Good morning, everyone. Welcome to CLCT's 1H 2026 Financial Results Analyst and Media Briefing. I am Hui Shi, Investor Relations for CLCT. I have with me today Gerry, CEO, Lintong, CFO, and You Hong, Head of IPM. Thank you all for joining us today. For this briefing, we will start with a brief presentation, followed by a Q&A session. Once the presentation concludes, we will open the floor for questions. If you have a question later, please use the raise hand feature and I will pass on the time to you. With that, I will now pass the time to Gerry for his presentation. Gerry, please.
Thank you, Hui Shi. Welcome, everyone, to CLCT's first half 2026 results presentation. Thank you for making the time to attend our presentation this morning. Together with my team, I will cover our results and leave some time for Q&A later. For those of you who know us, CLCT is the first and largest China-focused S-REIT. We have a diversified exposure to China's domestic growth, and we uniquely offer connectivity to both S-REIT and C-REIT markets. Our total assets for first half 2026 is SGD 4.6 billion. That is SGD 100 million increase from first quarter due to stronger renminbi. We have eight retail malls, five business parks, four logistics assets in predominantly Tier 1 and Tier 2 cities. Distribution yield based on trailing 12 months as of 30th June is 7.4%. Retail is the largest and most resilient asset class at 70% of gross rental income.
Our bread-and-butter malls continue to be defensive and benefits from government initiative to boost domestic consumption. Our new economy assets, business parks, and logistics parks form the smaller part of our portfolio at 30%, providing us exposure to China's efforts to grow technology and innovation, including key sectors like semiconductors, electronics, and ICT. First half financial highlights. Financial performance-wise, our gross revenue is RMB 822.6 million . NPI, RMB 561 million , and DPU is SGD 0.245 . Retail operations continue to be defensive with high stable occupancies, positive sales, and traffic with slight negative reversion. More AEI effects start to show fully in our numbers. Capital management efforts continue to buffer operations and with stronger renminbi trends, which appreciated about 4% over the last one year, we see benefits to gearing, cost of debt, and DPU.
On the same-store basis, on this slide, you can see that our first half 2026 DPU of SGD 0.245 cents outperformed first half 2025 by 2.9%. This is stripping out the contribution of the divested CapitaMall Yuhuating asset in first half 2025. On a gross basis, despite being one asset short for CLCT, our first half 2026 DPU of SGD 0.245 is close to the first half 2025 DPU of SGD 0.249 . A slight - 1.6% decrease. In terms of portfolio gross revenue and NPI, gross revenue dropped 5% and NPI dropped 3% respectively year-on-year. Encouraging and building on first quarter trends, on same-store basis our portfolio gross revenue is marginally negative at - 0.2%, and our NPI increased by 1.3% year-on-year. For retail, revenue declined by 6.2%. On same-store basis, it increased by 0.8% year-on-year, an improvement versus first quarter trends.
Yuhuating itself, we have been talking about Yuhuating just to inform the revenue contribution in first half was RMB 43 million , and NPI was RMB 36.7 million . Improvement from our retail and our retail malls was due to revenues from our mall in-yards. For first half of this year, the revenues that flow through contributed extra RMB 10 million . The improvement was also due to some security deposit for leases. These were somewhat offset by continuing weakness at some of our weaker malls, Xinnan, Grand Canyon, and Aidemengdun. Business Park revenue and logistics. For first half, revenue dropped by 2.7% year-on-year. We had improved occupancy at Shanghai Fengxian Logistics Park that offset by lower performance at Hangzhou Business Park cluster and lower rents entered in prior periods flowing through at some of the other logistics parks.
To buffer some of the operational weakness of our new economy assets, we continue to focus on cost reduction. For first half, on same-store basis, we reduced operating costs by 3.5% year-on-year. We also aggressively utilized capital management opportunities to cut down interest costs by 16%. That is about SGD 5 million for this half. We will continue to look for such opportunities in the second half. Retail operations trends. For first half, our traffic grew 3.2%. Tenant sales grew 2.6%. Both stats are faster than full year 2025. Even though second quarter 2026 moderated retail sales-wise. Overall healthy occupancy cost at 17.5%. For retail sales, the trade categories that have done well, F&B + 3.5%, that is the biggest trade category for us by Retail GRI.
It is driven by the good performance of established brands like Haidilao and Haitian, which had a good double-digit growth, as well as continued strength from Japanese sushi chains and bakeries. IT did well as well, + 5.1% tenant sales-wise, and this benefit from demand for consumer electronics as well as expansion of more digital brands dealing with AEI in Xuefu and Wangjing to cater to the evolving consumer demand. Brands that have done well, for example, are like Huawei and some of the other electronics providers. Sporting Goods & Apparel, + 34.9%. This is driven by expansion into this growing sporting and outdoor trend lifestyle trend in China. For example, Decathlon in Rock Square and ANTA Guanjun in Xuefu opened in fourth quarter 2025 and have started to contribute strongly to our first half 2026 tenant sales. Pets and hobbies continue to be popular,+ 42.6% this half.
Again, strong double-digit growth from Pop Mart and Miniso. Supermarket search very strongly for us as we have completed three supermarket upgrades last year, and their tenant sales fully benefited us this half of 2026. As you can see in the slides, the three supermarkets delivered a very good tenant sales when they opened, and they delivered material traffic growth across the mall. We are very happy with the results of the supermarket transformation that we have done in the three malls, Wangjing, Xizhimen, and Xuefu. On top of these trade sectors, of course, there are other trade sectors that last year and prior quarters have not done so well. Fashion, for example, and beauty and health. I am happy to report that we see, generally speaking, the rate of decline for these two categories have basically evened up or basically become narrower.
In fact, for fashion, I reported in first quarteruarter that, yeah, it started to turn, and for the whole of first half, we are just slightly negative, right, in terms of fashion sales. For beauty and health, overall the trend has been that the sales performance have been flat. That's to be compared to prior periods where their performance had been negative. So generally, we see a good trend going forward. Hopefully, it will continue. For retail occupancies, our malls have been resilient with high retail occupancy of 97%, with almost all malls above occupancy of 95%, except for Xinnan, which we are trying to reposition. in June, CapitaMall Nuohemule introduced Yonghui Supermarket, which is a new concept store as a replacement supermarket tenant, featuring an enhanced product and shopper experience.
The store achieved sales of RMB 8,500 per square meter in its first week, reflecting strong consumer demand and market reception. Retail reversion overall is at -2.7%, at similar levels to full year 2025, with two anchor tenants affecting our reversions. For business parks, our overall occupancy is at 85.1%, which was a drop from first quarter 2026. We've witnessed in Hangzhou and AIT, Ascendas Innovation Towers, in Xi'an. Our business parks generally outperform their submarkets, despite the general soft leasing environment for the business park market. AIT's occupancy drop was mainly from BPO tenants, which did not renew upon expiry. The Hangzhou cluster has been a challenging market supply-wise. Occupancy has dropped slightly but still above the 70% mark. Overall, business park reversions are at -12%. We prioritize occupancy through active retention of existing tenants and conversion of our leasing pipelines.
In first half, we managed to sign 102,000 sq m of renewals and new leases. We did a lot of new leases, but of course, the competition is fierce. We noted that there's been an increase in terms of tenant mix from the electronics and engineering tenants. For logistics, this is our smallest part of our portfolio at 3%. Our logistics portfolio we reported in first quarter continued with the same trend, stabilized at full occupancy. Retail reversions have basically negative retail reversions have narrowed to now -1.2%. If you recall, in 2025, it was in the -20% region. We think that it has truly bottomed in terms of rents in our logistics business, have stabilized. Next, I will let Lintong take through the capital management part.
Okay. Thanks, Gerry. Capital management actually remains as a core strength and priority for CLCT We maintain a healthy balance sheet and actively lowering our cost of borrowings, and that actually protects the distribution stability across FX and interest rate cycles. I'm happy to report that as at June 2026, CLCT's aggregate leverage has improved to 40.4%, from 42.1% one year ago. It's also an improvement from 41.4% in the previous quarter. These are due to the renminbi appreciation and also our cross-border cash management effort. Due to currency demand from strong export in China and also PBOC's guidance on slow gains in the yuan, renminbi has appreciated as much as 2.7% in first half of 2026.
Although we had earlier stepped up our natural hedge effort and did not enjoy the full positive pass-through from currency appreciation, this low 40% gearing has given us a very good base on our capital management. We are pleased to report that our year-to-date average cost of debt has also fallen to 3.06% in first half 2026. Average cost of debt actually has fallen to 3.06% in first half. This actually is a 40-basis point reduction year-on-year, and also a further reduction from 3.1% reported last quarter. This actually translated to close about 16% interest savings year-on-year, and these are tangible outcome from our active finance cost management. During the first half, not only we reprice some of our mortgage loans in China, we also proactively shifted our borrowings from Sing dollar to renminbi.
Through that process, we capture additional savings by swapping our Sing dollar interest rate cash flow into renminbi, and because the swap market actually has some favorable direction. Our trailing 12-month interest coverage ratio is maintained at 2.9%, is stable and resilient under MAS ICR stress test scenario. For CLCT , we continue to manage our interest rate risk by maintaining a high 60%-70% of debt on fixed basis. At this moment, interest rate curve are in our favor, so we can efficiently fix our interest rate in renminbi without paying up too much for the tenure. We also continue push for natural hedging and balance our Sing dollar and renminbi mix in the debt to reduce the FX impact on our gearing and to our NAV.
We are happy to report that we have actually aligned 73% of our debt in renminbi as at 30th of June 2026. These are done through a good mix of renminbi direct borrowing, as well as a renminbi synthetic borrowing via cross-currency swap. Next page. Okay, great. This actually slide shows our debt maturity profile remain well staggered. We do have a small refinancing not done for 2026. That is a FTZ bond, free trade zone bond of RMB 600 million. The current coupon that we are paying is 3.8%, so we are confident that we can refinance it for much below 3% and bring a very meaningful savings in interest expense. At this moment, we are working on various funding options. Meanwhile, we have undrawn and revolving facilities of close to SGD 500 million from our banking partners. That could be used as alternate refinancing solution.
Let me wrap up on the capital management section. CLCT is actively and prudently managing our debt structure, and we have actually delivered healthy balance sheet, lower cost of debt, and also a stronger resilience to the rate and interest rate movement. I will pass back to Gerry.
Okay. Thank you, Lintong. To summarize our strategy, we have four pillars of our strategy. Create value. In 2026, we are targeting expansion into new retail assets to replenish the lost income of our Yuhuating, and we want to keep business parks and logistics occupancy stable. Unlock value. We will continue to identify and see whether we can unlock value from mature assets as appropriate, in terms of timing and in terms of pace. Extract value. Our track record and ability to identify and execute on AEIs will be a key part of extracting values from our existing assets and for any new acquisitions that we do. Proactive capital management.
Lintong has explained, we have aggressively stepped up the way that we do capital management, and we have driven interest cost savings through these efforts, including expanding renminbi debt access and reducing our FX risk where appropriate, and we will continue to do so. With that, I will pass it back to Hui Shi to see whether we can start the Q&A session.
Thank you, Gerry, for your presentation. Now let us proceed with the Q&A segment. We have our first quarteruestion from Terence. Terence, please go ahead.
Yeah, thanks. Congrats, Gerry and team, on the strong results. Yeah, maybe two questions from me. First, on interest costs. Wow, very good numbers and pivot from Sing dollar debt to renminbi debt. I guess we would like to know what you expect for interest costs for the year, and especially with the refinancing of the FTZ bond and how much higher could we go on the renminbi-denominated debt? Second question on tenant sales. Tenant sales is up, OpEx is actually stable. So, when should we expect some uplift in rent reversions, especially for the retail malls? Yeah, that's it for me. Thanks.
first quarteruestion, I'll let Lint ong take. Second question, maybe You Hong want to handle it. Yeah.
Okay. Thanks, Terence. Thank you for noting our efforts in finance cost management. Yes, so for last year, I think we actually have embarked on this journey to actually pivoting more of our debt from Sing dollar to renminbi. As you know, China is actually having quite an accommodative monetary policy. So renminbi rate as well as renminbi interest rate curve are not as steep. So that actually has put us in a very good position when we actually switch from Sing dollar borrowing to renminbi borrowing. Our current renminbi-denominated debt is 73%. So we will continue doing more of this refinancing effort. And so we are actually looking at keeping renminbi at maybe 70%-80% kind of level in our total debt mix. Our current FTZ financing is actually due in October 2026.
Like what I have just shared, we are evaluating various options. At this moment, just to share that Sing dollar, in terms of a cross-currency swap, there is actually a significant savings from Sing dollar to renminbi. The current, that is actually because of a different steepness in yield curve. We are ready to actually take the opportunity to capture these favorable interest rate environment, that is actually help us in terms of stabilizing DPU and to drive the growth for CLCT . In terms of how much more we can do, I think we have actually successfully bring down from mid 3% to low 3%. I hope to actually maintain at the low 3% and hoping to actually report a high 2% number in the near future. Yeah, high 2% number. Yeah, sorry.
On the question on the sales and reversion, I think we have done well in terms of our portfolio, partially due to the AEI and also our active effort. However, I also note that the broader market retail sentiment remains to be cautious. When we discuss with the tenant, I think they are not ready to develop or is resistant to rent increase, generally speaking. I think, from that point of view, we think it will take a while for the business sentiment to come back. But we hope it is getting closer.
Thanks. Maybe just a follow-up. Linto ng, can we get a sense of what is the differential in the cost of debt for renminbi-denominated and Sing dollar-denominated?
Yeah. This is actually a purely, how to say, derivative kind of, maybe I take it from the derivative side. If I actually issue a Sing dollar, and then I decided to actually swap into renminbi on fixed-to-fixed basis, let us say for five years, we could actually get a saving of 30 basis points- 40 basis points. That is the construct of the market at this moment.
Effectively, what would that interest rate be?
Okay. Just hypothetically, if we issue at the, let's say, Sing dollar at 2.5%, right? Or rather 2.8%, that will actually be translating to about 2.4% in renminbi terms. Just a guide. Yeah.
This is fixed for five years in that sense.
Yeah. Fixed.
Oh, okay. Wow. Thanks. That is really very impressive.
Yeah. So we will seek to capture that.
I think one of the main things is because generally the market has turned positive on renminbi, so the swaps are quite in our favor.
Yes.
Okay, thanks.
Okay. Thank you, Terence. The next question is from Yew Kiang . Yew Kiang , please go ahead.
Hi, Gerry. Thanks for the good results. Just want to ask on NPI margins, why is retail and business parks up so strongly, and why is logistics down so much? The second question is on the second C-REIT. Do you have an option to sell those assets to them? Would it be exit vehicle for you?
Yeah. The NPI margin question, I will let Lintong take it. I think the question was to comment on NPI margins across the three sectors, right? I will take the second question after that.
Okay. So, one of the business parts increase is actually last year, the urban year. So there is actually a pre-termination of a master lease tenant. So we had to actually write off some of the revenue, unfortunately. So those losses that was actually happening last year, is not actually recurring. So that actually has contributed positive variance year-on-year. So generally speaking, our operating margin is about 67% for retail, right?
Okay.
About low 70% for business part, and then our logistics about a 60% kind of level. Those has actually been quite consistent, because if you look at our cost structure, 30% of our costs are actually revenue packed. It is actually a kind of a low fixed leverage ratio kind of. Yeah.
For the next two years, your NPI margin for retail should be about 67%, business part should be about low 70%s, logistics about 60%?
Yeah. That is a general guidance that we will.
Yeah, because your logistics have never been in the 60%s, right? It was always maybe 70% in the past.
I think logistic also had the effect of, because last year, I think versus this year, the revenue is lower because of the revenue version that we had last year. While there are certain floating or rather revenue packed costs, I think there are also some, in terms of, say, for maintenance, security, utilities, these are more or less more fixed. The margin would have dropped a little bit. From this year, I think the revenue would have stabilized. We would also assume project that going forward, the margin would also be more stable.
But if I look at last year, first half last year, actually our NPI margin for logistics was in the 60%s. I am not sure where the 70%s came.
Oh, like earlier years, much earlier.
Last year.
Yeah.
Maybe far earlier years it may be higher, because the rents level.
Yeah.
Was higher and I think, we have reported in several periods that last year before last, the rent drops for logistics sector, and this sector I think has been quite large.
Mm-hmm. Okay.
Okay. The second question, regarding CLCR, as you know CLCR 2, right? CLCR 2, as I think you read, this is still ongoing transaction. The reason that we did not participate is, if you recall last year, we just basically divested one of our asset and seeded it into the first retail C-REIT, together with the sponsor. We felt that it was too soon for us to basically do another transaction, right? We are, of course, still studying it. Our initial plan is to boost up our income levels first before we think about extracting value from any assets, whether it is retail, business parks or logistics.
If it turns out that after we have achieved our short-term goals and we find that there are assets that we want to monetize, the new C-REIT that the sponsor is doing could potentially be one source of capital recycling channel that we can utilize since we are under the same group.
How would you differentiate between the first C-REIT and second C-REIT? If you have a business park or logistic to sell or retail mall to sell, how would you decide between the two?
Okay. This one, maybe I let You Hong just describe the difference between the first C-REIT and the second C-REIT that the group is trying to do right now in detail. Yeah.
Yeah. So in terms of this second C-REIT, there is some slight, I would say, policy difference. In terms of the one thing that is different is the speed in terms of how the approval process, and it's a bit shortened. Secondly is also the sector is widened to not just the selected sectors, but also include office, hotel, and whatnot. In terms of selection of the vehicle, I think we are agnostic to us, whichever vehicle that is best for us in terms of doing.
For the first series, it was purely retail.
Yeah.
The second C-REIT it will be covering the prime larger scope.
Yeah, but you don't have any hotels or anything like that, right?
We don't have hotels yet, that's true.
Not in the one, but I think it's in the broader policy-wise, it's a lot.
Okay. Would it be fair to say if you want to divest the business part, you would only go for the second one, second C-REIT?
At this moment, it.
I would say.
In terms of mandate and asset class.
Yes.
In terms of mandate. If you are talking about mandate, yeah.
Okay. Thanks.
Okay. Thank you, Yew Kiang. We have the next question from Terence. Terence, please go ahead.
Good morning, Terence from UBS. The disclosure on slide nine, just thinking about automobile sales, just contrasting the 2.6% headline tenant sales growth versus it being higher if you exclude automobile sales. Is the falling automobile sales a problem?
I will let You Hong add on, but I would say that, maybe just to recap, I think a few quarters ago, we have shared that we have been trying to pivot away from EV tenants. We have sort of enjoyed, I would say, the EV dividend, one leasing cycle ago, which is roughly about three years ago when there was a proliferation of EV brands who wants to take up prime, first of all, space in many of the malls. Now, of course, the EV brands have consolidated, so there is less demand for that. We make some hard choices, and we decided we have got to pivot out of many of those tenants which we have. Maybe I let You Hong just touch on how does this 7.5% relate to our 2.6%.
I think the main reason for the EV sales decline is, like what Gerry mentioned, is actually we have actively sort of a re-shuffled the tenant mix and some of the EV tenants were actually not in our portfolio anymore. I am not sure exactly what the number question that you had, but I suppose we can follow up after this.
Yeah. He is just asking the 7.5% excluding automobile.
Okay.
Sales.
Oh.
Why is it 7.5%? Absolute tenant sales.
Yeah. The absolute tenant sales is higher, and also, I think this quarter, we also benefited from the small market as well. Yeah.
Correct. To recap, we have basically refreshed many of our first floor by reducing our EV tenants. Obviously, the EV sales portion would go down. Right?
Yeah. Yes, but if you had to convert from, say, an EV tenant to a non-EV tenant, is the expected impact going to be, say, a negative reversion?
Again, it is something that we have disclosed before, right? And those impact have already been reported in our rental reversions.
Yeah. I think that effect was a bit more last year. This year, we actually do not have.
Yeah.
Not any weight. Yeah.
Okay.
I mean, it is a replacement of the EV tenants with the other trade categories.
Okay. I guess if I do the math right, Toys & Hobbies, Sporting Goods & Apparel, they are relatively small but growing fast. I think they contribute about, let's say, 200 basis points to tenant sales growth. That is what my math suggests. I am just curious because 7.5% year-on-year growth in ex automobile sales is still pretty commendable. Excluding even the two categories that are growing fast and F&B, IT, and telecoms seem to be at a lower clip. There appears to be more broader strength across the other categories. Am I missing something here?
If we look at our own close to 20 trade categories, I think we have seen majority seeing higher growth year-on-year. There is only five that is lower. The others are higher. Out of the lower ones, I think, like what Gerry has mentioned, the fashion, which is also one of the largest trade categories, is quite flat. It is very marginally lower. The other trade categories that are negative are fairly small, perhaps with the exception of leisure and entertainment. I will agree with you that broad-based, most of the trade categories have shown good growth.
Okay. Good to know. Maybe just your thoughts on, Toys & Hobbies, I guess the Pop Marts. Would you say we are still, I do not know, early or midway in terms of the sales trend over there? Are we at a late stage already?
Again, with the limited samples that we have, the healthy growth continues, but then again, it is also very product and launch driven. So if there is a very unique, rare.
Collaboration.
Collaboration or publication of certain toys, I think then people flock into the shops to queue and buy. So, it is a bit early to tell. Having said that, I think second quarter versus first quarter, first quarter was doing better. But then again, I think it is also the Chinese New Year and all that. So, again, a bit too early to tell.
Yeah. Second quarter generally, not only that category, the retail sales are generally moderated.
Yeah.
Yeah.
Okay. And maybe for F&B, I do not know, is there a simple way to split between bubble tea and X bubble tea?
Bubble tea.
I guess while we say bubble tea grows well, but it's just an example. I think it's a more reflection of the light refreshment type, right? So it includes the coffees, newer brands of coffees, teas, and bakeries. So bubble tea is just one small category in that broad category of.
Yeah. If the question is whether the bubble tea is driving all this growth, it's definitely not.
It's not there.
Yeah.
Okay. Last question just to confirm the NAV per unit increase. This looks to me broadly due to currency effects. Would this be the right intuition? Thank you.
It is not only due to currency effects. As we were explaining, a lot of it had to do with the great work from Lint ong's team, cutting down these interest costs and finance costs. But currency effect helped. I think we reported 1%.
Increase in revenue.
Increase in revenue during the period, right? But certainly the finance savings as earlier discussion, we also talked about the better and better trends that we are seeing in terms of getting Sing-dollar swap. The revenue offshore has benefited us greatly.
Okay. Thank you.
Okay. Thank you, Terence. We have the next question from Ada. Ada, please go ahead.
Hey. Hi, Gerry and team. Congrats on the very strong first half, and thanks for the presentation. A couple of questions from me. First, to add on to Terence's question on retail, I noticed that the first quarter reversions actually came in at 2.1%, but that for the first half was - 2.7%, which seem to indicate a worsening in the second quarter. Could you please provide a little bit more color on that?
Maybe Yu Hong.
Yeah. There was some, I think, similar renewal.
Versus Q2.
Yeah, we have done. Also, I think we have one supermarket replacement. I think that would have affected the second quarter a little bit. Having said that, I think this rent reversion also depends on the sample that we had in that particular quarter. If we, say for example, decided that it helps to replace certain expiring tenants with new concept that is not necessarily the highest rent, but benefit the overall position of our mall in the longer term, we will do that. I would not say that within the first quarter and second quarter, the change of zero point something percent is a big trend to worry about.
Yeah, understand. That is very reassuring to hear. Second question is, in a similar vein, how long more will you expect rental reversions to stay negative for the business park portfolio? Also wondering if you can share a little bit more color in terms of supply absorption in the sub-market that Singapore-Hangzhou Science and Technology Park is in.
Okay. On the Business Park rental reversion, I think this is also a question that we are asking internally and also surveying the market. The supply situation is still, the competition is still fierce, I would say. We are doing everything that we can to bring in the occupancy, and therefore the rent is generally market, right? If you ask me how long it takes, I think 2026 is expected to be negative. 2027, I still think there is some way to go. Hopefully, the supply gap and also the demand can come quicker, that it will be better after 2027. That is my broad sense. What is the other question?
In terms of the supply absorption in the sub-market, there is new for Singapore-Hangzhou Science and Technology Park was in.
Yeah. Hangzhou, I think broadly speaking, the whole city still faces quite a lot of supply. I think I shared last quarter within our sub-zone, within the 1 km-2 km radius of us is this area called Singapore-Hangzhou Science and Technology Park. This is actually a sub-market. This market is relatively fully built, with the exception of only one building that is still under construction, which is the last piece of land within this area. So within our park, it is more or less fully built. Then again, I think the absorption takes a bit of time. I think I previously shared that within our park, the older vintage, meaning to say the ones that come on market around 2024 or before, is actually having the occupancy of around 60%-70%.
Then on the newer, last year's vintage, it was close to 50%, so there are still pressure on the filling in the vacancies. Yeah.
Thanks a lot for the color. I think one last question from me is, I was just wondering what was driving the increase in other income, because there seem to be quite a sharp increase in the first half. I was wondering whether it could be due to forfeiture of any tenant deposits.
Yeah. We actually in the PowerPoint slide number eight, we do highlight that we actually have some tenant deposit, security deposit that was actually belonging to the tenant who has actually left the building.
In prior years.
in prior years. Under our internal policy, we do review them, and then to actually discuss whether there is any chances that the tenant will actually come back and demand the security deposit claim. These are tenants that, let's say, they leave in halfway through the contract, and we do have the right to actually forfeit them, but I think out of prudence, we actually keep it for a while and look at what is the tenant's whether the tenant actually come back to claim. Some of these, after we have assessed it and then we believe that some of the security deposit wouldn't be able to challenged, we actually recognize them. Yeah.
Just for modeling purposes, should we expect the levers to go back to more prior years of levers for the second half, or will there potentially be more security deposits that are recognized in the second half?
The security deposit is not a lot, just to clarify. It's not the main revenue driver. Yeah.
Okay, thanks a lot. I will jump to the back of the queue.
Okay. Thank you, Ada. We have the next question from Geraldine. Geraldine, please go ahead.
Hey. Morning, Gerry, Lint ong. Maybe a first quarteruestion on your core DPU. Reversions looks to be declining, margin stable, and your interest cost savings, you are targeting a mid-teens kind of reduction year on year. Are we confident to say that if we look at just core DPU, this year we are quite well-aligned to actually have a beat against last year's core DPU?
As in core DPU, when you define core DPU, you mean without Yuhuating. Am I right? Just.
Yes, and the capital gains.
Okay.
The top-up. Okay.
Yep.
I think we strive to do that. I am not sure whether the word "strive" is something that we want to commit to, but I think if you look at the trend, whether it is on a same store basis for NPI, as well as DPU, we seem to be heading to a position that we will be not worse off on a clean basis.
Okay. Okay, thanks, Gerry. When it comes to capital gains, how much do you still have left, and how will you view additional top-ups end of this year?
Our past reserve from the investment gain is around SGD 15 million, SGD 15 million.
It is SGD 60 million.
SGD 16 million. Yeah. SGD 16 million. Our policy is we review it basically end of year for such top-up. That's why in first half we don't talk about top-up, right? And of course, that's only with a good reason. At this stage, I think I cannot comment on that yet. Last year, obviously we top-up because we divested Yuhuating and our rationale was, this a transitionary top-up as we find ways to basically replace the income.
Okay. This SGD 60 million is six zero and not one six, right?
Six zero. Yes.
Yeah. High SGD 50 million. High SGD 50 million. Yeah.
High SGD 50 million. Okay. Got it.
Yeah.
I think the next question on the second C-REIT, so if you do a divestment, If you do a divestment, how soon can it be, and how should we think about it when it comes to structuring? Will it be similar to Yuhuating where you're obliged to take on stakes in the second series, or it can be a rather clean divestment?
Well, maybe You Hong can answer that.
I think if I'm not mistaken, the timeframe for the second C-REIT framework to allow the further injection is six months. So, that's the general policy guidance. On the question on the expected structure, I would say that it's similar, that there is certain expectation on the originator or the asset inject from the seller or the originator where she injects assets to take a portion in the vehicle.
Okay. Thank you. Maybe just one last quick question on, again, on your Toys & Hobbies. I think 43%, right? Is that number actually influenced by your new anime street? Because it says that the Pop Mart trend is fading.
It does help. Okay, give me one moment. It does help, definitely.
But the.
But even on the.
Yeah.
You just look at that brand, that Pop Mart brand, I think it's still doing fairly well, and it contributed quite a bit to the more than double. It's in the double digit category.
Okay. Thank you.
Yeah.
Thanks, Geraldine. We have the next question from Tabitha. Tabitha, please go ahead.
Hi, good morning, Gerry and team. I am Tabitha from DBS here. My first quarteruestion is on your upcoming leases expiries. Any major leases we should be looking out for?
Expiries? You Hong?
Not that I recall. Our big tenants are the supermarkets, and we have just quite recently replaced quite a number of them. This year, there is one that we are replacing. Beyond that, I do not recall we have a big expiry that is unusual.
Okay. My next question is on your acquisition opportunities for retail in Tier 1 and Tier 2 cities. Can you share some of your thoughts, maybe some expected timeline, and if there are deals in the market now?
Yeah. We are certainly looking at deals in the market, and we are focusing on retail asset. That is not a change. You Hong is working very hard with the team to sculpt the market for those opportunities. I can only say that we have seen a few interesting deals. We are working on them. We hope that we can get something done by this year.
Okay. Thank you so much.
Okay. Thank you, Tabitha. I do not see any other raised hands. Okay. We have a question from Dexter. Dexter, please go ahead.
Oh, hi. Good morning. Can I ask just one quick question? De from Bloomberg here. Have you spoke to any third-party investors about divesting assets, and if so, is there interest? Yeah, that's it.
The question is, can you repeat that question? The line isn't.
Yeah. Basically, have you spoken to any third-party investors, so basically anyone outside of your C-REITs or CapitaLand ecosystem, about potentially divesting assets?
Well.
And if so, how much interest is there?
As our usual course of business, there will be people asking about assets, and we will ask about other people's assets all the time, so this is very usual.
Sorry, Dexter?
Sorry, your line is.
Yeah.
Not very good.
Sorry, Dexter, you are on mute if you are speaking.
Oh, no. I was asking how much interest is there because obviously the capital market is still quite depressed. Is that what you are seeing as well?
Sorry, I do not get it.
Capital market is still quite depressed.
If you are asking about the, generally speaking, the.
There has been transaction.
On both markets, I think it remains to be active. We have seen.
Transactions.
The likes of domestic players actually transacting.
Yeah.
There are interests. It is a matter of pricing.
As always.
Yeah.
As always in any market.
Okay. Thanks.
Okay. Thank you, Dexter. We have the next question from Rachelle. Rachelle, please go ahead.
Hey. Hi. Morning, Gerry and team. Thanks for the presentation. Just a few quick questions from me. Retail reversions, do you expect it to neutralize soon since we are seeing a pickup on the retail tenant sales and what not?
You Hong has alluded to and also answered that question. Basically, we have been seeing this level of retail reversions even last year and this year, even though you can see our occupancy cost is quite stable and sales is good, that really we attributed to the fact it's not that the tenants are not doing good sales. They are not obviously as positive about the general expansion in their retail stores, right? Therefore, they feel obviously no particular pressure when you ask them for rental increase to accede to your request. That doesn't mean that we don't get positive rental reversions in some of our leases. We do. But as you clearly see, that's outweighed by some of those that we cannot get positive reversions.
As well as sometimes we, as You Hong alluded, sometimes we make some changes to the mall in terms of anchors, in terms of mix, that may require some negative reversions.
Okay. Sorry, I may have missed this, but back to your tenant sales of that 7.5% excluding automobile. Is this going to be one-off as in just for this year, 7.5%, or moving forward we can expect this kind of number?
Yeah.
I'm just trying to. Yeah.
I think once we've cleared out the automobiles, or more clearly to say that we have remix the automobile sector in our malls, we should get a closer number between with and without, so-called with and without automobile sales numbers. Yeah, because automobile sales will become smaller amount. Yeah.
This half year, I think, benefited from the supermarket, I think, year-on-year as well. But even excluding that, I think we are seeing healthy low single-digit growth. I think we do hope that this trend continues.
Continues, yeah. The question of whether the with and without automobiles, will that gap becomes smaller in the statistics? I think it should. Yeah.
Hmm. Okay. Got it. Then just one last quick one. I think you said that you're hoping the average cost of debt will trend down, right? Is this mainly coming from the conversion of Sing dollar to renminbi debt or is it coming from some of the refinancing to a lower debt rate?
Sorry, Rachelle.
Basically, the cost of debt.
Join?
No.
Is the trend. Whether it does close.
Because he joined too late.
Yeah. So the cost of. Drop is actually already come from the lower cost of borrowing, right? Then of course, last year we had some proceeds from Yuhuating that has actually contributed some overall loan amount decrease. So I would say maybe 60%-70% is attributable to our cost reduction, then the other will be actually mainly the average amount of debt that is outstanding.
Hmm. If you are asking about absolute cost of debt percent, which is reported now 3.06%, it comes in different forms, right? Maybe you want to elaborate. It is not only because of Sing-dollar to.
Oh, no, no. What I mean is forward, I think you are saying that you are alluding to a high 2%, right?
Oh.
Yeah. 2% rate. Yeah, forward. Is that coming from refinancing rate or is it coming from the conversion?
Actually, both, right? We actually look at our debt ladder as and when our expensive swap or expensive borrowed debt actually due for refinancing and then we will actively discuss various refinancing options. These will take time. That is why I say it will not actually happen overnight because we actually do have a debt commitment and also swap commitment. We do need to wait for the refinancing window to open, right? At this moment, what we can do is the swap market actually does offer us some opportunity. Where possible, we will actually enter into this trade and then try to capture the cost. Yeah.
Okay.
Try the cost saving.
Okay. It can come from both?
Yeah, it come from both. Mm-hmm.
Okay. Okay, got it. Thank you.
Okay. Thank you, Rachelle. Noted that we are near the hour. May we have the last question from Vijay? Vijay, please.
Yeah. Hi. Morning, Gerry and team. Congrats on a decent set of results. Just one question from me in terms of future growth and acquisition potential. If I look at Chinese REITs and Singapore REITs, there is clearly an arbitrage. Chinese REITs are trading at a much lower yield. The onshore cost of debt is also lower. So there is every incentive for your sponsor as well as the domestic operators to sell to a Chinese REIT over to you. Your cost of capital is not competitive compared to Chinese REITs. In this environment, how do you think you can be competitive in growing your assets in the future? Because I see your sponsor, if even they want to divest, they would be better off divesting to a Chinese REIT rather than you. So how can you compete and acquire and grow in the future in this environment?
Thanks, Vijay. It is not correct to just characterize that the cost of debt is lower onshore. In fact, on onshore market, the LPR is about 3%, bank.
3.5%. Bank loans would depending on credit, you end up in the threes. As you can see, at times when we finance offshore, we can get very, very competitive loans when we swap it back to renminbi and Chinese yuan. That is one point to note. The second thing is in terms of the domestic sellers, whether they will be selling to a C-REIT or the S-REITs, there are of course, differences between the two. The C-REIT number one, is constrained by a few factors. One, their gearing has to be lower. I think the gearing limit is about 28. We spoke about even though the vetting or the transaction timing has become shorter, but nevertheless, it does not mean everything that gets submitted, gets approved. There is a long backlog, China being so big.
Timing is shortened, but provided you get into the queue. Provided you get in the queue. From perspective of sellers, sometimes they cannot wait. That is another key point to take note. Third, in terms of the structure of the C-REIT, they can only buy assets in full. Meaning they have to take 100% stake. Then of course, S-REIT, we are more flexible. You can see in our own S-REITs we can take 51%, some S-REIT have taken significant minority or significant majority as well. So, variety of stake and structures can be used in a S-REIT transaction. But a C-REIT transaction, basically the vehicle can only buy 100% of that vehicle.
It is also not so useful to just look at the trading view in a way of the C-REIT because at the end of the day, valuations still do matter in the C-REIT environment. The valuations are also scrutinized by the regulators. There is a fixed way that they do look at it. If you look at our Yuhuating sale, when we went out to the market, actually that is before the IPO premium. It was, I think, valued at about 6.7%, 6.8% NPI yield. I would not say that is widely off the mark of what we will be willing to sort of trade or buy the asset at based on our ability to gear up and based on the cost of debt that we are looking at today. For those reasons, I do not think it is so clear cut matter.
Okay. Thank you. That is all I have.
Okay. Thank you, Vijay. Gerry, would you like to share a few words before we conclude today's session?
Okay. Thank you everyone for coming through our results presentation. For CLCT , we will continue to work hard to make sure that we deliver DPU that is sustainable and that will continue to benefit unitholders through our efforts in growing our retail portfolio, extracting out the value from our assets, as well as very importantly making use of the overall environment in terms of interest rates to drive down costs, and make sure that our DPU continues its recovery path. Yeah.
Okay. Thank you everyone. Please feel free to reach out to me or my team if you have any questions. Have a good day ahead.