago. And the SD amount amounted to $3.3 million, if I get the number correctly.
Pauline Lim: $3.3 million.
Richard Ng: That is official. So we are going through a legal process, a legal proceeding to recover that amount. We have to let the process run its course before we could comment as to if we could recover the amount? Or if we could recover, how much of the amount? Is it partial? Fully? Or what's the amount, right? So we don't have that response for you today. But definitely, we are going through the legal process to recover as much as we could, right?
Pauline Lim: Richard, if I may add on to that, right? So the quantum $3.3 million also includes a portion that relates to the outstanding security deposit from this tenant. So what is really owing is actually lower than that $3.3 million that's out there in the market, right? So that's one point. I think the other thing is we are also -- we have other various -- or we have other legal recourse, right? So to answer your question, Vijay, are we writing off this amount? At this point in time, no, we are still pursuing the various legal recourse that we have.
Vijay Natarajan: Okay. Okay. I mean repositioning the space, are you looking at a cinema operator? Or if not, what other types of segments you are looking at, at this point of time?
Richard Ng: We are looking at various options on the table right now. We have cinemas, we have non-cinema operators. So there are a few options that's available to us to consider.
Vijay Natarajan: Okay. But what would be a preference at this point of time?
Richard Ng: It depends on what is the offer and also what is likely contribution that the tenants can bring, right, whether it be -- we think that a certain trade may be able to bring in more or drive stronger shopper traffic as opposed to the other. So those are considerations, and of course, the economics as well.
Vijay Natarajan: Got it. Second question is, what is the proportion of variable rent as a percentage of total rents in your portfolio at this point of time? And is there a change in terms of variable rent mix, especially for sectors like F&B, which are facing a bit more challenges at this point of time?
Richard Ng: Not really. GTO is about 5% of our total revenue. So it's still a very small proportion of our overall rental structure. I have not seen really a significant change in terms of the overall GTO proportion, whether it be F&B or the other trades.
Judy Tan: We'll just accept one last one from Derek from Morgan Stanley. Derek, can you unmute yourself?
Richard Ng: Hey, Derek, hi.
Judy Tan: Hi, Derek? Otherwise, we'll take one question from the chat as well. There's a question coming from one of them. It appears cost pressures have built in 2025, while other SG REITs saw utility cost decline. Why is there this difference?
Richard Ng: Okay. Again, it depends on the base, right? So some of the other operators, they actually had a higher cost base before that, but we have been quite active in hedging our utilities over time, right? So if you look at -- we have managed to bring it down in the previous year. So that movement may not be as significant because for the last 12 months, 15 months, it has been quite steady. The rates has been quite steady. So when we hedged it, we hedged forward, right? So we capitalize on that as well to make sure that we are not exposed to any significant risk because you don't know there's a lot of dynamics that's going around, whether Middle East, Russia, Ukraine and so on, right? So there's a lot of uncertainty. So we took that position. But you have to look at the starting point, right? Did they come off from a higher base or they were already lower than us and they got lower. So that's the question.
Judy Tan: Thanks, Richard. Derek, are you able to ask your question? Okay. Maybe some issues with his sound system. But anyways, I think we are out of time. So thank you so much, everyone, again for joining us in FCT's results briefing. If there are any further questions to follow up, please feel free to reach out to me. And thank you so much again for joining us today. I'll end the call right now. Thank you.
Richard Ng: Thank you.
Judy Tan: Thanks, Richard and team as well.
Shyang Lee Khung: Thank you.
