Hello. A very good morning to everyone. Welcome to Frasers Centrepoint Trust first half FY 2026 results briefing. I have with me today the management team, Mr. Richard Ng, who is our CEO, Ms. Annie Khung, our CFO, as well as Ms. Pauline Lim, our Managing Director for Investment and Asset Management. I am sure we have lots to cover today, so without further ado, can I pass it on to Richard to kick start the briefing, please? Thank you.
Yeah, thanks, Judy, and a very good morning to all of you. Thanks for joining us this morning again. I figured that you guys probably have some time to go through the deck. So we are just going to run through and perhaps can spend a little bit more time on the Q&A part of it. All right. Judy, let's go.
Yep.
Okay. Once again, I am very happy to share a set of strong results that we have delivered for this first half. If you look at all the numbers here, it is all positive. It has grown, has improved. Revenue, of course, came in pretty strong, more than 20%. NPI, likewise, more than 20%. Even for DPU, we grew by 1.4%. If you look at the operating metrics as well, tenant sales have increased by 3.2%. Traffic has gone up. Occupancy is again very resilient, very strong at 99.8%. Rental reversion is also at 6.5% for this first half. Right? In terms of the capital management side, Annie will go into a little bit more details, but just on a broad perspective, our leverage is about 40%. For this quarter, our cost of fund is about 3.2%. Okay, next we are going to touch on the broader market perspective.
The macroeconomics in retail market in Singapore. I am not going to dwell too much on the economic indicators. You guys are pretty much aware as much as we do. But let's maybe perhaps look at the sales numbers. For retail sales in Singapore as a whole, we are looking at just January, February, because as you are aware, typically the SingStat is a little bit behind time, so we try to compare on the same period of time. You know that January, February is an average of, depending on which month is the Chinese New Year. So for this, we normally put these two months together. On the average, Singapore retail sales grew by about 3.4%, and FCT is actually ahead of that at 3.5%.
If you also strip out the rest and just focus on the F&B, because there is a lot of conversations around this particular sector. The broader market saw a 1% increase, but for FCT, we actually delivered a 1.7% increase. So that is where perhaps one of the difference, right? You read a lot about F&B operators shutting and so on. It is not the fact that it is not across every mall, but maybe some are more affected than others. This is again a strong numbers that you can look at in comparison with the broader market perspective. In terms of rent, for this quarter-on-quarter, suburban prime retail rents grew by 0.2%, and year-on-year grew by 1.4%. Next, in terms of financial highlights, I will then hand over to Annie.
Yeah. Thank you, Richard. Good morning, everyone. I will go through the financial performance. The gross revenue for one half FY 2026 stood at SGD 221.9 million, which is an increase of 20.3% compared to the same time last year. The increase was mainly due to the Northpoint City Southpoint acquisition in May 2025 last year, and also higher passing rent across most malls. This was partially offset by the AEI at Hougang Mall, as well as the divestment of Yishun Mall in September 2025. Property expenses for one half 2026 is 20.5% higher compared to one half last year. Excluding the effect of Northpoint City Southpoint and Hougang Mall, it is comparable to the corresponding period last year. Accordingly, our NPI for this one half is higher by 20.2%.
There is a lower distribution from joint ventures for the one half this year, due mainly to the absence of the one-off dividend compared to the same time last year. The DPU for one half is at SGD 0.06136 , which is 1.4% higher than last year. This excludes an amount of SGD 4.6 million, which has been retained for general corporate and working capital purposes. Next slide, please. There are no significant movement in balance sheet position compared to 30th September 2025. The NAV and adjusted NAV increased to SGD 0.0225 and SGD 0.0219 , respectively, mainly because of the effect of the marks on market recognized for the derivative financial instruments. Next slide, please. As at 31st March, our aggregate leverage is at 40%, which is a 0.3 percentage point lower than last quarter. Interest coverage ratio remain healthy at 3.59x .
Average cost of debt for the six months is at 3.3%, but for the quarter it is 3.2%, which is a 30 basis point drop from last quarter. We have refinanced all the loans in FY 2026 this quarter, as well as also partially refinanced some loans due in FY 2029, therefore extending the weighted average debt maturity to 3.92 year as at 31st March. The hedge ratio is lower at 66% due to the interest rate swap that we have.
Slide 11. There is no refinancing risk in FY 2026. As mentioned earlier, I think we did early refinancing for borrowing, which was previously due in FY 2029, by pushing it to FY 2031. With that, there is no more than 30% loan due in any one year. Next slide please. The DPU SGD 0.0613 for the first half will be paid on 29th May 2026. I will now hand over to Pauline for portfolio highlights.
Thank you, Annie. Good morning, everyone. I am very pleased to share a very strong set of operating performance for our portfolio. On this slide, you see the occupancy. Portfolio occupancy on a year-on-year basis has improved by 1.7 percentage points to 99.8% as at the second quarter of this financial year. Just a deeper look into how the various assets have performed. You see that all our malls have delivered 100% or almost full committed occupancy. The high occupancy and the positive rental reversions that I will show in a later slide are supported by very robust trading performance of our retailers, as well as good demand for quality spaces within the suburban space. Next slide, please. This slide shows a very strong block base improvements in top line and net profit across our portfolio.
This is the result of our continuous efforts to drive not just revenue productivity, but also to optimize cost in the face of inflationary pressures. You see that in terms of the NPI margin, our portfolio is actually using a NPI margin of 3%. That has maintained, if not improved, on a year-on-year basis. Okay, next slide please. Shopper traffic and sales also shows a positive picture. Both traffic and sales have sustained growth from previous years into this financial year. This is largely attributed to our focus on in-mall activation and also driving repeated visitations. All this focus on bringing people back to the mall, doing the sales conversion, is yielding results. We see good sales conversions as demonstrated by the improvement in sales in tandem with the growth in the shopper footfall. Next slide please.
Okay, rental reversions. Happy to say that we are tracking ahead of our projection of mid-single digit at the start of this financial year. If we look at the performance across the malls again, we do see positive rental reversion across all our malls. On top of that, also across all our trades for the first half of this financial year. The other metric to highlight is tenant retention. Very strong tenant retention of 87%. Again, this is a testament to the trading health of our existing retailers. A little bit of flavor on where some of the leasing demand is coming from. We do see good traction coming from the top three trades would be F&B, beauty, healthcare, fashion, and accessories. Again, these three trades are one of the top five within our portfolio.
So again, this demonstrates how strong the portfolio is and how resilient the trading performance of the portfolio is. Next slide, please. Lease maturity profile. You see that the lighter blue bar of 26% shows the amount of stock that is due for renewal or new lease at the start of this financial year. On a today basis, we have de-risked more than half of this stock that is due for renewal. So it stands at about 11.6% as at the first half of this financial year. A proportion of this comprises anchors and mini anchors, which have been largely de-risked. So that gives a little bit of comfort in terms of what is the leasing risk for our portfolio in the remaining part of this financial year. The other metric, you see that there's no tall stack in the immediate two to three years.
The lease expiry profile is quite even, so there's no concentration risk. In terms of the WALE, at 1.7 years is respectable in the context of our average three years lease term. Next slide, please. This slide we wanted to demonstrate that we are still cognizant of the fact that we need to bring excitement to our shoppers. Over the course of this first half, we had brought into our portfolio 48 new-to-portfolio tenancies. This is across various malls and also various trades. I believe some of you would have heard about the exit of GV, the cinema from Tiong Bahru Plaza. Happy to provide a little bit of preview of what we are doing for that space. In line with the emphasis of bringing experiential and play into our malls, we'll be bringing in Xventure, which is an indoor active sports park.
It will be first in Singapore. So we're very excited about the repositioning plans that we have for the space that is to be vacated by GV. Next slide, please. I think for the next two slides, it's just a flavor of what we are doing to engage our shoppers and also to enhance the experiential elements. Activating our malls continue to be a key focus, and it's our responsibility as a landlord to bring footfall to sustain the performance of our retailers. So this remains a key priority. We believe in leveraging the strategic locations and connectivity of our malls within the heartland to position ourselves as a key community hub. A lot of the activities involve placemaking, involve engagement, enriching the experience of our shoppers. Next slide, please. Next one. Another key partner for us would be our retailers.
I think there's a lot of talk about cost inflation, impact to business sustainability. This is a topic that is top of mind for many, especially with the war that is brewing in the Middle East. As landlords, we are committed to work with our retailers for them to trade better. Here you see some examples of what we are doing as landlords to work with our retailers to help them manage their costs and also to help them tap into a segment of the population, the silver population, which is actually growing. All this is with the view of ensuring the sustainability of our retailers, ensuring the productivity of their space. Next slide, please. In this segment, I will touch about our pillar of strategic growth, enhancement growth through AEIs. Happy to update that Hougang Mall AEI is progressing well.
To date, we have garnered about close to 90% of leases for the space that is affected by the AEI, and the overall AEI is on track to complete by the end of this financial year. You see on this slide, we have provided a sample of some of the retailers that have signed with us and will be coming to a mall. Many of these are actually new to mall. If I look at the average of options that are new to a mall, we are looking at about close to 1/3 of the mall being refreshed by new retailers. Next slide, please. You will recall that in the last quarter update, we were very happy to share that the AEI for NEX is coming to fruition.
Over the past quarter or so, I am happy to update that it has actually made good progress with about 40% of leasing pre-commitment just for the phase I. Another 28% is in advanced negotiation. This brings us to close to 70% of the spaces that is undergoing the AEI, largely the ex-Isetan space. That will be coming up at the end of this calendar year. Good leasing traction, good progress in terms of the AEI works. Isetan is now doing its final sale over this weekend. A lot of good deals, so please come down to the mall and support us. Next slide, please. Okay. With this, I will hand over to Judy to take us through the ESG section. Thank you.
Good morning, everyone. I just have a couple of slides on the ESG part. As you guys know, Frasers Property as a group is very focused on ESG, and along with that one of the initiatives that we always have been embarking on is that community engagement, ensuring that our malls are vibrant social hubs where our shoppers and community can connect through various initiatives. Throughout the year, through targeted placemaking from the festive events to the various health and sustainability programs, we continue to strengthen our engagement with the community and across various customer segments. There has been a lot of talk about costs as well, given the inflationary environment. We just wanted to feature a couple of the initiatives that we have embarked on over time. This is not something that is just drawn up overnight, for example.
Essentially, it demonstrates how we are driving operational and cost efficiencies through leveraging technology as well as ESG initiatives. One of them, for example, is our smart facilities management, where we are integrating both cleaning as well as security services with an outcome-based approach to reduce costs, and yet at the same time, still deliver good performance when it comes to our mall operations. On top of this, of course, leveraging AEI, very common nowadays, across asset maintenance as well to increase that productivity. Again, on our lifts, as well as escalators as well, there is a lot of remote monitoring and diagnostics in place. This helps to then support predictive maintenance. Again, all in line with achieving operational savings. Okay. On the energy side, lots of questions on that recently.
Pleased to share that we are fully hedged in terms of our electricity costs for FY 2026 and partially for FY 2027 as well. Over the past few years, we have been putting on so much of this solar energy on our malls itself. That is like a 3x increase, for example, just in FY 2025. All of these measures put over the longer term has actually helped us to support the operational and cost savings. All in, these efforts also support 100% in terms of our green financing. In terms of our properties as well, 100% are green certified at the moment. All in all, underlying our strong ESG credentials. I will next pass on to Richard, who will cover the looking ahead section. Richard, please.
Yeah. Thanks, Judy, once again. As my colleague has shared, for this first half, we have in fact delivered very strong results. Thanks to everybody's effort from the asset management team, the property management team that has worked very hard on the ground, and it has shown through the numbers that you have seen. Looking ahead, I think the questions will be, how do we sense the market? What are we looking for, and where we are going for the next six months? This is where we want to share some of our views as well. Next slide, please. Fundamentally, if you look at our business, it is about numbers. As Pauline mentioned, we continue to want to drive traffic to the mall and driving traffic, and then thereafter, we try and do a conversion.
We have been doing very well on that front. Our shopper traffic has continued to increase, and that has also contributed to the increase and improvement in sales for our tenants as well. That is what we have been doing on the ground. On a macro perspective, again, it is very important for us to look at where, in terms of numbers as a whole, it is going. Happy to share, and some of you would have seen some of these numbers shared across various media, various announcement speeches, and so on. That our population is growing. We know that we have crossed the 6 million mark. In fact, it is about 6.11 million as of June 2025. That is a growth of 1.2%. Historically, the last 10 years, the average growth rate has been at 1%.
While we do not produce enough, but we do still able to increase our population by about 1.2%. That is good news for us, a business like ours, because we want numbers. The more people are available in Singapore, the chances are they would probably shop in one of our malls. At the same time, if you look at going ahead, based on the master plan that has been shared previously, over the next six to seven years, we are looking at about 145,000 housing units, both public and private, that would be constructed. Again, these are big numbers. So far we have been kind of monitoring what is the progress like between 2022 and 2025. Again, those BTO that have been announced, about 25% of them are actually near our mall.
This is where we are waiting for completion of these flats and the catchment market is going to grow for us. If you look at slightly in a shorter term, 2025 to 2027, we are looking at about over 50,000 HDB flats going to be built. Like what I said, big numbers, and these are the numbers that is going to continue to sustain the growth that we are seeing at our mall. Next slide, please. Right. Going back to the fundamentals of numbers. You have population, so that gives you the numbers, the traffic. Then what about spend? This is, again, we want not only numbers comes to the mall, but we also want the numbers that comes with spending ability.
These are stats that has been widely shared, that the median household income in Singapore have in fact exceeded the SGD 12,000 mark for the first time. As the population median income grows, the propensity for them to spend has also improved. That is also fundamentally supporting the sales across our portfolio. Not only individually they are doing better in terms of the pay and the income, but I think the government has also been very supportive, very progressive in terms of coming forward to help as and when they see perhaps there are some challenges in certain sector of the market or certain sector of the population. Nothing new. You guys would have seen this, but putting it a little bit more in terms of perspective. CDC Vouchers, SGD 500 is going to be distributed in June instead of January 2027.
As we all know, this has got an impact for us, for our malls, because half of that can be used at our supermarkets. The other half, of course, can be used at the various HDB outlets and also hawker centers and so on. But even despite the fact that 50% are not able to be used in a mall, we do see knock-on effects. Similarly, even the 50% that is so-called available only for supermarkets. You normally see a knock-on effect. What do I mean by that? What you see is now, the household has additional SGD 500 to spend. Which in the past they would really would have spent it on supermarkets or markets or hawker centers and so on. But now with this SGD 500, meaning that the SGD 500 that they have previously allocated for the same spending can be used for other things.
Perhaps a little bit more non-necessity, perhaps, maybe in terms of fashion accessories, in terms of footwear and so on. There is actually a knock-on effect. It is not just strictly mean that SGD 250 goes to supermarket and that is it, and nobody else benefited. But based on our data, we are seeing that every time when there is a distribution of CDC Vouchers, we do see some knock-on effect. That is where the team, again, will look at how can we get the tenants to participate, to be involved in any of such activities. Beyond the CDC Vouchers, there are also cash payments. There are also U-Save that has been earmarked. If you look at just on a very broad perspective, you add up all this, roughly, a household could get up to about SGD 2,007. Depending on the housing type and so on.
So potentially up to 2,007. Again, not only income is growing, but there are also additional sources of funds that this population catchment that we are serving can tap on. Next slide, please. Fundamentally, if we go back to basic, what are we all about? It is really about basic necessity, bread and butter that you need, essentials that you need on a day-to-day requirement. Again, focusing very much on essentials. Our essential services made up about 54% of our GRI. Close to 50% of our NLA space is actually occupied by this type of trades and products. Growth in demand drivers, we spoke about just now. Population, housing growth, median income growth, government support. So with this basic essentials, growth drivers, plus of course, demand supply, right?
If you look at the supply side of things, over the next two and a half years from now till end 2028, we are looking at about just slightly below 180,000 sq ft of suburban space. In fact, none of them are actually the type of malls that is comparable to our portfolio, right? They are about 90,000 sq ft and so on, and some of them are actually smaller spaces. So this is where you see how we believe that we continue to stay resilient. We continue to see that tenants in our malls will be able to do well, right? Fundamentally, basic essentials, strong growth drivers, limited supply. Next slide, please. If I could just sum it all up. What are we looking at? Where are we focusing on? I think pretty much we have not gone out of what we have been always focusing on.
Enhancement growth, Pauline has shared, we are very happy with the progress we have made at Hougang Mall, and again, excited with the fact that NEX is going to start physical work. But even before the physical work has started, right? The traction in terms of leasing for the space that is going to be worked on has been pretty strong, 48%, and again, 40% and another 28% that is already in an advanced negotiation. Very strong numbers. Acquisition as part of the growth, we have continued to be disciplined. We look for opportunities that fit our strategy. Again, as I always said, acquisition is opportunistic, right? It is not something that you can really plan for, right? The third leg is organic growth. This is bread and butter for us.
We continue to work very hard, trying to see how we can further improve the performance that we already have. Very strong performance, drive traffic, drive sales, and that is where you could, again, be able to get the rental reversion that you are looking for, right? Supply is very muted, so that kind of underpins the demand for spaces at our malls. Judy also mentioned about beyond looking at the revenue side, we are also very focused on the cost management perspective, right? So proactive property management in terms of looking at cost management, in terms of actually looking at cost mitigation as well, right? Sometimes you may not see an immediate improvements in terms of the OpEx, but the question is, what happens if you don't do it, right? Sometimes it is about cost mitigation, cost avoidance.
Annie and her team has been, again, also working very hard on managing our capital. We see a lot of progress in that area as well. The overall cost of fund has come down. Again, about 60%+ hedge. We continue to monitor the market and would look at hedging if and when it becomes something that is positive for us. With that, I will wrap up our presentation. Happy to move to the Q&A section. Judy, back to you.
Yeah. Thanks, Richard. We've got a number of panelists already lined up to ask questions, so without further ado, let us start with Terence from JP Morgan. Can I invite you to unmute yourself, please? Morning, Terence.
Hey. Morning, Judy, and Richard, and team. I just wanted to ask on perhaps two sets of questions. Actually, congrats on the good result. Number one, on the financial side, could you talk a little bit more of the SGD 4.3 million that was retained and what are the plans for it? Will they be distributed in the second half of the year? Also, any update that cost of that guidance for the year? Then, I guess on the broader picture, this potential divestment of White Sands, maybe if management could walk us through what's the thinking behind it and if any asset sale were to take place, how would some of these funds be redeployed? Are you looking at acquisitions, and would this be in Singapore or overseas?
Okay. Terence, I will take the second question, and then perhaps Annie could help out in the response to the first question. As you have seen the announcement we put out, sometimes the media caught hold of news and they make a big deal out of that. We are in talks, right? Just like most of our past transaction also was like sometimes we started talking. But as the announcement has stated, it's still a conversation, discussion. Nothing has been fixed, nothing has been concluded. Again, it's when things are done, things are really formalized, that's when we will come forward and share with all of you. Right? But as of now, it's conversations and discussions. There isn't anything definite at this point in time. Your lead up question is, what could we do, right? Again, like what I say, sometimes investment, divestment are opportunistic, right?
If there are interest in our mall, and we think that maybe we could look at something that is aligned with what we have always envisaged for an asset like this when it comes to maturity, and we do get somebody who knock on our door and say, look, this is something that potentially we could do, then we will start the conversation, right? Again, it is opportunistic. If it happens, then we can start looking at, for a start, our headroom will improve because that will bring our gearing down to about the 36% range. That gives us a little bit of a headroom to then pursue opportunities when it comes our way, right? It is not something definite that we are looking at, okay, we have this and how we are going to deploy the fund immediately. Again, it is all opportunistic.
Sorry. Maybe just to clarify, if you were to redeploy, would it still be a dominant mall in suburban Singapore or would you consider other things like downtown, overseas, and other assets? Yeah.
Okay. The question is about maybe in terms of overseas, maybe a little bit straightforward, right? The question is, will we go overseas? But at the same time, we also ask ourself, are we able to find good assets that has got similar attributes like what we have? And after you do your risk-adjusted return, can you find opportunity that is better than what we can get in Singapore? I think probably not at this moment. That is the reason why we will continue to stay focused in Singapore, right? That is quite clear for us, at least for this period of time, during this period of time and foreseeable future. Whether we, again, do something in downtown or do something in suburban, again, depending on what is available. If you do know of something that is available, perhaps, you can share with us.
But at this point in time, we do not really am aware of anything that is available. Again, fundamentally, I think we look at how does it fit into our portfolio. Right? Whether does it add value? Are they having the same kind of attributes that we think gives us value in the longer term, something that we believe is sustainable? And if it makes sense, we can always look at that. So maybe-
Thanks
Annie. Yeah.
Yeah.
Annie, the first question.
I will take the first question. Hi, Terence. Yeah, so the SGD 4.6 million that was retained, it actually came from our strong underlying performance of the portfolio, as well as lower finance cost. So it is retained for various purpose, working capital, other initiatives, AEIs, and which also includes our potentially release in the second half. So the other question was the cost of guidance, cost of debt, right? Yeah. We did not change our guidance that was provided last quarter, so it remains around 3.3%.
Okay, thanks.
Okay. Thanks, Terence. Next up, we've got Vijay from RHB. Vijay, good morning. Can you unmute yourself? Thanks.
It's coming directly. Couple of questions from me. Firstly, in terms of the one-off JV income last year, can you remind us how much was it, and what was the reason last year it was given? I also want to know a bit on the debt cost at the JV level and how is it tracking.
Okay.
On that-
Can you. Yeah.
Yeah. The one-off dividend that was in last year. There was some excess cash that was kept in GRPL, which is the excess cash which is no longer required. We reassessed the cash position and know that we can make a one-off distribution up to the shareholder. It is one-off, so we do not expect to have this in this year. What was the other question again?
Debt cost at JV level.
Okay. Yeah, we do not share specific debt costs at our JV level, but there is no new refinancing for the JV, so it will be the same as what we have previously guided, which is around 3- odd percent. Yeah.
Okay.
Yeah.
Got it. Sorry, if you can clarify again, if we strip off the one-off income, your JV income would have been higher year-on-year?
No, the one-off income was last year, not this year.
No. Okay. If I strip off the last year's one-off, would your JV income be higher year-on-year?
Yes. JV income is still higher year-on-year.
Got it.
Yeah.
My second question is, last quarter, I think you mentioned something about Causeway Point transformation and then increasing the NLA. Maybe is there any update on it? As it comes closer to RTS, are you seeing some tenant impact or any conversation with tenants in terms of how they see this overall changes?
I think the quick answer is, Vijay, we don't see that. In fact, the occupancy for Causeway Point remain very strong. We are still getting renewal reversion that is very healthy. Each time they sign is a three-year lease, so that has not actually deterred tenants from signing. Again, like what we shared many times before, perhaps the view on this RTS has been overemphasized or overblown. If you have been operating in Causeway Point for a very long time, you have been seeing this flow of people going to JB all the time, right? So it's nothing new. Perhaps maybe a little bit more, a little bit change. Again, we shared before about the bigger picture. We expect more people to come to Woodlands because it's a connecting hub.
We are seeing growth in population because as we speak, some BTOs just next to the mall is being constructed and will be completed soon. By and large, we don't see any issues with our leasing strategy for Causeway Point. In terms of how we're going to revitalize the mall or redevelop the mall and so on. Not redevelop, but again, doing an AEI on the mall. We are hoping to be able to share some plans, but because we have to go through certain planning application and also getting in some of the key tenants that we wanted to showcase, that has kind of pushed back. We hope that by the next quarter we can come out and show some of these ideas that we have for our Causeway Point going forward. Unfortunately, I'm unable to share details at this point in time.
Got it. Thank you. All the best. That's all I have.
Thanks, Vijay. Next, we've got Geraldine from DBS. Geraldine, can I invite you to unmute yourself? Good morning.
Hey, good morning, Richard and everyone. Maybe just three questions from me. I guess first, if we look at transactions in the market, i12 Katong recently transacted. Did FCT look at the asset? Because in terms of quantum, it looks quite close if you do sell White Sands to redeploy.
Of course, we look at all opportunities that are available in the market, then we start to look at the numbers. We start to look at and ask ourselves whether does this asset fit in terms of attributes, right? So typically, we want asset that is well connected to key transportation hub like MRT station, bus interchange. The way the mall, the physical structure of the mall, can we still create value? What are some of the competition around that area? So when we look at all these attributes, we decided that i12 is not something that we believe can add value to our existing portfolio, so which is why we did not participate in the deal.
Okay. Very clear. Maybe just on the reversion, 6.5% still very strong. I believe the cinema backfilling as well as the AEI completions would have added to this number. On the same store basis, what would be a cleaner number?
Yeah.
A cleaner number.
Geraldine, just to be very clear, AEI numbers, those areas that we did AEI on is not included in this reversion. Reversions are only those spaces, existing spaces. Any subdivision work and so on, we strip them out because that's where you get numbers that is not stable numbers. We strip out all those. This is really, in a way, clean numbers.
Okay. The AEI will be a bigger boost to the 6.5%?
Yes.
In fact. Okay. Maybe just touch on the cinema closure at Tiong Bahru. Hearing all this noise for the past two years, is Golden Village actually a precursor for further closures?
Of course, I cannot comment on GV's business strategy, but the fact that they took up a lease in Century Square, that goes to show that they still want to continue to operate in Singapore. Again, Tiong Bahru Plaza is one whereby, like what I say, again, is it because of certain proximity, they feel that in that catchment market, having one at Great World is sufficient. But for us, we look at it more as an opportunity. Tiong Bahru Plaza GV has not been really a key traffic driver. It's not bringing in the level, the type of traffic that we wanted. So we have been looking at this space. And I've shared with all of you before that even though they're operating, we are making plans for every one of the cinema spaces that we have to identify what could be the possibility.
So if they decide not to renew, they decide to exit, we have the plan quite quickly. Which is why, when they announce that they're exiting, and we are able to backfill the space very quickly. And we are quite excited with this Xventure that's coming in, because I think that would be something new to the mall, something that we believe it's going to be able to drive more traffic than what Golden Village used to be able to do so.
Okay. Thanks, Richard, for all the color. Yeah, thank you.
Thanks, Geraldine. Up next we've got Rachel from Macquarie. Good morning, Rachel. Can you unmute yourself?
Thanks, Judy. Hi, morning Richard and team. Maybe just a few questions from me. Firstly, if I were to look at your tenant sales, could you give us some color? Is it mainly coming from supermarket, and have you seen any softening coming to the March year?
No.
I'm sorry.
Yes. The numbers is for the first half. We haven't really gotten the detailed number for beyond March, because normally the numbers comes in a little bit later, so we only get it in May. Eyeball observation, we still see a very strong traffic flow, very busy at our malls. We don't really see any softening from that perspective. What was your second question? Sorry.
Oh, no. Is it mainly coming from the supermarket?
Oh, okay. Yes. Right. In terms of trade-
Tell me. Yeah.
Okay, maybe Pauline can also help out, but I believe some of the trade categories that have contributed that include your F&B, supermarket is one, your beauty and healthcare. Of course, jewelry is one of the trade that is doing really good business. Fashion and accessories, I believe, is also one of those categories. Did I miss out anything, Pauline?
Yeah. Richard, I will provide a little bit more flavor on that. If you actually look at the slide that I presented earlier, in terms of tenant sales overall, we have actually achieved a 3.2% increase on a year-on-year basis. With a further deep dive into the trades, I will deal with the, say, the top five trades within our portfolio. We see that across our top five trades by GRI, the sales have actually improved. I think the only one that is maybe slower is fashion and accessories, but even that is quite fictitious. I hope that gives you a little bit of more perspective on how our retailers are doing.
Okay, got it. Thank you. My next question is on utility costs. I think you mentioned you have hedge FY 2026 and partially in 2027, right? Just wondering, how is the rate compared to last year's rate in 2027 versus the 2026?
Okay. 2026, all done. 2027, we have done about 50%. We continue to monitor the market. We still have another 50% to hedge. Like what I said, we cannot really give you a fixed number right now. But let's say we take a pretty extreme condition and say, look, if let's say the forward rate goes up to about $120/bbl . I am talking about forward rate and not spot.
Today you look at, oh, oil price is about $100, $110, but that is spot. Forward rate is slightly different. Forward rate is where, again, it is adjusted and the view is very different. For example, yesterday the forward rate is about $80. Never mind. Even if we assume the forward rate, it is about $120. The impact to our 2027 numbers, it is about 1% of the DPU. I hope that give you a sense. That is, to me, is quite extreme because I am looking at forward and not spot.
And also to answer the question on whether the utility costs have come down, I think we can say quite definitively for FY 2020 because it is fully hedged. It has come down from the past year.
Oh. Do you have a rough quantum, 5%, less than 10%, something?
Do I have a rough? Yeah.
Okay. I believe our-
You know, maybe-
Yeah. Utility cost is about 9%-10% of the overall OpEx, so probably we shave off maybe about half a percent from there.
Yeah. Okay. Okay. That sounds good. All right. Thank you. Yeah. Then maybe just very quickly on the reversions outlook. I think it softened a little bit versus the last quarter, I think. So moving forward, do you still see it moderating down further, or are you still expecting stronger reversions?
Yeah. In fact, we spoke about this, and our guidance has always been looking at about mid-single. In fact, it came in much stronger than what we have guided. Basic fundamentally is because our tenants at our malls continue to do well, which is why we were able to get that. So we're continuing to guide that, in a longer term, more sustainable basis, it's a middle single-digit number.
Okay. All right. Thanks, Richard and team . Thank you.
Yeah.
Thanks, Rachel. Next, can we have Terence from UBS to unmute yourself. Good morning, Terence.
Good morning. Terence from UBS. Just a question on the dispersion in rent-paying power across your tenants. Just a question, there are articles online that say that local businesses are being priced out. Is this the case where you have Chinese brands want to pay top dollar for your higher visibility store front and perhaps the local ones who cannot keep up?
Okay. If you ask me in terms of ability to pay, yes, you are right that there are brands who come in, foreign brands that came in and are prepared to be a little bit more aggressive. Maybe perhaps that is their business strategy. They want to grow, they want to grow fast, they want to take position. Right? But for us, it is not a case of always going after the best rent. If you look at our malls, if you visit our malls, you will find that, in terms of the trade mix, it is well planned, well thought out.
We don't have any specific single cuisine that is actually taking in a significant number of outlets in our mall because we believe that what we serve is a catchment market that consists of different races, people with different palate, people with different needs, and they don't want to eat the same thing every day. We are very cognizant of the fact that when we plan our trade mix, we plan it in a way that we want to have a diversified, well-mixed kind of a tenant mix that we have.
The answer to you is, at least for our portfolio, what we can say, it is not always the case that we go for the top dollar. If they are good, they are well demanded, that's what the catchment market are looking for, yes, we will bring them in. That has never been the first criteria, that because they can pay better than our local brands, we will always take them first.
Okay. I presume that also means that these people who pay top dollar isn't exactly driving your reversions in a disproportionate way.
Definitely not. Just to be very clear.
Okay. Also, let's say on some of these foreign brands, are their sales necessarily performing well broadly across? Because I do walk by some of these foreign brands, and some of them are a bit quiet sometimes.
That goes back to my response, Terence, because again, some of them they can pay, but is it really something that you want to have in your mall? Is it something that your catchment market, your shoppers are looking for? For us, we are quite cognizant of the fact we want to bring in trade that can do well, trade that our communities are looking for. Our leasing colleagues, they do a lot of groundwork. They understand certain products, certain brands may work in Singapore, and certain brands may not work. But maybe they can pay you, but if not going to work, they are not going to be sustainable. That's not the point that we are looking for. What we do is we try to pick brands that we believe can do well and can be sustainable.
Okay. I take it that as it stands, there isn't much of any underperforming trades.
Of course. Again, different trades perform differently over the period of time. Again, sometimes it's a case of the product that they have, maybe after a while people get tired of it, that you change. Whether it be local or foreign, it doesn't matter. Over time, certain brand you can see that slowly they are no longer attracting as bigger a crowd as what they used to. Maybe people got tired of the product or the services that they provide. Sometimes actually the services within different restaurant that you get will have also impact in terms of whether customers are coming back or not. It cuts across whether it be international or local brands.
I don't know if you can help us simplify. I guess, if you look across your tenant trade categories in terms of how their sales are trending, which are the more concerning ones? I guess we can just put aside cinemas, but what else is there to think about on the downside part of things?
Okay. Pauline.
You want me to.
You want to take that? Yeah.
You want me to take this? Yeah. Terence, what I have mentioned earlier, maybe I was not very clear. If I look at the top five trades in our portfolio by GRI, and these top five trades actually represent more than, I think close to 80% of the GRI within our portfolio. These trades are doing better. The only one that is maybe quite flat would be fashion and accessories. That gives you a little bit of comfort. Now, in terms of which are the trades that we do see a little bit of slowing in and so forth, it is like what you have correctly pointed out, the cinema trades, some of the entertainment-related trades, and also maybe the smaller trades within our portfolio. For example, books and so forth.
All in all, I think in terms of the overall performance, we take comfort from the fact that the bulk of our retailers, i.e., the top five, they are doing better on a year-on-year basis.
Yeah, but I just wanted to chip in as well, Terence. Even having said that, F&B is doing well, but does not mean every single one of the F&B guys are doing proportionately well. Some are doing better, some are doing okay, some may not be doing well. That is where you do see that there is some consolidation, certain brands are moving out of our malls or certain brands as we change out. We work on those that probably are not doing as well. Again, what Pauline is giving you is a broad category, but I just wanted to highlight that even within the same category, it is disproportionate. Maybe perhaps that can answer your question because you are probably wondering, you read a lot about F&B closures and all this, why is it that our F&B sector is still thriving?
Got it. I guess my comment is that maybe the flip side of having limited underperformance across the portfolio is that there is not much, I would say, change of our tenants to drive further improvements.
Not really. We showed that we have a retention of 87%. Usually it's about 85%, 87%. We change out at least about 13% for this time around as well. Typically, we would try to do a change out because especially if we don't see certain trade doing as well or maybe it's slowing down, which is a signal that perhaps the shopper in the area is no longer looking for this product or this kind of cuisine, this food. We change out. What we also try to do is to bring freshness to the mall. Retail center can never stay the same all the time. You need to bring in something new, something that is fashionable, trendy, something that people are looking forward because, say, for example, our malls are in Punggol, in Yishun, in Woodlands.
We want the shopper there to be able to also experience certain things that's new in the market instead of having to travel all the way to town to see maybe the latest yogurt or latest salad bar that they read about, they want to have. The idea it's about ability for us to also bring in some of these brands that is generating a lot of conversations as well.
Got it.
Yeah. I think just to add on, the calibration is not just between trades, but it's also within the trade itself. Because we know what are the sales performance of all our retailers. The focus is always on looking, okay, what is, say, the top 10%- 20%, are there better options for that space? Is there something better that we can offer to our retailers? I hope that gives you an answer in terms of how focused we are on refreshing the trades, because it also comes back to the longer term sustainability in the trading of our malls.
Got it. Thank you.
Thanks, Terence. Next, can we invite Rayson from HSBC to unmute yourself to ask questions? Morning, Rayson.
Hi, morning. Morning, management team. Three questions. Firstly, just a quick one on numbers here. Notice that under the other items for net tax adjustments, about SGD 6.8 million. Just wanted to get a sense, is the SGD 4.6 million that is retained for general working capital purposes being parked under this? Because I think year-on-year-wise, in the first half of 2025, there is probably some that is due to Cathay being provisioned, but I was not expecting such a big number.
Rayson, that is correct. SGD 4.6 million is included in the SGD 6.7 million.
I see. Got it. That's clear. Thank you. Maybe just moving on to the next question. Firstly, maybe on the Causeway Point, just wanted to get a sense with regards to how much you see as an imperative or urgency to embark on the AEI, because I know we are seeing Johor Bahru City Square already doing some AEI on upper floors. Given that the bulk of the expiries for the mall is probably occurring in FY 2027, are we going to wait till FY 2027 to expect maybe some AEI works? Or maybe you will be engaging your anchor tenants, your Metro, like what you did ahead of time?
Rayson, when we embark on any AEI, we will plan out and see what is the best opportune time for us to do it, and also working backwards to say what are all the planning process, the planning applications, the engagement of agencies and so on it's going to take. It's not going to be overnight that you can decide to do it. We plan ahead. While RTS is going to open, it's not something that, oh, because it's opening, so we must also complete our AEI on time. I don't think that's the intent. What we also want to do is also want to observe, want to learn, when that happens, what is any learning point that we can pick up from there. Perhaps we can continue to fine-tune our trade mix as well.
Engaging with anchor tenants, definitely something that we will do ahead of time, whether the certain tenants we think is going to fit into the new Causeway Point that we are looking at. Because as we shared before, our idea is to transform Causeway Point into more regional mall instead of currently it's more a mall that serve just Woodlands catchment. We want to expand the trade mix that has the ability to pull people from a wider catchment market. It's going to be a regional mall. With that in mind, what are the kind of trades? What are we going to put in? Not just the hardware, but the software as well. This is something that we are planning. Again, our AEI is going to be done in stages. The mall will continue to trade while we look at doing it in phases over time.
Yeah. Sorry, Richard, maybe I just add on. I think our perspective for the enhancement of Causeway Point is not just a response to potential risk. There is a lot of opportunities from the infrastructural changes in the north. With this AEI, we are seeking to tap into these opportunities. So it is not just a reaction to the RTS, but we do see tremendous opportunities.
Right. Thanks for the color. Maybe just one final question on the acquisition. Notice that your slide 33 actually added that new pillar on acquisitions. So, I guess probably are turning a little bit more acquisitive. Just wanted to get a sense in terms of your preference for maybe, let's say, if you are presented with a partial stake in a very strong, dominant regional mall versus your just maybe 100% stake in a neighborhood mall, because we do know that i12 Katong transacted at a pretty cheap valuation. So I guess you would probably be looking more at a strategic fit for the portfolio rather than just pricing alone.
Yes, definitely. I think for us, we look at it from a long-term perspective. I am not sure in terms of the buyer for i12, what is their plan for that asset. But for us, it is a long-term game. It is a long-term hold. In fact, we have sold some of the smaller assets before, assets that did not fit into our portfolio. So again, we are very mindful about acquisition, disciplined approach, something that we feel that is going to value add to our portfolio. Otherwise, it does not make sense. We are just buying for the sake of buying.
Again, sometimes headline numbers may not be showing the full picture. Why is it at that price? There must be some underlying reasons for that. So for us, it is about ability to contribute and add to a portfolio in a meaningful way. Accretion is also one we look at, maybe even if it is not immediate, it has to be one that we believe can give us within a short period of time. So all those are consideration. Fundamentally, even the infrastructure is important for us because you look at our strategy is always about having malls with strong catchment.
Strong catchment, strong ability to spend at the mall, because spend in a meaningful way, even though it is basic necessity, but we still need people with the propensity to spend for that category of products that we have. So definitely, yes, we will be very focused on anything that we consider. As I shared just now, when it was available, did we look at it? Of course. It is our job, it is our duty to look at every opportunity that is available. But whether we proceed or not, that is another question.
Got it. Thanks for the color. Thank you, Richard and team. Thank you.
Thanks, Rayson. Can I invite Derek from Morgan Stanley to unmute yourself to ask a question, please? Good morning, Derek.
Hi. Thanks. Can you hear me?
Yes.
Yes, we do.
All good.
Cool. Just two follow-ups. Just on Metro, the lease at Causeway Point. When exactly is it expiring? If there's an early pre-term, does that jumpstart the AEI commencement? On cost of debt guidance, just to clarify, it's still 3.3% even though the quarter's cost of debt is already 3.2%?
Yeah. I will leave that financing question to Annie. If you ask me about the tenants in our mall, whether it would hamper our planning, the short answer is no. Because like what I said, when we undertake AEI, we always do it in phases. We can do different parts of the mall to prepare and so on. It doesn't really always have to be one whereby we have to wait for certain lease to expire and so on. It's not conditional on Metro's lease, per se.
Okay. When exactly do they expire?
Okay. I cannot give you a definitive because it is not public information. I am not sure Metro will be very happy if we share that.
Yeah.
Yeah. Really, the only thing that we can give comfort is our AEI is not determined by their expiry.
Okay.
Yeah, Derek, on your question, yes. Although the quarter is 3.2%, you know that the five-year IRS i s pretty high. If we were to have new hedges, this will actually be not at the current low SORA as well. I think given that 1Q is already 3.5%, if you keep constant at 3.2% for the rest of the quarter, it will be around 3.3%.
Okay, got it. Thank you.
Okay. Thanks, Derek. Next up we've got Tan Xuan from GS. Morning, Tan Xuan.
Hey, morning.F
Morning.
Can I ask about the distribution that's withheld? If I recall, this is the first time, other than COVID, that you're withholding distribution, right? Is this also a function of gearing and can you walk us through when we go into second half, what is the decision process in determining whether to pay this out?
Okay. I do not believe that this is the first time. I think we have done it before within the year, maybe the first half we retain and then we release in the second half. It is definitely not the first time, at least during my time, if I can remember. Again, it depends on where we see potentially there could be just need for short-term basis and then the decision to decide whether we want to distribute at the end of the day.
Again, there are many areas that we can look at in terms of how our performance continue to show for the next six months, whether there is really a need for us to keep this amount of money or whether this amount of money is used during the six months itself. There are many considerations that we will look at. But if we do not need the money and we can deliver what we wanted to do, yes, there is something that we will be able to distribute at the end of the year.
By needing money, are you also considering gearing?
Uh-
I think previously you kept-
Not really because this SGD 4.6 million is not going to move much needle in terms of our gearing. It's not from gearing perspective.
Okay. So on a full year basis going forward, I think 100% payout ratio is still a fair assumption?
Yes.
Okay. Got it. Thank you.
Okay. Thanks, Tan Xuan, for your questions. Thanks everyone for your questions as well as time today. I don't think we have any more questions from the ground. So, thank you again for joining in FCT's first half 2026 results briefing. If there are any further questions, feel free to reach out to me and have a great day ahead. Thank you.
Thank you. Thanks. Bye.
Catch up soon again.