Good morning, everyone. Welcome to CLCT's full-year 2025 analyst and media briefing. I am Siyu Yi, investor relations for CLCT. Joining me today we have our CEO, Gerry; CFO, Joanne; CFO designate, Yan Lintong; and head of IPM, You Hong. For this briefing, we will start with a brief presentation followed by a Q&A session. If you have a question, please use the raise hand feature, and I will direct the time to you. With that, I will now hand over the time to Gerry. Please go ahead.
Welcome everyone to CLCT's full year 2025 financials result briefing. Thank you for making time to attend our presentation this morning. CLCT is the first and largest China-focused S-REIT, and we uniquely offer connectivity to both S-REIT and C-REIT markets. Our total assets now is SGD 4.5 billion. We have eight retail malls, five business parks, and four logistics parks. We predominantly tier one and tier two city exposure. Distribution yield based on our announced FY 2025, full year 2025, our DPU is 6.2%. In terms of our asset allocation, retail is our largest and most resilient asset class at 69% of gross rental income. This bread-and-butter mall are relatively defensive and benefits from government initiatives to boost domestic consumption.
We also have new economy assets, business parks, logistics parks, which form a smaller part of our portfolio at 31%, providing us some exposure to China's efforts to grow technology and innovation, including key sectors like semiconductors, electronics, and ICT. For our retail portfolio, one of the key highlights in 2025 was our establishment and listing of our C-REIT platform, CLCR, on Shanghai Stock Exchange, together with our sponsor. We managed to securitize one of CLCT's assets, CapitaMall Yuhuating, which is from tier two city in Changsha, into the C-REIT, CLCR, at a premium to our valuation. The C-REIT has also done well, and since listing has traded up almost 20% year to date.
All the transactions that we have done in 2025 validate the value and liquidity of our retail assets, and CLCT will continue to seek opportunities to utilize this unique S-REIT-C-REIT connection to benefit our unitholders. This also gave us greater confidence to actively source for new retail assets for investments, where we want to repeat what we have done in Yuhuating's case. That is, we buy well, add value with our operational and AEI expertise, and recycle at a good price within a relatively short period of time. While we are happy with the successful divestment of Yuhuating and demonstration of our retail value proposition, we did lose some income, which we will need to replenish over time. This would show up in our full year revenue and NPI, which I will now address. For full year 2025, overall business conditions have been soft.
Among the three sectors, we still have relative resilience. Logistics: we have stabilized amidst our rent resets for that portfolio, but business park has seen weak demand. Portfolio gross revenue and NPI dropped about 9% year-on-year. Excluding Yuhuating on same store basis, portfolio gross revenue and NPI, the drop narrows to about -6% year-on-year. For retail, revenue declined by 9.6% but narrows to 4.9% on same store basis excluding the Yuhuating factor, which was the biggest factor for retail. This year we have embarked also on a number of AEIs in Xizhimen, Rock Square, Guangxin and Xuefu, involving anchor or mini anchors upgrading. The AEIs have downtime around four to nine months, but that will benefit us when the AEIs are completed and started fully contributing by the year-end of 2025.
Retail has also been affected by some of the continued positioning at our weakest mall, Xinnan, and general retail overall rents and occupancy in CapitaMall Wusheng and Guangxin. Next, for business park, our revenue declined by 9% year-on-year due to lower rents and occupancy in Hangzhou and Xi'an. Main factors were the pre-termination of the service office master tenants in Hangzhou phase two and delays for Ascendas Innovation Towers in backfilling the vacancy created from large tenant relocation a year ago. We are happy to share that Ascendas Innovation Towers has made good progress. Now Ascendas Innovation Towers is at 85% occupancy. Although most of it came in the last quarter of 2025. For Hangzhou phase two, for the service office operator backfilling, we have backfilled to 70% with a single-digit positive reversion for the area that we have backfilled.
In terms of occupancy for BP, first quarter of 2025 was the lowest point for BP occupancy at 83.7%, but we have since worked hard to lease it up, and by the end of the year, the whole BP portfolio had an occupancy of 86.7%. Logistics, our smaller sector, generally had seen improvement as we had leased out our previously vacant Shanghai asset. The lease was for a period of 8 years, a long-term lease. We have also improved occupancy in Kunshan and Chengdu. The whole log portfolio looks in a much better shape than maybe a year plus ago. For our full year occupancy, it ends at 98.1%, which is higher than a year ago. DPU-wise, DPU for second half 2025, is SGD 2.33 cents. Full year 2025 is at SGD 4.82 cents.
This SGD 2.33 cents includes a one-time top-up distribution for second half of SGD 0.33 cents, which amounts to about SGD 5.7 million. That roughly equates the loss DI from Yuhuating, which we divested in 2025. Our one-time top-up distribution is drawn from our past divestment gains that CLCT has done and will be funded through that. We only have a marginal +0.1% gearing effect. What we seek to do here is to provide unitholder with some income stability despite difficult conditions, while we look for a quality replacement asset to replenish and hopefully exceed the lost income from Yuhuating. I would also like to emphasize again, this is an interim measure.
What management is doing is therefore focusing on finding a good asset this year in 2026, as well as working on different ways to deliver further cost savings in financial costs to boost our DPU, while continuing to work on preparations for further asset securitization through the C-REIT on our older, mature retail assets, which will of course expand our pathway for portfolio reconstitution and rejuvenation for our assets in our portfolio. For retail assets, there has been an improvement in shopper traffic and tenant sales in 2025. On the whole, for the full year, traffic grew 2.7% year-on-year, and tenant sales grew 2.1%.
4 Q was a strong quarter for the year, outperforming nine months with 4%-5% growth in both traffic and sales as AEI efforts kicked in, especially with the full reopening of the new supermarkets in Xuefu, Wangjing, and Xizhimen, all of which the results came in the 4 Q. In fact, for the supermarkets, we can see in 4 Q, sales growth was +47%, which is a very strong 4 Q number once supermarkets were open. Overall tenant sales now are above pre-COVID levels, at slightly above about 2% above pre-COVID levels. In terms of overall occupancy costs, we are at 17.5%. That is a healthy level compared to pre-COVID range of above 20. Trade caps that done well. Maybe I just mention a few highlights here. F&B, we had a positive 5.8% year-on-year. That is the biggest trade cap for retail for us at 39.4%.
There was strong acceleration in sales in 3 Q and 4 Q, driven by introduction of new high-performing trendy brands, which have been pull factors for our shoppers. Growth was broad-based. You have old local favorites like Haidilao and new ones like Cao Jiang, Japanese sushi chain Sushiro, and Genki Sushi, and even Starbucks delivered growth. We have also IT, which grew 9.3% for the full year. This trade cap is boosted by consumption vouchers as well as expansion of more digital brands during our AEIs in Xuefu and Wangjing, really to cater for the evolving consumer demand and broaden the appeal in the malls. In this category, we have Apple, DJI, Xiaomi. These are some of the brands that have good growth in 2025. Jewelry and watches also did well, +18.3%. That is driven by increasing demand for investing in gold.
Sales increased from established brands, especially in Beijing. Toys and hobbies done very well this year, +52.3%. This basically stems from the continued popularity of collectible toys market. Pop Mart, for example, year-on-year, the sales went up 100%, and Miniso also a very strong double-digit number. They are still growing strong in this category. We also benefited from our AEIs. The supermarket upgrading in Wangjing, Xuefu, and Xizhimen, as I mentioned, powered the supermarket category in 4 Q by 47% sales growth, which we expect to spill over to first half 2026, helping to reverse the supermarket downtrend in sales that we have seen in the first half of 2025. Decathlon, which was introduced in one of the mini anchor AEIs in Rock Square in October, was also done successfully and has basically produced sales growth from the sporting goods category for us.
In the fourth quarter, the sporting goods category actually grew 39%, largely due to Decathlon's introduction. Of course, there are weaker trade tenants that offset our general sales growth. We have mentioned before, fashion and beauty and health has been trending downwards. For the full year, they have trended downwards about single digits in sales for the full year. In terms of occupancy, our malls continue to be highly resilient with high retail occupancy of 97.2%, similar to Q3, with almost all malls above 95% occupancy, except for Xinnan, which continues to require some repositioning to attract shoppers. Rental reversion-wise, we clocked the full year at - 2.4%. We are affected by EV consolidation, which we have spoken about in previous quarters. We are pivoting to less EV reliance across our portfolio. Without the EV impact, the rental reversion for retail is actually - 0.6%.
For 2026, we still have some EV tenants to deal with, but that will be at half the number of leases that will expire when you compare 2026 and 2025. There will be a lesser impact. Reversions probably slightly stronger than the 2025 print of - 2.4%, but it will still be mildly negative. In terms of business parks, our business park occupancy, which forms 27% of GRI, this sector generally faced weaker demand and ample supply. Our business park overall occupancy is now at 86.7%. This is an improvement from Q3, which was at 85.2%, due to our improvement in Xi'an AIT leasing progress. Our business parks assets generally outperformed their submarkets, despite the general soft leasing environment for this sector. Ascendas Xinsu Portfolio, our strongest business park asset continued to have a strong year at 95% occupancy.
For the Xi'an cluster, we have made good progress, especially with electronics and ICT tenants. Ascendas Innovation Towers asset occupancy is now at 85.2%, and we have made big strides to backfill the major tenant that was relocated one year ago. You can see that quarter to quarter, we actually improved from 75.4% in Q3 to 85.2% currently. One of the bigger tenants that came in to the backfilled space was ChangXin Memory Technologies, which took up half the space of that major tenant which relocated. ChangXin Memory Technologies is basically the largest DRAM manufacturer in China and is known as a domestic alternative to Samsung, SK hynix, and Micron Technology. It's an important tenant, very much in theme with the kind of companies that are being supported by the government in China nowadays. Ascendas Innovation Hub also improved quarter to quarter at 86.7% occupancy.
For Hangzhou phase one and two, this cluster has a more challenging leasing environment compared to the rest of the BP clusters, with lots of supply. Hangzhou phase two occupancy slipped versus Q3 to 73.6% due to the loss of a large cultural tenant, about 2.6k square meters, which we are looking to fill up. Hangzhou phase two: we have been working through our service office master tenants, which we have disclosed before, which over the course of 2025, we basically took back about 55,000 square meters, and we have successfully re-leased 70% of the area to the subtenants. We managed to push by the end of the year, the overall Hangzhou phase two occupancy to 74.9% for the full year versus Q3, which was 70.7%.
Overall, BP reversions are at -8.1%, driven mostly by Xi'an and Hangzhou, where we are pursuing tenant occupancies in a soft market. For 2026 for BP, we feel that reversions will likely be in the same order of this year, of 2025. For logistics parks, the smallest segment, 3.7% of GRI. Our logistics portfolio have stabilized. Our Shanghai Fengxian Logistics Park asset, which was not leased for much of 2024, is now fully leased and rent-paying from July 2025. We have also improvements in Chengdu that drove our occupancy. All this drove our occupancy up to 98.1% for the full year, higher than Q3 of 96.6%. In terms of bringing up the occupancy, we had required to basically use lower rents to get the portfolio leased up. You can see that the rental reversion for 2025 logistics is -24%.
Also, there was some situation where we proactively renewed some of the major tenants so that 2026 will be a very stable year. All our efforts combined, we feel that going forward for this 2026 year, our rents have bottomed in our logistics portfolio, and we aim to maintain the full occupancy at these rent levels. Valuation-wise, relatively stable valuations versus previous years. Slight overall drop of 0.8% with cap rate of largely unchanged. The larger impairments were in assets with weaker performance. So CapitaMall Xinnan, CapitaMall Aidemengdun, and Shanghai Fengxian Logistics Park. Shanghai Fengxian Logistics Park had a bigger percentage drop to reflect the rent adjustment that we needed to do to sign the long-term lease, which will provide income stability for this asset. Next, we will go to capital management. I will let Lint ong from our finance team to take that through.
Okay. Thank you, Gerry. For FY 2025, CLCT continued to maintain healthy financial position. Our year-end total debt has reduced by SGD 150 million on year-on-year basis. This is after CapitaMall's Yuhuating divestment as well as Perpetual Securities replacement in September 2025. Our year-end aggregate leverage is 40.7%, which is a significant improvement of almost 1.2% year-on-year and 0.6% from Q3. This is attributable to stabilizing renminbi and, of course CapitaMall Yuhuating divestment proceed, and we have also accelerated cross-border cash movement from China to Singapore. Notwithstanding, the property valuation has a slight dip. Through 2025, we have stepped up our balance sheet natural hedge effort to make our gearing less sensitive to FX movement. We will continue bringing cash from Singapore to China to maintain our aggregate leverage level. Average cost of debt has also gradually decreasing, now is 3.32%. Almost 20 basis point year-on-year improvement.
CLCT has benefited from interest rate decrease both in China and Singapore. I would say CLCT has more exposure to renminbi borrowing and renminbi interest rates right now, which will give us more interest saving if renminbi rate continue to ease. Our ICR has decreased slightly to 2.8 times. This is mainly due to weaker asset performance. But this ICR is still much higher than MAS 1.5 times limit. Under required stress test scenario of 100 basis point increase in cost of borrowing or 10% decrease in EBITDA, our ICR level are still very comfortable. Overall, for our distribution income FX hedge, we have 72% of our distribution income has been hedged from renminbi to Sing Dollar. In Q4 2025, we successfully refinanced some Sing Dollar loans with renminbi term loan, which boosts our natural hedge and extended our debt maturity profile.
Now our renminbi-denominated debt has increased to 60% of our total debt portfolio, up from 35% one year ago. This has exceeded our earlier target of 50% by the end of 2025. We have also forward hedged to further improve our natural hedge position and reduce NAV impact due to renminbi and Sing Dollar fluctuation. Our debt maturity profile is well staggered. We only have one offshore bond of RMB 600 million, which is due at the end of 2026. This was a FTZ bond issued two years ago. Notwithstanding, we have sufficient bank facility to refinance this bond; we are still evaluating options which aim to continue our capital source diversification.
Just to highlight that in early 2026, we announced that we have updated our MTN program, which is used to incorporate Hong Kong CMU clearing mechanism, which means that we are now able to issue Dim Sum Bond, renminbi-denominated Dim Sum Bond. The mechanism is ready. For interest rate hedge, 65% of our debt is hedged into fixed rate, and the remaining floating rate loans are mostly in renminbi.
Okay. With this, let me take over from Lintong. Looking forward, if you look at what we have done this year, we completed four AEIs. We have done Xuefu, Wangjing, Rock Square, and Xizhimen, and they have all opened by 4Q of this year. All these supermarket AEIs, supermarket upgrading AEIs, which is Xuefu, Wangjing, and Xizhimen, all produce good results with returns or rental increase more than 10%. The Decathlon introduction in Rock Square helped us to strengthen a previously weak corner in B1 as part of our overall plan to drive traffic and improve rents in that part of the mall.
With these successful AEIs, I think we have proven again, similar to the supermarket AEIs that were executed in 2023 for three other malls, that CLCT is able to extract value from our older malls and demonstrate our track record of doing so. When we look for new investment in the future, we will also want to utilize our AEI ability not just to buy good malls at good prices, but also to actively identify and add value to these malls. In terms of strategy, we are still focused on building a balanced portfolio and how we go about doing it. I think in 2025, we have demonstrated a few initiatives, which we will continue in 2026. Unlocking value. We have successfully established a long-term capital recycling vehicle by the C-REIT platform. In fact, we have managed to divest Capital Mall Luoding. This supports our ongoing portfolio reconstitution.
We created value by entering the C-REIT market in 2025. In 2026, our immediate priority is to source for a new retail asset to replenish Yuhuating's lost income while maintaining our existing operations at high occupancies. Extract value. Our track record, our ability to identify and execute on AEIs speaks for itself. We will continue to see whether we have opportunities in our existing assets as well as using AEIs as a key part of extracting value from any new acquisition. Proactive capital management. We have been proactively working on capital management to drive interest cost savings, and that would include expanding remaining fee debt access while reducing our FX risk where appropriate. With that, I will end my presentation. Maybe we will have time for some Q&A.
Okay. Thank you, Gerry, for the presentation. Now let us proceed to the Q&A segment. We have our first question from Jovi.
Please raise hands.
Mr. Ahid.
Hello. Good morning. Can you hear me?
Yes, we can hear you.
Thank you. Thanks, Gerry. Thanks for the presentation. I just have two questions. The first one actually just looking at the Shanghai Fengxian Logistics Park. The valuation for this sank because of an adjustment; is that correct?
Because of the rent adjustment.
Yeah. Okay. Can you just tell us a bit more about this fixed-rate lease that you have here? Can you share the rental reversion for this asset specifically?
I will let You Hong take that question.
Yeah. This lease is an eight-year lease that we signed with, I would say, sea freight and logistic provider. They have actually spent some time and CapEx to convert a portion of the park to fit their own use. That is why it took a while. Actually, the reversion was already captured in 2024.
Okay.
2025. That is not in the 2025 reversion. But 2025, to begin with, is actually a much smaller area that we are reverting. Although the magnitude is quite similar. Yeah. I think that is about the color that I want to give.
There was—
Can I just follow up?
In the-
Yes.
In the eight-year lease.
Yes. It's a normal step-up. I can't remember the exact figure, but it's a typical two to three years. We will have a step-up that's similar to the kind of
Market
Market terms. Yes.
Okay. When did this eight-year lease start?
It's July. It's 2025.
2025. Okay, got it. My second question here is just looking at the overview of our strategy on page 19 of the slides. The four puzzle pieces. One is about CLCT, two are about the retail malls, the last one is on capital management. Can you just provide some indication of your plans for the logistics and business part of your portfolio? Are you planning any divestments in these assets? Thanks.
Well, it is maybe a little bit of a condensed statement. In my create value, we did say that we want to continue to maintain stable occupancy across these two business parks and logistics parks. I think that is the first step that we have to do. Business parks, of course, at current stage, we still need to push up the occupancy. When the occupancy of some of our weaker business parks are stabilized, then we can talk about whether portfolio reconstitution is a good time to do it. Of course, if you want to reconstitute the asset or divest the asset, it has to be in good condition here first. To get a good price. For logistics, I think we have stabilized occupancy. So I would say that if the right opportunity comes, we may consider it.
Okay. Thank you. Just following up on the Shanghai asset as well, if you can provide a forecast about the valuation, how would they hold up this year? Because, of course, the adjustment was the biggest impact last year. Would there be any impact from the sub-market this year? How is that sub-market performing outside of this asset?
I think that we are seeing in Shanghai the vacancy level still there, but it actually has improved year-on-year. I don't want to put a forecast too much, but I think the situation is better. If rent stabilizes, I expect the valuation to be stable as well. Because I think from a term point of view, we are locked in there already.
I think this is a one-time cut if you have it. Because we have sort of locked in the 8-year lease, and the valuation itself reflects the cut that we have done.
All right. Thank you.
Okay, we have our next question from Terence. Please go ahead.
Hey. Hi, Happy New Year, Gerry and team. This is Terence from J.P. Morgan. Actually, before I start on the questions, can I request that you all provide the quarterly updates for the sectoral revenue and NPI on the RMB basis? Because I think previously that was provided, I think last year, maybe earlier this year, but the numbers seem to have been replaced by a full annual number. It's a bit challenging to track on the underlying income. And maybe I'll start the questions. So on this, SGD 0.53 cents top-up, SGD 5.7 million. In the event that you all don't acquire any asset, perhaps let's say in the first half of next year, would you all still consider continuing with this top-up? Or how should we think about it?
What I would say is, management is very focused on trying to find the replacement assets within this year. So that's our number one priority. Between us and the board, we have a lot of discussion about this. And we considered this, and we thought because we are very focused on finding a replacement asset, so we were okay to give a one-time top-up for this in the interim.
Okay. Sure. I guess then, in the sense that you're looking at replacement assets, could you share on what you're looking at? Is it tier one, tier two cities? Is this something from your sponsor pipeline? How large would it be? And given their gearing, it's come down, but it's still relatively elevated. How should we think about funding this?
Yeah. I think, in terms of assets, we are looking for retail asset because that's in our experience, has been the most defensive, and of course, we do have the ability to provide even more stable liquidity for retail assets through the CLCT platform. So that's one. Two, in terms of the cities, I think we're casting our net wide. Right now in our mind is tier one, tier two cities that we have been looking for. In the start of the year, actually, the team visited China looking for some of those assets across different cities in China. So that's what we are focusing on. In terms of the size, we will calibrate it accordingly. What we have said is we want to replenish Yuhuating's lost income and perhaps just exceed it slightly.
I don't think that we'll do two big acquisitions that will stretch the balance sheet. So in terms of Yuhuating, that's a CNY 700 million-CNY 800 million renminbi asset. I would think that's probably where we are focusing in the ballpark, up to CNY 1 billion renminbi.
As to internal and external, obviously we are open to both. We want to look at the best asset. Of course, like what Gerry mentioned, we want to have a little bit of a value-add angle as well. So I think as of now, I would say external will also be part of the consideration.
In terms of funding this?
In terms of funding this, we will look at the market situation at that moment. If it is not too big a deal, we may do it through debt in the short term. If it is a bigger deal, we may fund part debt, part equity. That could be some of the considerations.
Okay, thanks. Maybe this is the final question from me. Any outlook on borrowing costs for FY 2026?
The borrowing costs?
Yeah.
Yes. Sure. For FY 2026, we expect the borrowing cost to inch down. Right. But I think not to the significant extent. Because we still have some earlier hedged IRS that is actually still ongoing, and then we have some bond that is on the fixed rate. We actually do note that our floating rate in renminbi has actually formed a significant component of our borrowing. They are actually news that PBOC will continue easing, so that should actually benefit us.
If I may clarify, when you say "inch down," are we talking about maybe 10 to 30 basis points? Is that sort of the ballpark that we are looking at?
Yeah. I think probably 10 basis points, and then we will continue looking for cheaper debt to actually make it better. Yeah.
Okay. Thanks.
Maybe to interject there, 2026, as Lint ong is saying, just happened to be the year that some of the historically lower interest rate swaps expired. But in 2027 and 2028, we have more opportunities to drive down interest rate costs, because that's where the higher-rated interest rate swaps are expiring. Having said that, as Lint ong says, we will still try to find ways to deliver more than the 10 basis that we are sort of using as a baseline.
And in terms of the, sorry, RMB proportion, how much higher can we go?
Okay. For renminbi loan, sorry, this year, barring any additional debt that is actually used to fund acquisition. On the status quo basis, I think we only have one renminbi-denominated debt that is actually due for refinancing. We will aim to actually get the renminbi-denominated debt as well to maintain our natural hedge. That doesn't mean that we don't tap the Sing Dollar market. It's just that while we find the cheapest source of debt, we also are mindful that we have to actually maintain a high level of natural hedge.
I think, taking into context, I think what Lint ong is trying to say is, if everyone recalls, maybe one and a half years ago, maybe 30% to 35% of our debt was renminbi. Now we have brought it up to 60%, above our own target. We do have a little bit of leeway, and depending on where we can get cheaper source of funding and what is approptriate, we may either use Sing or renminbi. Of course, the long-term direction is we want to be as natural hedged as possible.
Okay, great. Thank you.
Thank you, Terence. We have the next question from Geraldine Lim. Please go ahead.
Hi. Morning. Geraldine Lim from J.P. Morgan.
Yes.
Hi. Morning. Maybe just three questions from me. Sorry. If we look at second half without the capital gain, DPUs at SGD 0.02, and this, I presume there is some impact from AEI. Going to 2026, is this the kind of baseline that we should expect?
The baseline in terms of the SGD 0.0233?
Yeah, for DPU.
I think second half indeed, of course; we thought about the AEIs, that was an impact. There will be some positive flow-through from the AEIs that been completed in 2025 that will come through in the whole of 2026. Just as context, I think the downtime I said of four to nine months, probably about SGD 15 million of NPI was lost from there. The other thing that I spoke about, which is, we are looking for an acquisition to top up the Yuhuating lost income. Yuhuating is, while not a big asset, it still contributed about SGD 14 million of the NPI that was lost in 2025. I think that if we manage to acquire an asset, I think we should do probably better than SGD 0.02. If that is what you are trying to ask.
Okay. Thanks, Gerry. The 15 million is in SGD or RMB?
It's RMB numbers, yes.
Oh, okay. The 5.7 million cap top-up this half will likely be one-off, and you'll save your bullets for that acquisition?
Yes. It's our intent really to find the asset so that we don't need to top up.
Okay. Maybe a quick second question on divestment back into Sponsor's C-REIT platform. Any guidance in terms of timeline and probably quantum? Because just thinking aloud is that proceeds will likely go towards your acquisition. Yeah, just thinking about the steps.
Yeah. We are actually concurrently working on this as well. Identifying assets that are suitable for the next securitization. So you are right; depending on the timelines and when we find the asset, it could be that the sale may happen before the securitization may happen before the acquisition, or the acquisition may happen with the securitization. So you touch on a good point. In fact, I think the earlier question that Terence has asked, I've omitted one point, which in fact is true. If we manage to securitize the asset before we acquire, obviously we will use the proceeds from the securitization to fund the asset purchase. We are indeed working simultaneously, both on the acquisition front as well as working on identifying and preparing our next securitization target. In terms of size, I think we would probably not want to give guidance at this moment.
There are a few that we are looking at. We definitely want to balance it a little bit depending on the kind of assets that we can also refresh our property. As we, of course, want to make sure that the DPU profile is maintained while we reconstitute our portfolio.
Okay. Thanks, Gerry. Very clear. If an acquisition happened before the sale, you're okay with gearing going up a little higher, but it's going to be temporary.
Yes. As you know, we have multiple ways of trying to manage the gearing of the trust.
Okay. Thanks, Gerry. Just one very last quick one on the business park rental incentive. The tenant profile sounds quite solid, but is this rental incentive the current market practice to retain tenants, and you still see this ongoing?
Yeah. The reversions that we are talking about, I think it is the current market to attract tenants to come in.
Okay. Are you able to share how much you gave in terms of the incentive?
You mean—
Or—
For the general rental reversion was minus 8%. Yeah.
Okay.
We probably don't want to comment on singular tenants.
Oh, okay.
Yeah. It is a very good tenant, but I probably do not want to comment on a singular tenant. Yeah.
Okay. Yeah. China Samsung. The minus 8% already captured this rental incentive?
Yes. In terms of the park. Yes. Yeah.
Oh, okay. Thanks so much. Yep. All the best.
Thank you.
Thanks, Geraldine. The next question is from Ada with Mahek.
Hi, Gerry and team. Thanks for the presentation. First question, just to double-check, is there a sort of blackout period post-listing of CLCR before you can inject another asset into the vehicle?
Okay. I think you're referring to more, Don, maybe—
Yeah. Yes. The short answer is yes. Previously it was about 12 months period before a new injection can be considered or submitted, so to speak. Last year, somewhere middle of last year, I think it was shortened to six months. I think that's good. I think there's still regulatory approval. The process will still take a while. In the normal circumstances, you will expect about one year, around there, for another asset to be injected.
Perfect. Are you seeing any interesting transactions come to market in the retail space YTD? How soon do you think you'll be able to acquire?
Interesting transactions.
We are actually following on a number of leads. We also want to be prudent at the moment because although retail is actually one of the more resilient asset classes, consumer sentiment and all that still remains to be. I think we want to be very careful in selecting the right city, right location. This is our bread and butter. I would say yes, we are cautiously confident that we should be able to do something this year to get the priority going and to, like what Gerry articulated, to deliver what we've set out to do.
I think interesting transaction volume of transaction have came down, generally speaking. But if you talk about big moves, maybe slightly more, maybe a platform or move. PAG, the PAG deal—maybe You Hong can talk about it a little bit. Then SKP as well. These two maybe show the interest in retail.
Yeah, indeed. PAG is actually one of the cornerstone in the Wanda , have been for a long time. I think they acquired their management platform, and last year, I think they did quite a big, a separate venture that actually is an asset platform, that actually, if I am not mistaken, 40 of the assets was put into debt.
Retail assets.
Retail assets. One title retail. That is one deal that is quite big. Another one is the SKP. I think PAG actually injected or rather took a substantial share in that. And towards the end of last year, I think they also did a sale deal. There was some outlet in Beijing.
Yeah. So that was also something that is interesting. So I think there are still deals ongoing.
I do not want to jinx it, but touch wood. If, say, in the worst-case scenario, if you are not able to acquire to replace the lost income from CapitaMall Yuhuating, will you actually consider further distribution top-ups for this year?
2026, you mean?
Yeah, I think I answered that question. We are quite focused on getting an asset this year for 2026. If the worst case happens, we could reconsider it at the end of the year. Yeah.
Okay, got it. Just one last question from me. Does this mean that share buybacks will be off the book for now, given that you are focusing on finding the replacing asset?
Actually, I don't want to use the word "off the books," but we are guided by logic. Share buyback was mathematically accretive when the yield was very high and share price was very low. Now that our share price has recovered, it may not make as much of a sense to do share buyback versus buying a higher-yielding asset. Yeah.
Got it. Thanks for the additional color. I'll jump back to the back of the queue.
Thank you.
Thanks, Ada. The next question is from Yukien. Please go ahead.
Hi, Gerry. Just now you touched on the moratorium. Now it is six months instead of 12 months. You mentioned that there is maybe some regulatory processes that might take a while, so more realistic to assume a year. Can you explain what are the regulatory issues here? Also technically, you can start to maybe target assets or identify assets to be divested, maybe in another two months or three months' time, right?
All right. Let You Hong take the regulatory part, but I think in terms of preparing the asset, actually, we are already in preparation. I mean, things like testing the valuation or making sure it is doing up the numbers, so on and so forth. Those are all within our own team's work, which we have already accepted for a few assets.
Yeah.
Right?
Regulatory side, I think maybe to put it that way, the follow-on listing of assets still requires quite regulatory screening. That is a bit different from how Singapore. Singapore is after the listing part is actually heavily regulatory involvement, but the follow-on is more market-driven. I think in China, the market is still relatively new. The regulators still want to be a bit more careful. The follow-on process, it is just that; we, because it is already set up, the investor base is there. It is slightly shorter, but everything still needs to go through the regulatory approval. Basically, when I mention regulators, NDRC, CSRC. Yeah.
In terms of a proposed divestment, how should we think about it in terms of size? Also, are you looking at the weaker assets? Also, is it going to be bigger, smaller than Yuhuating?
Like Gerry mentioned, I think at this moment, we are working on it, but we probably do not want to go so far as to say which asset. But the principle applies. It is basically where we actually complete the AEI, and then we think there are not much further growth to be milked from that asset, then I think we will consider data injection. I think that is the principle that we always held. When you talk about weaker asset, stronger asset, I think I would rather put it in the more stabilized, mature assets. That is the kind of category.
Maybe a little bit of GKA. Of course, we look at our own acquisition pipeline. If for whatever reason, Yu Hong managed to find a very attractive asset, but it has a higher quantum, then maybe out of the assets that we were thinking of securitizing, we may do the bigger one so that we can match the funding needs. If we do not manage to find a big one, maybe a more medium-sized one, then we will match it accordingly. As I said earlier, I want to basically have the DPU profile sort of maintained even as we do portfolio reconstitution.
How should we think? Because both are least core. How should we think about it? You have a stake in CLCR as well. How should we think about the—I know what I said. If you bring an existing asset, post-AEI, there is not much left to cream, and then you sell it to CLCR. Would the CLCR shareholders, unitholders, be happy? Because there is not much upside to this asset.
Yes
Yeah. I am just trying to understand that.
No, if you summarize it for the investors in specific market, they are really insurance company, pension funds. They are trying to have very regular payouts at the income rate that is competitive to their own environment. Their own environment now: RMB deposits are maybe 1%, corporate rates, bond rates, government bond rates are below 2%. Some panda bonds are just 2% plus, or some corporate RMB bonds are 2% plus. So for them to get 3% plus yield, which is what CLCR is trading at right now, actually, it is enough for them to buy those units. They are not looking for big growth or more than that. I do not think that they are very concerned if there is a lot of value add in the asset.
In fact, just to share some color, some of the pockets that is under those insurance or banks, it is more like fixed income.
Fixed income.
Department-
Department
Doing that investing.
REITs.
Right. So I think there is a bit of difference in how they are seeing it. In fact, they actually really are seeking yield, given that China's domestic alternatives are limited.
Yeah. They just want to bid whatever they can get in the corporate bond market.
Okay. Last one from me. From the CLCT perspective, there is no regulations that prevent them from raising equity within the first 12 months of listing to acquire stuff. Is it correct?
Like I said, I think after six months, they can do it.
Oh, after six months, they can actually acquire something through equity raising.
Yes.
Okay. Got it. Thanks, Gerry.
Thanks, Yukien . The next question is from Jessie. Please go ahead.
Okay. Hi, good morning, Gerry, everyone. I am aware of the time, so I will keep it short. I know that many of us have asked, but are you able to give us a little bit of a hint, what kind of mature assets, maybe which cities or which asset classes, will possibly be divested into the C-REIT? Secondly, I note that CLCT marks its 20th anniversary this year. So are there any major strategic plans you can share with us for the rest of this year?
I think both parts we kind of covered, but really just bear repeating. First one, for the securitization. As you have put it and also I think previously I have shared, we are looking for assets that we feel that we have extracted full value from. Over the last many years, a lot of our assets, actually, we have done AEIs on them. So you imagine, many of them fit the category that we have done AEI for them. But maybe some of them, we still feel that there is more value of keeping in our portfolio to continue to extract. So maybe we will not consider those. In terms of size, I think because the CLCR itself, the C-REIT, you can only sell basically 100% of the asset. You cannot do part sale. So the size will determine which asset we put in.
On our books, our valuation, we have assets that are SGD 1 over billion to also assets that are CNY 3 billion to CNY 4 billion. So there is a whole range out there. Therefore, it is a bit difficult for me to pinpoint which range. But if you want to talk about range one to four , that would be the range, billion renminbi. As far as our anniversary, thank you very much for mentioning it. I think CLCT have come a long way since we were listed 20 years ago. Along the way, we learned a lot of things about China. China is evolving, and what we have as a strategy today is really to tap into that evolution in China. Really, they are looking at trying to grow their domestic consumption. Also, they have a very strong innovation-driven economy.
Both of these themes we are trying to cover through retail malls, as well as the new economy assets. Of course, the new economy assets now is more challenging. But we are following it closely. Tenants like Samsung Memory—I am sure it is only one now. There will be more such tenants that will be coming up. So we want to seek those opportunities so that we can put them into our business parks. As far as retail malls are concerned, that is certainly something that, maybe we can say for the anniversary year, we want to focus on, to basically continue to drive the narrative that we have deep expertise in retail malls in China, we want to make use of that.
Not only operational AEI, but also capital markets with our ability to get set up the C-REIT platform, as well as hopefully we will start to bet more on the RMB capital markets for our debt financing. These are things that we can look forward to for our anniversary year.
Okay. Thanks, Gerry.
Thank you, Jessie. We have one last question from Joel. Please go ahead.
Hi, can you hear me?
Yes.
Hi. Thanks, Gerry and Lintong, for the presentation and the opportunity. I just have three questions. I think I will take it one by one. The first is regarding your retail. I think we see your retail sales tenant footfall, occupancy costs. These are all headed in the right direction. Just wondering why the retail rent reversions remain weak. Is it due to a supply situation, or are tenants generally a bit more resistant to higher rents?
Maybe I can take that.
Sure.
I think you probably have seen that the China business is more niche and all that. Also, I think we have seen some of that. I think previous quarters we also have shared. Generally speaking, I think tenants are doing good sales, but their margins are actually also been, I would say, thinner than before because they needed to promote, they need to offer more and to entice the consumer to keep shopping. I think that's a trend that we have seen, and then what you mentioned as supply is selective, right? Certain areas there are, but not for all our malls. Basically, I think there's that factor. But I think the tenant's behavior is actually quite closely related to how they look forward. If they are looking forward to a good growth, then they will actually start to plant more shops.
They see good business, they will do more. I think at the moment they are still a bit cautious, if you ask me.
Maybe I add to that. I don't think that the retail supply is that much of an issue generally for most retail markets versus, say if you talk about business parks or logistics. Among all the sectors in real estate sector in China, I think retail is the one that have less of that supply issue. What You Hong say is right. The general economy is deflationary. Obviously, in the tenant's mind, they see prices being difficult to increase, right? I don't want to generalize it, but there are some sectors that are like the toys and hobbies that still maintain pricing power. But generally speaking, when tenant sees that they don't have pricing power on their own revenue side when it comes to increasing rentals, it's also difficult for them to increase rentals by too much.
Having said that, if you think about the rental reversion, it is really a blended rental reversion. There are trade categories in our portfolio where you would see sales are increasing by a lot. Those trade categories, we are still seeing some rental reversions. Some of the F&B brands, some Pop Mart, and of course toys and hobbies—we do get some positive rental reversion. For a long time now it is sort of offset by the weakness in fashion and beauty and health, which I have said single digit sales drop. So rental reversions there could have been negative as well.
What I do observe when you talk about looking forward, all these are historical, but if you talk about looking forward, I see maybe two trends in relation to fashion particularly, which is an important trait because historically speaking, fashion trait, they usually have higher margins, usually in the good days, and therefore they can afford to pay a higher occupancy cost or rent in general. One is I think in our deck we didn't go through that in the business outlook. In last year third quarter, there have been some changes in the taxation on e-commerce. Now all e-commerce basically sellers have to also have to disclose their sales, and that will be taxed. So we have been hearing that anecdotally that is leading to more online players thinking about setting offline stores. That means physical retail stores.
E-commerce, a large chunk of it is really fashion sales. That could start to reverse maybe some of the damage that has been done to this sector over the last many years. If I look at some of the reversions from fashion traits, I do not want to say that I am painting a trend, but the reversions and sales drop are probably lesser than previous years. So we are hopefully slowly finding a bottom, and with some equalizing of the playing field, hopefully from 2026 and onwards, we can see some strengthening in the trade. So either fashion or beauty and health, either one of the trade categories, even reverse their trend a little bit, I think that will help us finally be able to show some general positive reversion on a blended basis. Because our other trade categories are actually okay.
It is just really fashion and beauty and health that is contributing to the more negative emergence.
Okay, thank you so much. Very clear. My next question is regarding acquisitions. I just refer to two, I know your sponsors, two blockbuster assets, the Raffles City Chongqing and Suzhou Center Mall. I know it's not within your mentioned size of, I think it was close to RMB 1 billion. Are these on your ROFA, and is this something you could potentially acquire in the further future?
Raffles City Chongqing is not in our ROFA. Suzhou Center is also not in our ROFA.
They are not in our direct, so-called acquisition ROFA list. I think for sure, if there's any chance, we will be ahead. Having said that, these two are also very big. I think we will be careful and hopefully the market will allow us to do big deals. Then I think it will be a more opportune time to consider it, this is my opinion.
I think at this stage, we basically just start. I would just say have some head way in terms of our portfolio reconstitution journey here, having just started the series and then having a stable channel of recycling our assets. We probably would err on the side of caution first, but if we get something going, then of course, we have a proven model, and the bigger assets will be something that we can have a deeper think about.
Okay, thank you. My last question is regarding your RMB debt percentage. Is there an intention to raise it up to 100% over time, or you think 60-40 is pretty good?
Sorry, let me take a sip. For CapitaLand China Trust, we are still a Singapore REIT, so we are actually very well supported by all our Singapore banks. The Singapore banks' natural funding currency is Sing Dollar. We can actually fund quite competitively in Sing Dollar. That has actually been the case for many years. I would say we will continue to maintain quite a balanced profile. We wouldn't actually totally give up on our most competitive source of capital, which is Sing Dollar. But yet, we do need to actually have a good percentage of our debt in renminbi. That is actually both to benefit from the easing of renminbi interest rate as well as renminbi liquidity. And of course, that will actually also shore up our balance sheet.
I would say 60-40 or maybe 50-50 is something that we will be looking at. And of course, going forward, one of the most important factors is also to evaluate the relative cost of funds. Renminbi rate has been decreasing, and Sing Dollar actually now is also quite competitive. We will actually continue tapping both markets.
Okay, thank you. That's all from me.
Thank you.
Thank you, Gerry, and thank you everyone for joining. This concludes our session for today. Please feel free to reach out to me or my team if you have any further questions. Thank you all and have a good day.