Morning, everyone. Thank you for joining in Frasers Centrepoint Trust's 3Q FY 2026 business updates earnings briefing. I have got here with me today the senior management team, Richard, who is our CEO, Annie, who is our CFO, as well as Pauline, our Managing Director for Investment and Asset Management. As you can see from the contents, we have got a lot to go through today. Without further ado, I will pass it on to Richard.
Hey, thanks, Judy. Good morning, everybody. Let's get down to business. For this quarter, we decided to, instead of jumping straight into the business update, we also included the recent activities that happened around itself. The first one being the divestment of White Sands. Next slide, please. Okay. I am not going to go into every detail here, but just a couple of quick highlights. The property was transacted at SGD 467 million, and the last valuation was done at SGD 431 million. So that kind of give us a net gain of approximately 32.4%. This transaction is also at a premium to the valuation at about 8.4%. The entry or rather the exit yield based on 2025 year-end NPI, it is about 4.6%.
Some of the key rationale you can see there, of course, one of the main one is actually the reduction of our gearing from 40% to 36.5%. That is giving us a little bit of headroom for us to again look out for opportunities in the market, which we did. I am going to share shortly as well. Okay, these are just some information on White Sands. Probably most of you are familiar with this. Also, just a couple of highlights. The leasehold for this asset is gone down to about 67 years. It is also the smallest size mall in our portfolio, about 150,000 sq ft. Some of those are also considerations we take into effect when we look at the divestment of this asset. Next slide. So what are the end product with this divestment? Aggregate leverage dropped to 36.5%, giving us a good headroom.
NAV actually went up because we divested at a premium. There is a slight dilution of DPU by about 1.9%. Okay, next slide, please. Okay, so what did we do with the headroom that we have managed to obtain from the divestment of White Sands? We participated with the sponsor, FPL, and our joint venture partners in this Bayshore Drive site. The one, as you can see, that is with the yellow star on the right side of this pictorium.
Okay, next slide, please. Okay, a very quick run-through on some of the key details. Site area is about 618,000 sq ft. What we get is the tender price is about SGD 2.1 billion. But more importantly, the total development cost for the retail portion is approximately SGD 613 million. The GFA for the commercial site is, or the commercial portion is about 238,000 sq ft, if you round that up.
The estimated NLA ranges between 160,000 sq ft- 180,000 sq ft . It is a good sizable mall, if you can reach the upper limit of this NLA. Our joint venture partners are Sunway MCL and also Sekisui House. The target completion for this project is roughly end 2030. It takes about four years of construction. Next slide. Some of the key highlight of this site. Of course, most of us, or if not all of us are familiar with the precinct itself. This is the Bayshore precinct, an area where it has got high density population and also, I would say, a pretty high income range for this whole precinct itself. This will be the only commercial site in this whole precinct. It's in a location where it also encompass part of the Bedok region as well.
What is important is also when we look at our investment criteria, one of such is definitely looking at connectivity. This site, again, it's on a car-light precinct, and it has a direct connection with Bedok South MRT station and also a new bus interchange. The population is expected to continue to grow, as you can see from this diagram. Some of those developments that you can see here actually will be coming on stream. We are expecting around 10,000 new homes that has been planned and will be developed around this mall itself. The site itself, FPL and its partner will be actually building about 1,280 residential units. Of course, this site is also close to other amenities. It's going to be located next to the largest SAFRA clubhouse, which is also due to open in 2030.
A lot of amenities, growing population, and very good connectivity. Next slide, please. Yeah, so these are some strategic rationale. Some of them I've mentioned before. Definitely it fits into our criteria of a prime suburban mall with a very good connectivity, with a growing population. Also, if you look at it, this also gives us an opportunity to be looking at development as a new growth driver. The question is always about what's next. Is there malls for us to purchase? What are the opportunities available? So this will give us a new opportunity to look into. I would say that not every developer or not every REIT in Singapore has this capability. It's just a couple of us who can partner with our sponsors to do this kind of thing.
In a way, that will give us an opportunity as a new source of growth. This site has excellent location. That's something that I mentioned just now. Of course, the other critical part is if you get into a development of such, in a way, we are entering at a very attractive yield. The yield on cost is approximately 5%. We divested White Sands at 4.6%, so you can see that kind of arbitrage that we can make if we are able to get into a development project. By participating from the onset, it also gives us the opportunity to shape the direction of the mall that we want it to be, how we want the mall to be positioned, et cetera.
And I talk about the fact that this is a very highly populated region in Singapore, and the retail space per capita in this area is actually significantly lower than the Singapore average and also most part of Singapore as well. Next slide. Now turning back to the BAU or the business as usual. In terms of some of the key highlights for this quarter. Committed occupancy remained very strong.
Again, it is over 99%, with some frictional vacancy while we churn out some of the spaces. Year to date, shopper traffic and tenant sales continue to be positive. Traffic gone up by 2% year on year on a year to date basis, and also tenant sales at 1.8%. Capital management. Here you see, we actually stated the gearing at 40.4%, but that is because the completion of White Sands is going to take place sometime in September.
But if you take that into consideration, our gearing would have come down to 36.5%. And the other positive thing to note is also the cost of funding has continued to come down. So we are looking at 3% for this third quarter. Our more AEI update, we will go into a little bit more detail, but happy to say that we are on track to complete and over 98% of the space has already been pre-committed. NEX AEI is also progressing very well. Phase 1 achieved 87% commitment, and also 73% of those spaces at this phase is actually new to mall, brands and concepts. High level macroeconomics. GDP, we are still looking at 2%-4% for this year. Surprisingly, Q2 actually came in pretty strong at 5.7%, but MTI has kept that estimate of 2%-4%.
Core inflation for June, it came in at 1.6%, but they also maintain the inflation estimate to be around 1.5%-2.5%. Hopefully, the announcement by MAS can also kind of kept the core inflation in check as well. Retail sales for Singapore on a whole year to date is about 3.3%, and FCT came in at 1.8%. Of course, the Singapore sales figures also include the entire sales, those that happen in Orchard Road, online, et cetera. Ours is just purely our portfolio. F&B sales, Singapore as a whole, 1.1%. For FCT, we grew at 2.1%. Rental, again, similarly, we are also on an upward trend at comparing the market as a whole for suburban prime retail rents as expected for actually grew by 1.4% year on year. Next slide.
In terms of supply, continue to be limited, especially if you look at significant suburban space. So between 2026- 2029, we are looking at close to about 447,000 sq ft of suburban space. But these are actually multiple sites. The largest probably is the one in Parktown , 107,000 sq ft. And then the one in Chencharu is about 130,000 sq ft. The rest are about 100,000 sq ft and so on. So it is quite fragmented. It is more you would deem as a neighborhood center rather than a pure prime suburban mall. So limited supply is expected for the next couple of years. Next up is the financial highlights. I will hand over to Annie.
Thanks, Richard. Good morning, everyone. A quick update from me on the financial highlights for this quarter. As mentioned earlier, I think gearing for this quarter stood at 40.4%, which increased slightly from last quarter. On a pro forma basis, post White Sands divestment, the gearing will be approximately 36.5%. The interest coverage ratio remains healthy at 3.6x . Cost of debt for the quarter is around 3%, which is a decrease of 20 basis points from last quarter, and a 70 basis points reduction year-over-year. We expect that the full year cost of debt for this year to be around 3.2%. Around 2/3 of our debt is fixed at quarter end, and our credit rating from Moody's remain unchanged at Baa2 stable. Next slide, please. All refinancing in FY 2026 has been completed.
The next refinancing will be the first quarter of 2027, and we have commenced discussions with the banks on the refinancing. With the refinancing that was done this year, the debt maturity profile is, you can see that it's well staggered, and there is no more than 30% borrowing that is due in one financial year. I think with this, I will hand over to colleague who will walk us through the portfolio and AEI highlight. Thank you.
Thank you, Annie. Good morning, everyone. I think Richard has touched on some of these key performance metrics, but I'll try to provide a little bit more flavor as I go through the slides. On this slide you see committed occupancy. So committed occupancy for the portfolio has maintained at a high 99% for this quarter. You see that consistently over the past quarters or so, the occupancy has maintained at this good level. The quarter-to-quarter fluctuations is largely due to tenant churn, because one area of focus for us is also constantly improving and enhancing the trade mix for our malls, and that entails, to a certain extent, some downtime. Next slide, please. On this slide, you see that both shopper traffic as well as tenant sales have maintained upward trajectory, both on a quarter-to-quarter basis as well as a year-to-date basis.
In terms of shopper traffic on a year-to-date basis, we have actually increased the shopper traffic by 2% and also tenant sales by 1.8%. In terms of looking at the tenant sales for the quarter, we do see that it's at 0.2%. Arguably, it's a little bit flattish, but that's due to the churn as well as the refresh that's undergoing our portfolio. Just to give a couple of larger examples. Say, for example, at Tiong Bahru Plaza, we have actually recovered the cinema space, and we are repurposing that for an indoor activity park. The other example would be at Northpoint City, whereby we are looking at repurposing again the gym space into a duplex for UNIQLO. All this is in view of the fact that we need to actually maintain the relevance of our offerings.
We've also looked at the sales productivity of our portfolio. On total basis, the sales productivity of our portfolio has continued to improve somewhere in the region of 3% or more than 3%. When we deep dive further, we do see that the top few trades that contribute more than close to 80% of our total sales have actually shown an increase. The top three trades, for example, would be the likes of F&B, beauty and healthcare, as well as supermarket. That lends credibility to the fact that our portfolio, being very much focused on convenience necessities, non-discretionary, remains very resilient and robust in terms of trading performance. Next slide, please. This slide, we look at the WALE 1.87 years. It shows very stable cash flows.
If you look across the lease expiries in the medium term, looking out, say, over the next three years or so, we do not see any concentration risk in terms of lease expiry. To date, we have de-leased, or rather at the end of the third quarter of this financial year, we have de-leased more than 80% of the leasing stock in FY 2026. We are left with 4.9% by GRI, and a lot of these, or the bulk of these are actually in advance circle or documentation stages as we speak. Next slide, please. I think a key focus that I alluded to earlier is that there's always a need to maintain a balance between protecting the occupancy and also updating offering. Refreshing the trade mix ensures that our portfolio of malls continue to be relevant to its shoppers.
Of course, that would entail some short-term pain in terms of downtime. Over the course of FY 2026, we have brought in 69 new to portfolio tenancies. Just to highlight that these are new to portfolio. There would also be for the various malls new-to-mall brands that we are bringing in that are not included in this 69 count. All this lends diversity to our offering. You see that it's a mix of not just F&B, but also across the different trades, lifestyle, as well as fashion. My take on this is that the Singapore retail market continues to remain active. Tenants are prioritizing the fun malls to actually expand their market presence. Next slide, please. This slide shows or demonstrates our focus on driving traffic to malls, and also driving the sales conversion.
A lot of hard work on the ground by the team in terms of sustaining the positive sales growth trajectory. There's a lot of focus on bringing the experiential to our shoppers, engaging them. All with a view of fostering shopper loyalty as well as repeat visitation. Next slide, please. Next. I'll cover a little bit about the asset enhancement initiatives. I think one of the key pillars of our growth would be enhancement growth. How do we actually extract more value from our existing portfolio? Hougang Mall, which is at its tail end of the asset enhancement, I'm happy to share that in terms of the progress, it's actually on track in terms of project implementation as well as leasing. We're looking at completing the AEI in the last quarter of this financial year.
And if you recall, when we first shared this asset enhancement initiative, we provided an indication of about 7% ROI. Happy to say that we are on track, if not looking at outperforming this ROI. Right. Through this AEI, we have transformed the mall, not just upgraded the physical real estate. We have also improved its trading potential in terms of sales, in terms of rents, and also looking at delivering valuation uplift to the investors. Okay, next slide, please. Yep. In terms of the other larger AEIs that we have or working on. For NEX, we have actually commenced Phase 1 in May of this year after taking back the space from Isetan. The first phase is focused on unlocking value through resizing and reconfiguring this anchor space. Happy to share that for this first phase, we have also achieved a pretty healthy leasing traction.
In terms of commitment of leases, in terms of getting our target brands to reposition the space. The new-to-mall we have for this Phase 1, we have achieved 73% new-to-mall brands and concepts. Looking positive in terms of the trade remixing and the value enhancement objectives that we have set ourselves to. Right. Phase 2 is also on track for commencement. We are looking at starting in the first quarter of the calendar year 2027. Right. ESG-
Thanks, Pauline.
Yeah. Thank you.
I'll go through some of the slides on the ESG part as usual to make sure that there's a comprehensive review. As you know, for Frasers as a whole, we are very active in terms of the place-making initiatives at our malls. From the World Water Day at Northpoint City as well as Jump for Hope, which is a signature event at the mall itself to something for the kids in terms of introducing them to EVs. There's been a lot of initiatives on the ground again, to continue to engage the community. As well, for all walks of life, shoppers from all walks of life, we've got the Silver Generation community walk at Century Square as well, and various other sports activities such as pickleball, at Tiong Bahru Plaza itself. In terms of curating the experiences at our malls, there is something for everyone.
Okay, I'll next pass it on to Richard, who will go through looking ahead.
Sorry. Thanks, Judy. Just wrapping up what we have just shared today. A lot of focus again, is on some of these key pillars. Enhancement growth is something that we have spoken about at large, and we have again proven the capabilities that we have at Frasers in terms of executing, leasing up, and also bringing in concepts and also freshness into the mall. We shared about Hougang Mall. We shared about NEX, and I know some of you will be wondering how come we haven't shared about Causeway Point. We are developing the materials. We are developing the fly-through and so on. We just need to make sure that all the documentation are in place, Memorandum of Understanding are signed before we can share this. But 4Q, we will be able to share the AEI.
May not be the entire extent, but at least some preview of what we have in mind and the plans that we have for Causeway Point. But AEI is a key component of our growth strategy. The next one is, of course, looking at acquisition divestment, and we shared about the success that we have achieved in our bid for the Bayshore site. That gives us another new growth opportunity in terms of growing our portfolio through development. As I mentioned, this is going to be one area that is a key differentiator for us as well, because not every REIT in Singapore has the capabilities to do so. We are very happy that we are able to partner with a couple of our partners to get a sponsor to win this site.
Organic growth, this is where, again, the team works very hard on the ground looking at how we can continue to grow revenue, how can we continue to look at cost mitigation. This is an ongoing process. For retail mall, it is something that we need to continue to be very focused, continue to be very sharp, and work very hard on this particular growth strategy. Capital management. Cost of fund has come down to 3%, and as what Annie pointed out just now, we are expecting to close the full year, this FY, at about 3.2% for average cost of fund. The leverage has come down to about 36.5%. Like what I mentioned, it gives us the headroom, which also provide us the opportunity to participate in the development itself.
With that, I will end our presentation and let's move on to Q&A, because I've seen a lot of hands have already come up.
Yeah.
Judy, back to you.
Okay. Thanks, Richard. Okay, first up in the Q&A section we have Terrence. Can you unmute yourself to ask a question, please? Morning, Terrence.
Hey, thanks, Richard and team. Congrats on a very busy quarter. Really done well in terms of the sale and also the development opportunity. I just wanted to ask on Bayshore, I wanted to understand a little bit more. I think, working through some of the numbers, we are sort of like for this SGD 613 million, we are getting almost SGD 3,500 per sq ft on NLA. To get a 5% yield on cost, it suggests that the stabilized rent for the mall will be above SGD 20. If you compare this against your existing malls across the FCT portfolio, it does seem elevated. Wanted to understand a little bit more as to what are the assumptions going into this, and can this 5% yield on cost be achieved in the first leasing cycle?
Secondly, on Causeway Point, could you share on the NLA for Metro and what are some of the thoughts behind Metro leaving? When could we see that space re-tenanted? Thanks.
Right. Terrence, you have been looking at computation of the rent itself. Over more than SGD 20, that is quite sharp, but I don't think this is something that we are targeting. A little bit more conservative than that. In terms of how we work on the return itself, there are a couple of key features of a mall that we need to recognize as well, right? Firstly, this mall is not a very large mall. It's 160,000 sq ft- 180,000 sq ft. The tendency is when the mall of this size, you work on per sq ft, it tends to sound a little bit higher than normal as compared to your NEX or North Point City. That's the first point. Secondly is in terms of rent itself, don't forget, within the revenue portion, there are also other revenue, right?
Rent is only one portion, but we also have other revenue that we can achieve to make up the entire revenue before you offset your cost to get an NPI. The next point is also how the mall is going to be structured, right? If you notice for generally for retail mall, as you go higher and higher, the rent kind of comes down, right? Because rental is always against gravity. For this particular development, we are looking at only two levels, Basement 1, Level 1. Significantly, every part of the mall is going to be pretty much a prime space. With that and with proper planning, we believe that we could possibly get a pretty strong rental rate. Also, if you look at it, today is 2026. We are looking at four years down the road.
So there's also this escalation growth that we are looking at from where we are today. So that's how we arrive at our estimated 5% yield. I hope that gives you some color as to how we work around this development, this investment. And of course, at some point in time, when we have the plans in place, the development plans in place and so on, we probably can come back and share this with you guys and also with our investors. The second point is about Causeway Point AEI, and in particular, your question is around Metro. I'll share a little more then maybe perhaps Pauline can jump in as well. The news came out on Metro. It's nothing surprising for us because we have been engaging them for a very long time.
We kind of agreed in principle that keeping the department store as is in the current state is not something that we as landlord would want to do. Probably as an operator, they came to a conclusion that perhaps there are other ways in which they can be more productive, they can be more efficient. So they announced a business restructuring, and that's something that we have been aware of for a while. We've been engaging with them, and we see there could be opportunity for us to continue to work with them with their differentiated approach of breaking up a department store into multiple concepts. Some of the concepts are interesting and will be relevant. But this is an ongoing discussion we have with Metro as we plan our AEI.
As we shared, we are looking at turning Causeway Point not just as a dominant mall in the north area, but also more like a regional mall. So we hope to bring in interesting concepts, interesting mini anchors, rather than having a very large anchor as what we have today. So that will bring variety, will bring in more interesting concepts as well. So that is where we are for Causeway Point. I'm not sure whether, Pauline, you'd like to add on anything as well?
Maybe just a couple of points. I think in terms of timing, it's pretty much aligned with our plans for the commencement of AEI and the recovery of this space. Also, this is something that has been at the back of our minds when we undertake the space planning as well as the trade mixing for Causeway Point. Just to give assurance that whilst this is news, but it didn't come as a surprise to us. We have actually been looking at this option as part of our overall planning for the asset enhancement.
Thank you so much. That is all I have for now.
Thanks, Terence. Next up, we have Yew Kiang Wong from CLSA.
Hi, Richard and team. Good results.
Hi.
Just quickly on the, recently, there is this RTS impact report, right? SGD 290 million net reduced spending leakage. Has the team done any similar report? How does it compare with their findings? That is mainly the question I am trying to figure out. Also, can you share the tenant sales performance for the last two years for Causeway Point and also Northpoint?
Okay. The report, yes, we are very much aware of that, and I don't think it's a significant deviation to what we have shared before, right? We spoke about engaging our own consultant to look at that. CBRE was brought in, and what they have shared with us is also quite in line in terms of the projection, 2%-4% increase in sales leakage, so to speak, right? Nothing new. Even some of the survey that they have shown about what are the trades that is going to be more significantly affected. If you had a chance to look through the report, it's also they made a point that probably those in the northern region the shoppers are already pretty much used to that. In fact, they don't see that leakage to be more significant in the north than other parts of Singapore.
Again, this is something that we are aware of that. We are cognizant of the fact, right, as we did our own study, and also work with our consultants. By and large, again, but having said that, we continue to watch this space, watch the market. As we plan our AEI, we are taking note of what are some of the trades that we think we would like to reduce, what are the areas that we want to emphasize more going forward. They also talk about, besides looking at it from the leakage or impact perspective, there are also a lot of opportunities, and that's where we think we want to leverage on those opportunities as we expand our mall to make it into a regional size mall. Having the ability to capture more than just Woodlands' catchment market.
We want to expand it to potentially other parts of Singapore, because this is going to be a major transportation hub, as we spoke, right? Woodlands is an interchange station, right? You can expect people from other parts of Singapore who wants to go to RTS would come to this station to change to the train that takes them into a TEL line that takes them into RTS. So it's going to be more busy, getting more people coming around. Also not just Singaporeans, right? We're expecting tourists who want to go RTS or go to JB, may also be using this route and also using this as a transportation hub to stop and transit. Similarly, people coming from JB, right? They are also going to be coming in because of this convenience and this ease of connectivity.
So from a total perspective, the report doesn't seem to suggest anything different than what we have seen, what we have been aware of. Even if you're looking at potential impact, so for example, if our occ is on the average about 16%, and in fact, our two assets in the north is slightly below 16%. So if the impact of 2% to the sales leakage of 4% of sales leakage, we are still within 16.5%, 16.6%, that kind of range, which is actually still very healthy. Right. So, that's how we look at it. On the sales for the two malls, I would say they have continued to grow. Can't give you the specific number, but they have been growing.
Despite the fact that every weekend is congested, every school holidays, every holiday is massive jam, but the sales at our two northern malls have continued to grow.
Okay, thanks. Second question is on Bayshore, just housekeeping. Will this be consolidated equity accounted and then also related to Bayshore, can you give the construction cost and the land cost split please? In that six monthly, yeah.
At the moment, we cannot provide that information as yet because we have an estimated cost that is kind of capped it, but we are still working through the cost with the partner. One of the partner is actually a construction company. This is not available at this point in time, and even our 613 is an estimated as of now. We will probably be able to update once we lock in the cost with all the scheme in place. That would be probably at a better time to do so. In terms of how we accounted, maybe Annie, you want to chime in on that?
Yeah. Usually it will be accounted for as equity accounting because it is a JV.
Okay, thanks. I will jump back to you.
Thanks, Yew Kiang . Next up we have Geraldine from Jefferies.
Hi, morning.
Hi, morning, Geraldine.
Good morning. Very happy to see Bayshore come through. Maybe just the first one on Bayshore. 5% yield on development. I see that you have an NLA range there. Does it matter whether you are on the lower bound or the upper bound of that range, or does that affect your 5% assumption?
It is more on the average, I would say, and we are confident of getting that 5%. Average NLA.
Okay. So 170,000 sq ft will be the underwriting. Okay, and Richard, I think you have been quite balanced when it comes to income disruption. Would you be keen to pay out some of the dividend gains from White Sands? You have about SGD 30 million buffer there.
So how we look at this gains is, of course, this a possibility that we can explore when we can deploy this because, as you probably are aware that we are going into a period of time where we are expecting quite significant, or rather we expect impact to our normal operating income because of AEI at NEX that is going to swing into Phase 2 next year. Then we have AEI at Causeway Point coming on stream for FY 2027-2028. So this is where we would leverage on all our capabilities to, again, kind of top up some of those impact that may come on stream. So this amount of income that we have generated will be considered as part of the pool as well.
Okay. Thanks, Richard.
Thanks, Geraldine. Can we have Rachel from Macquarie unmute herself to ask questions, please? Thanks. Morning, Rachel.
Morning, Richard and team. Can you hear me?
Yes.
Yes.
Yes. Loud and clear.
Okay, great. Thank you. So maybe following on from Geraldine's question. You do have quite a bit of AEI that is happening next year, actually, Causeway Point, NEX, and they are quite huge as well. I am just wondering, how are you going to think about capital top-ups, and how much less in your divestment gains? You still have your Bayshore development ongoing also, right? There will be cash as well. Can you give us some guidance on this?
Okay. For Bayshore development, the interest cost will be capitalized. There is not significant impact to the overall DPU perspective or DI perspective. We do not need to be too concerned with topping up that portion. Certainly, in terms of AEI, when we have two major AEI that is ongoing, that is where we will look at again, trying not to impact our investors' income during this period. AMCs will be used. If it is not enough, then that is where we could then look into this income. Based on our estimates, we have more than enough for us to ride, so to speak, the next two years of disruption. I suppose the message to investors is, do not be overly concerned with all the works in place.
We have our strategy in place, and of course, this over SGD 30 million comes in pretty handy as part of the overall planning that we have going forward. By large, no need to worry about whether there is going to be a significant impact to the DI.
Remaining divestment gains that you do still have.
May be able, yeah. Or rather, we may consider using part of this income to kind of support the impact or kind of smoothen out, mitigate the impact, as a result of those AEI works that is going to take place.
Okay.
Yeah, sorry, just to go back one point to Geraldine. Sorry, my bad. I think the 5% is based on a lower bound of 160,000 square feet. I just did not remind on that.
Okay. Do you have the amount of the remaining divestment gains that you have in your books?
We do have divestment gains from previous divestment. Probably it is not something that I have off the top of my head, but if you could look back on some of those divestments, I think you could probably add up the numbers. It is quite significant. Yeah. But I am not even looking at past divestment gain. I think with White Sands, I believe, and what we think we can generate over the next two years in terms of the performance of our mall, we are more than comfortable that we do not have to look beyond White Sands capital gains.
Oh, okay. Thanks for that. My next question is on NEX. I think you have committed quite a good-
7%
Is it still 7% or is it higher than 7%?
We are only in Phase 1, Rachelle. There is a lot more work to go. Of course, if you ask me as of now, the numbers are coming pretty good, strong numbers, but we still have a long way to go. I am hopeful that, like what we have done with Tampines 1, Pauline alluded to the fact that Hougang, we are expecting to come in above what we have estimated. Likewise for NEX, I am hopeful that we will do likewise. At least I think 7% is where our lower bound expectation is. Yeah.
One last one. Just housekeeping. Interest cost this year, very good, 3.2%. Any guidance for next year? If you look at the debt that is expiring, your Singapore debt, has it all been repriced to cover rates?
Annie, you want to take that?
Rachel, I think you can see from our expiry profile that we only have SGD 100 million refinancing to be done in FY 2027. With that in mind and the current SORA rate, I think our guidance wouldn't be too different from what we have given.
Okay. So flat next year?
Yeah.
Okay. Got it. All right. Thank you so much.
Thanks, Rachel. Next can we have Tabitha from DBS. Unmute yourself to ask questions. Morning, Tabitha.
Hi. Good morning, Richard and team.
Morning.
My first question is on the NEX AEI. Can you walk us through the phasing of the works over the 2.5 years until the fourth quarter 2028? Will the income disruption in FY 2027 actually be more minimal given that the additional square feet is through conversion of GFA from the car park?
Pauline, you want to take the question? The first part, the walkthrough for 2.5 years.
Yeah. Okay. Phase 1, I think I mentioned earlier, it would be completing towards the end of this calendar year. Phase 2 will start at the beginning of 2027, and it should take place over the course of maybe the next 14-16 months or so. In short, that is the phasing. Phase 2 would be quite expensive because it entails the decanting of the car park GFA to actually create a new trading floor area on what we call the northern part of the mall, which is closer to where H&M is. Sorry, I didn't quite catch your question on the car park, the second question that you have.
Oh, I wanted to ask on the income disruption in FY 2027.
Okay. Given the nature of the works, there will be definitely some disruption. But essentially, the way we plan the AEI is that it happens in stages. As far as possible, depending on the micro phasing, we will actually delay the recovery of certain spaces. Although one phase looks quite big, but within each phase, there are micro phases. It's either a case whereby we recover the space for the works later or we try and bring back the post-AEI spaces earlier. This is how we actually manage the staging of the AEI. As you are aware, the mall also continues to operate. A large part of the revenue would still be forthcoming over the duration of the AEI.
Yep. Also just to add, not forgetting that Phase 1 will complete year-end, right? The uplift in Phase 1 will also help.
Yes
to defray some of the impact, so to speak, on the subsequent works that's going to take place. That's how we do it, right? We do it like what Pauline mentioned, we do it in small stages. So when it's done, it will trade, and then we move. Some of those uplifts that we have achieved will help to defray some of the impact. That's how we do our AEI.
Okay. Just to add on also, you've correctly pointed out that Phase 2 works involves decanting the GFA from the car park. The car park will still remain intact, but the space or the GFA that's attributed to the car park is deemed to be GFA, right? Whilst we are keeping the area, essentially what I wanted to say is that for Phase 2 works, we are actually creating new retail spaces, right? In a way it's not decommissioning existing commercial space for the works. We're actually building new commercial space. Okay. I hope that gives you a little bit more perspective.
For those of you who frequent NEX, don't worry, the car park is going to be there. We are not demolishing the car park in any way. In fact, we are adding more lots as part of the AEI, right? So, it's a decanting terminology, but it's not a physical decanting. It's actually a theoretical decanting because the car park is actually residing on GFA that can be redeployed.
Okay. Thank you, Richard and Pauline. My next question is on the Bayshore development. The cost is likely to be phased over the four-year construction period. Will it be relatively even or part of the capital in the middle stages?
I think there are two portions to that. Of course, the land will be pretty much upfront. Once we receive the bill from URA, we have to pay. But for the construction cost itself will be over stages. We haven't really seen the S-curve yet, but typically you could expect a slower upfront, and as you progress, then it catches up faster as you build, right? Because the initial phases, you've got excavation and so on and also piling work, so you tend to speed up towards the later phases.
Okay. Thank you, Richard. That's all from me.
Thanks, Tabitha. Next up, we've got Derek from Morgan Stanley. Good morning, Derek.
Hi. Morning. Morning. I just wanted to follow up on that Bayshore upfront land payment, given that it will probably take place within the next quarter or so. How would that impact, I guess, the full year DPU? In a soft sense, really that line in the sand where you will not cross, you can use the investment proceeds, change MFU proportions just to safeguard that number, given all these moving parts in place, especially for the land, the upfront land cost.
Yeah. Because we divested White Sands, right? We are expecting the money to come in, and as I alluded to just now, we are targeting completion by end September.
Meaning the money is going to come in and we can redeploy the fund towards payment of the land. Effectively, it is not going to affect the DI in any significant way at all.
Okay, cool. That is, yeah. Just wanted to.
Yeah
find out. I guess from a, you've alluded to, I guess, the relatively attractive yield on cost at 5%.
Yep.
But if you stack that up against, I guess the divestment of White Sands at 4.7%, the AEI at 7%.
Yep
Is it really that attractive? Is the premium of 50-75 basis points over mature malls really that attractive for a new build?
Okay. I think when we look at it, we are looking at it holistically, right? First and foremost, White Sands, as I mentioned, is 4.6%, so you have about 40 basis points gap here. You're getting a 99, okay, by the time you complete, maybe 95-year leasehold as opposed to a 67-year leasehold that's remaining at White Sands. Again, there's value that you need to consider there as well. Secondly, this will be the only mall in the entire Bayshore precinct, right? Again, it's going to give you that dominance. It's going to give you that resilience that you would expect from a suburban mall. AEI 7%, I've been talking about that AEI is a fantastic return, but nobody seems to be looking at it or batting an eyelid on that. I don't understand why. That is fantastic.
You are right, AEI gives you very good return. That is why we continue to do this work despite the disruption, despite this heavy hard work to do AEI. We believe that it is where we can really create good value with our skill set. So AEI is something that I think it is above all acquisition that we have today. Coming back to this 5%, if you look at White Sands, 4.6%, but you also look at some of the other investment at 4.3%. So buying a suburban mall is getting increasingly more and more competitive. So being able to get in at 5% is what we look at today based on our FS. Of course, we hope we can even surpass that when it ultimately comes to fruition, right?
At a 40 basis points gap for White Sands, that is already a very good arbitrage. If you look at the market that is trading or some acquisitions being done at 4.3%, that then again gives you even a higher point of differentiation. Plus, a brand new mall that has got direct connectivity to train station, bus interchange, the only dominant mall in a growing catchment. So I think all this has to be viewed in collectively.
Richard, if I may add on, I think from total returns perspective, it makes sense also because when the mall stabilizes, that is where you also reap the revaluation gains, right? So you get some of that development gains as well.
Yep.
Okay. Thank you. Thanks. That was helpful.
Thanks, Derek. Next up, we've got Brandon from Citi. Morning, Brandon.
Hey, morning. Hey, thanks, Judy. Hey, thanks, Richard.
Yeah.
A couple of questions. I just want to get your sense on your long-term view of FCT, right? If you look at, I know you've been doing a lot of things, but if you were to look at your post-COVID DPU growth trajectory, right, it's been kind of flattish.
Obviously, you've been doing a lot of things. Just wanted to ask when you're looking at all these acquisitions and your AEI. Do you actually factor it in on a forward basis what that growth trajectory looks like? Yeah.
Yeah. You are absolutely right, Brandon. Actually, I think we are, in a way, building up for the future growth because we have been doing so many things. So in a way, there is a bit of disruption to our actual bottom line that we are able to generate. But every time there is a disruption, whether when we buy something, there is negative carry, or when we do an AEI, we need to stabilize it before we get a full uplift, and sometimes it is between different periods.
So you are right in the sense that we are actually building up something. But at the same time, if you look at the last year or two, we have started to show growth in our DPU. I am confident to say that this year, you are going to expect further growth from what you received last year. So we are looking at growth.
Of course, the trajectory is not as high as what some investors were looking at. That is because we are still doing a lot of work. But this is going to give you a continuous growth for now, and then, most of them may be back-loaded, so to speak, when most of these works are done, hopefully, and stabilized. That is when I think we are positioning FCT to be on a longer term perspective, right? It is not something that you expect the DPU to fall off the cliff. You do not expect the DPU to turn negative, right? But we are looking at a growth. A slower growth now, perhaps, but that will probably be able to escalate as we complete more and more of this big, large, significant AEI.
Okay. Can. Just going back to this amount that you can top up, right? Does the retained amount of SGD 4.6 million in the first half count towards that pool? Do you intend to sort of give that out in the second half?
Annie, you want to answer that?
Yeah. I think SGD 4.6 million also come into the pool. We have the flexibility of how much to release if we decide to in the second half.
Okay. Maybe I can just squeeze in one more since there's still some time.
Yeah.
When I look at this, your White Sands sale, right? And then, obviously, with your recent acquisition, where does Hougang Mall now stand? Because if you look at your historical divestments, right? It's been at a 150,000 sq ft-200,000 sq ft kind of NLA. Is this still a space that you're looking to compete?
I think we're looking at couple of dimensions. Size is, of course, one measure, but also we look at how much space that's going to come up in that location as well, right? Size is one. How strong the mall is going to be, what's the catchment market that's going to be as well, right? For Hougang, when we look at overall perspective, and we shared this before as well, when we were looking at AEI, we knew that site is going to come up, right? Nonetheless, we felt that it's timely for us to do the AEI works, regardless of whether our sponsor were able to win the site. Now, because we believe that Hougang catchment market will continue to grow and can accommodate a size of about probably 400,000 sq ft- 500,000 sq ft retail offerings in that location.
It is not a case of, oh, because it is 150,000 sq ft-160,000 sq ft , we will sell. But it depends on firstly whether we have optimized the asset. We have opportunity to redeploy it to something better. In this case, when we look at White Sands and Bayshore, we believe we are redeploying it into something better for the longer term. Then, how we coexist. Just like how we worked with White Sands, right? When Pasir Ris Mall was being developed, there was a lot of questions about, or a lot of concern by investors that White Sands would be significantly affected because of PRM. But we have demonstrated our ability to actually coexist with PRM. In fact, we continue to do better collectively.
Our theory back then was also that this theory can actually take on a size of about 400,000 sq ft . So we are likewise to be doing the same for Hougang. At some point in time, if somebody else comes in and tell us, "Okay, I am interested in Hougang. I can offer you this kind of price. Will you be interested?" We will have to evaluate it. And then if there is opportunity for us to redeploy the capital more meaningfully and we have optimized the value, yes, that is something that we will definitely consider. And that has been our strategy all this while. As we grow, we also look at reconstituting our portfolio all the time.
Okay. Great. Thanks so much. Thanks, Richard. That is it. Thank you.
Okay. I think we have one final question, perhaps from Wilson Jefferies. Morning, Wilson.
Hi. Morning, Judy. Morning, Richard. Just a quick question on Bayshore. I am not sure if it is really covered earlier. How much debt are you looking to take on for the Bayshore in terms of the upfront land payment? In terms of gearing, accounting for both the pay-down debt from proceeds from White Sands, then incremental debt for Bayshore land, where do you see gearing landing at?
Okay. I think we are looking at probably after paying off the land portion, this financial year end is probably landing about 37%. Slightly above 37% gearing.
All right.
If that is the question you are asking.
Yeah.
Today, we pro forma it with the sale of White Sands, we are bringing it down to 36.5%. So that should go up to slightly over 37% with the payment of upfront land costs. So we still have quite a good headroom, actually.
All right. Got it. Thank you.
Thanks. Thanks, Wilson.
Okay. Thank you, Wilson, and all who have asked questions. I think we have come to the end of the FCT 3Q FY 2026 business updates briefing. Thank you for joining, and if you have further questions, please feel free to follow up with me. Wishing everyone a great day ahead. Thank you so much.
Thanks. Bye.
Thank you.
Bye-bye. Thanks.