Good morning, everyone. My name is Judy, the Head of Investor Relations for Frasers Centrepoint Trust. Welcome to FCT's second half and full year financial results for the financial year 2025. With me today, we have got our senior management team, Mr. Richard Ng, our CEO, Ms. Annie Khung, our CFO, and Ms. Pauline Lim, the Managing Director of Investment and Asset Management. Without further ado, I will pass it on to Richard to kick off today's briefing.
Hi. Thanks, Judy, and a very good morning to all of you. Thanks for joining us on this call. Just to start off with, maybe we can give all of you a quick recap of what happened for the full year financial FY 2025. Of course, one of the key aspects is the acquisition of Northpoint City South Wing, which we announced in March of this year. Coupled with the divestment of Yishun 10, that helped us again to proactively reconstitute our portfolio. As we have shared before, the idea is for us to grow, but at the same time to continue to strengthen the portfolio that we have, and we have done exactly that. As part of that acquisition, we also did an EFR fundraising. We raised over SGD 420 million.
It was a very successful EFR, and at the same time, we raised another SGD 200 million via the perpetual securities. Financial position, very healthy at 39.6%, and the cost of debt has come down on a quarter-to-quarter basis. For this quarter, it is at 3.5%, and later on, we will talk a little bit more about cost of fund and also our refinancing plan. The operating performance continued to be very strong, as demonstrated in the positive rental reversion, shopper traffic, and also tenant sales. Hougang Mall AEI is ongoing, and it is actually on track in terms of timing, in terms of cost, and I am happy to say that over 80% of the entire AEI spaces has already been pre-committed. Next slide, please. Just very high-level numbers. DPU came in at SGD 0.12113 . That is 0.6% higher compared to a full year FY 2024 at SGD 0.12042.
Our aggregate leverage is below 40% at 39.6%. Cost of debt overall for the full year is at 3.8%, and if you compare that to FY 2024 or 4.1%, so you have seen a downward trajectory for overall cost of debt. Net asset value came in at SGD 2.23 compared to SGD 2.29, a slight drop from FY 2024. Operating highlights. Just wanted to stress a little bit in terms of the committed occupancy. Overall, the asset is again performing very well in terms of occupancy, but you could see on the slide there or the chart there, it shows a 1.8% gap, and that is partly contributed by the two, or it is contributed by the two spaces that we have retaken back from Cathay. That accounts to the 1.8% that you are seeing there. Otherwise, occupancy rate would have been at 99.9% again.
Shopper traffic and tenant sales, you can see the next chart. Shopper traffic has gone up for the full year-on-year at 1.6%, and tenant sales, we grew by 3.7%. Again, quite a strong performance from our retailers as well. Rental reversion came in pretty strong at 7.8% versus 7.7% that you saw in FY 2024. As I mentioned just now, Hougang AEI is very much on track to complete by September 2026, targeting an ROI of 7% based on a SGD 51 million CapEx. We are still, again, on track to achieve that. More than 80% of the spaces has already been pre-committed, as I indicated upfront just now. A little bit on the big picture. General macroeconomics. The advanced estimates for Singapore economy came in at 2.9%.
Of course, if you compare to the 4.5% previous quarter, you could see a drop in that, but actually the numbers came in higher than the market estimate. Actually it's a positive note. What is also interesting is the inflation continuing to ease down to 0.5% year-on-year in August. Again, this is helpful for us because easing of inflation is also helpful in terms of the cost perspective for our operation as well as also for our retailers. Overall market for retail sales seems to have rebounded, even from the overall RSI perspective. For August, it's a 4.6% growth year-on-year, pretty strong. If we take the RSI year to date from January to August, because they always release the numbers one month later, so we only have up to August, so we could only measure January to August.
For RSI, the overall number came in about 1.2% growth year-on-year. If we were to take the same period for FCT's portfolio from January to August, our growth is actually at 4%. So we are ahead of the general market performance. Renter rents continue to track positively. Suburban prime rents grew by 0.5% quarter-on-quarter and 1.7% year-on-year. This actually brings us to the next slide, also looking at the supply side of things. Overall, again, very limited stock that's coming on stream from now till 2028. We are looking at about 1.2 million sq ft of total spaces that's coming up. But if you just focus strictly on suburban, we are looking at about slightly over 340,000 sq ft of space. Even for that matter, it's not looking at any significant mall.
For example, you have Lentor Modern mall coming up next year, 90,000 sq ft. Another one, Parc Point Neighborhood Center in Tengah, it's about 75,000 sq ft. So there are pockets of neighborhood malls coming up, so nothing significant on this list at this point in time. Next slide, please. This is the overall picture. Very limited supply, strong occupancy. That's the reason why for CBRE in their forecast of rental trajectory is still on an upward trend for whether it be suburban or Orchard Road and of course, on an island-wide perspective. The next segment, we are going to go into the financial highlights. I'll hand over to Annie. Annie, please.
Thank you, Richard. Good morning, everyone. Let me take you through the financial highlights. Gross revenue for the second half is 14.3% as compared to the corresponding period last year. This is mainly because of the Northpoint City South Wing acquisition, completion of the AEI at Tampines 1, partially offset by the Hougang Mall AEI, which commenced in April 2025. If you exclude the effect of these three malls, gross revenue is about 2.1% higher, mainly due to the higher occupancy and higher rent across most malls. Property expenses for the second half is about 23.1% higher compared to the same period last year. Excluding the three malls, property expenses is about 5.1% higher due to the higher property tax. The second half on the NPI is about 12% higher compared to same period last year. If you exclude the effect of the three malls, it is about 1% higher.
Distribution from investment is 3.5% higher, mainly because of the better performance from Waterway Point and NEX. DPU for the second half is 0.6% at SGD 0.06059 . Next slide, please. On a full year basis, the gross revenue is also higher, mainly because of the same reason as previous slides. If you exclude the effect of the three malls, gross revenue is about 2.4% higher, mainly because of the higher passing rent across most malls. Property expenses is about 13.5% higher compared to last year. If you exclude the effect of the three malls, it is about 4.7% due to the higher property tax, marketing, as well as the higher net allowance of the full debt. NPI is about 9.7% higher than last year and is about 1.6% higher if you exclude the effect of the three malls.
We recorded a higher distribution from investment by 37.1%, mainly due to the full year contribution from NEX, which was completed in March 2024, as well as inclusion of the once-off distribution from JV during the year. With the full half DPU of SGD 0.06059 , it brings us a total of SGD 0. 12113 , which is 0.6% higher than last year. Next slide, please. The higher balance in the total assets and liabilities as at September 30th 2025 is mainly because of the inclusion of the Northpoint City South Wing. Net asset value is lower at SGD 2.23, mainly because of the enlarged unit base following the equity fundraising during the year, as well as the effects of the mark-to-market recognized in the financial instruments. Next slide, please.
As briefly mentioned by Richard, as at September 30th 2025, aggregate leverage is 39.6%, which is 3.2 percentage point lower than last quarter. This is mainly due to the repayment of loans from the proceeds from the issuance of the PERPS, as well as the divestment proceeds from the Yishun 10 in the last quarter. The interest coverage ratio is healthy at 3.46 x, and the average cost of debt for full year is at 3.8%, but on a quarter basis, it has dropped to 3.5%. Average debt maturity stood at about 3.16 years, and the hedge ratio for the asset year-end is higher compared to last quarter at 83.4% due to the repayment of variable borrowings during the quarter. Credit rating remained unchanged at Baa2 stable from Moody's. Next slide, please.
For the capital management front, we have diversified sources of funding where we issue a seven-year, SGD 80 million bond as well as the SGD 200 million registered securities during the year. For the debt that is maturing in FY 2026, part of it is in Q2 2026, and we are in the advanced stage of refinancing of these loans. Next slide, please. Aggregate appraised value for the total portfolio, including the 50% of NEX and Waterway Point, increased by 16.8%, as driven by the acquisition of Northpoint City South Wing as well as stronger performance. The cap rates adopted by the valuers remain unchanged as compared to last financial year, which is in the range of 3.75%-4.75%. Next slide, please. The DPU of 5.963 will be paid on the November 28th 2025, and this is for the distribution period from April 4th to September 30th 2025.
I will now hand over to Pauline for portfolio highlights. Thank you.
Thank you, Annie. Good morning, everyone. I will just do a deep dive into the various performance metrics that Richard touched on earlier. So in terms of converter occupancy, the portfolio stands at 98.1%. It would have been 99.9%, if not for the re-entry of the two cinemas at Century Square and Causeway Point. If we actually take into consideration the cinema space, the two assets, Causeway Point and Century Square, would actually be reporting at 100% occupancy as well. We are in advanced negotiations and planning for the repurposing of this space. I think one of the observations is for the cinema space, because of the lower than average rent, it does give us certain opportunities to reposition the mall better. Next slide, please.
All right, in terms of NPI, I think one of the key observations is that the NPI actually generally increased or improved on a year-on-year basis for all the assets. That's with the exception of Century Square and Causeway Point, which maintained largely neutral compared to last year. That's notwithstanding the fact that we had that vacancy as well as the arrears from the cinema space, in these two properties. So very strong top-line growth across the portfolio. This is reflective of the strong operating performance in terms of footfall, in terms of sales, which allows us to achieve very good, healthy reversion. Next slide, please. So now we cover reversions at 7.8%, which is a good reversion for the entire FY 2025. I think one of the observations is that this reversion has actually maintained at this strong level over the two consecutive years.
We do see reversions coming in at this level for FY 2024 as well. The other observation is that we have achieved positive rental reversion across all our malls within the portfolio. Next slide, please. This slide shows the trending of the portfolio occupancy. I think a couple of observations. You will note that the occupancy cost of our portfolio at 16.1% for FY 2025 is below the pre-COVID levels. This is reflective of the fact that sales growth for our portfolio has been strong. That enables us to maintain the healthy EOC and trading performance of our retailers, notwithstanding the good rental reversion that we have negotiated from our leases. In a way, this is reflective of the success of our focus on driving footfall as well as sales conversion. Next slide, please. I think Richard touched on this earlier.
On the quarter-on-quarter basis, as well as year-on-year basis, we do see the strong growth in the traffic, the footfall coming to our malls, as well as the conversion into healthy tenant sales growth as well. Next slide, please. Observations from this slide, we do not see any tall towers going forward over the next three years. As you are aware, our average lease tenant is three years. For next three years, no concentration in terms of lease expiries. This bodes well in terms of the cash flow from our portfolio. Next slide, please. Again, coming back to the resilience of our income and valuation. By AUM across the assets within the portfolio, we do not see any significant concentration risk.
Also at the mall level, in terms of the trade mix, there's no concentration, or rather that we do see a higher proportion of essential services at 54% GRI. I think over the course of the past few years, we've seen the resilience from the suburban retail sector, and that is largely due to the fact that it has a large component of essential services, which caters to the daily needs as well as the necessities of the population that we serve. So we see a resilience at both the balance sheet as well as the P&L level. Next slide, please. In addition to achieving good rents for our portfolio, we are also very cognizant of the sustainability of our retail offering. So there is a focus on refreshing our trade mix, to delight, and also to keep up with the latest retail trends.
On average, we are looking at about 20% refresh rate for leases that comes up. Over the course of FY 2025, we have brought 76 new to portfolio tenancies. The other observations are that this refresh is actually across all our malls, and it's a variety of trades. So no particular concentration in one particular sector. So it's of course F&B and the various retail offering. Next slide, please. For this slide, we wanted to showcase some of the promotions, events, and placemaking activities that we had undertaken over the course of this year, and in particular, the last quarter. On the left-hand side, you see some of the promotions, as well as the activities for SG60 during the National Day celebration. A large part of our focus is to actually work hand in hand with our retailers to magnify the outreach to our shoppers.
And we are positioning our malls, given its strategic location within the heart of the heartlands as the social hub within that particular catchment. And this is to build that loyalty and sense of place with our shoppers. Next slide, please. Update on Hougang Mall AEI. I am very pleased to update that the progress of the AEI has been good in terms of timing, in terms of meeting the financial underwriting. Like what Richard mentioned earlier, 80% of the overall AEI spaces have been pre-committed to date. And if we look at phase I, which has just TOPed and spaces are being handed over to the new tenants, we have achieved a pre-commitment level of close to 100%. So in terms of downtime, that has been mitigated. Also, the focus on refresh is seen in the new two Hougang concepts that we have actually brought into.
Out of the pre-commitment we have brought in, this 40% represents about 30 over new two Hougang concepts that we are bringing to HM post-AEI. And the other focus for the AEI would be refreshing some of the amenities. The mall is new. So part of updating the retail experience would also be refreshing some of the key touch points, like the lobbies as well as the restrooms. Next slide, please. So with this, I will hand over to Judy to take us through the ESG.
Yeah. Thanks, Pauline. On the ESG front, we are pleased to share that in recognition of FCT's progress towards sustainability, we have been recognized as the regional sector leader listed in the Asia retail category in the 2025 GRESB assessment. And this is also the fifth year in which we have attained a five-star rating, and we have also increased our score from 91 to 93. This slide showcases two of the initiatives that we have implemented actually in FY 2024, both first of its kind, including the Singapore's largest single solarization for retail malls. And right now, we have got this program implemented across eight malls producing over 1,400 MW per hour of renewable energy, translating to, of course, savings as well as carbon emission reductions for us.
And of course, on the Singapore's first of its kind food valorization program as well, we have actually reduced about over 258,000 kg of food waste reduced. So, all initiatives that contributes towards carbon emissions reduction. On the community engagement front, of course, Frasers Property is all about inspiring experiences and creating places for good. And this slide basically just shows my read of all the different activities, placemaking initiatives that we had during the year to engage, enrich, and excite our shoppers as well as the communities. And in particular, for the SG60 community campaign, we actually donated a total of SGD 200,000, working hand in hand with our shoppers as well as tenants. We also wanted to highlight this initiative that we had, where we actually ran a dive into sustainability campaign in our malls, to actually encourage shoppers to come forth, donate their used bottles.
We actually rewarded shoppers SGD 2 FRx gift vouchers for every five bottles recycled. During this period, not only did we do good, we also saw an increased traffic to our malls by over 20%. This initiative actually got Frasers Property Singapore to be recognized as a runner-up by the Singapore Retailers Association Retail Awards under the Green Initiative of the Year Award. Next up, I will hand it over to Richard to give his concluding remarks looking forward.
All right. Thanks, Judy. Next slide. Okay. Again, we have shared with you the set of results and how did we get there. Of course, from the perspective of our portfolio itself, both organically, AEI, and also in terms of acquisition, we have done a lot of good work this year, and that by itself actually helps in giving us a boost in terms of our overall performance and also the DPU. The market continues to be very strong, very resilient because of tight supply and, at the same time, strong demand. This is something that we continue to see, and we believe that the positive trajectory will carry us through to the FY 2026 as well. We spent a lot of time sharing about place making, ESG, and so on.
This is fundamental for us because our malls are located in strong catchment area with a very strong community feel. We want to make sure that this is a place where we can continue to drive traffic, bring in more people, more shoppers into our malls, and ultimately, this will then help to result in a better sales performance for our retailers, and by itself, will then give us a better performance for our overall portfolio. With that, I'll end my presentation, and happy to take questions from you guys. Thanks. Back to you, Judy.
Thanks, Richard. Okay. Right now, we'll go on to question and answers. Of course, we've got a couple of analysts already raising up their hands. First up, can I invite Yew Kiang from CLSA to unmute himself and pose his questions, please? Thanks, Yew Kiang .
Can you hear me?
Yes. All good.
Hi, Richard. Can you share the tenant sales for this FY and this quarter for Causeway Point and Northpoint?
For Causeway Point and Northpoint specifically. I will not be able to give specific, but what I can share with you is perhaps, I am not sure, but maybe you are alluding to the impact and so on of people going to JB. But what we have seen is over the last, from 2019 to now, both malls have actually, in terms of sales, has delivered more than double digit. For Causeway Point, I am looking at slightly over the middle double digit, more than 15%. For Northpoint City, it is more than 20%, from 2019 to this period. And if you look at the annual growth rate, it is about 3%-4%.
Okay. The double digit is over that since COVID, is it, from 2019?
Yeah, from 2019 to now.
Okay.
Despite there is a lot of talks about more people shopping in JB, et cetera, but what we have observed at our most northern malls, the sales continue to improve between 3%-4% annually.
Okay. Any plans on Central Plaza?
Oh, okay. Central Plaza is something that we have been talking about for a very long time. A couple of reasons. One reason is, firstly, it is an integrated development part of Tiong Bahru. It actually fits into Tiong Bahru very nicely, providing access for the people in the office to support the retail. We get to control the type of tenants that comes into the office as well. That is one key aspect of having it as an integrated development. Secondly, we also recognize that there are still some potential for us to look at vacating some space, better utilization of space. So there is still some GFA that we probably could harness as part of an integrated development. Once you sell it off, you will lose some of this. Thirdly is, again, the management of the entire asset is important for us.
If you do look at selling off Central Plaza, you lose control of the car park because that is actually, again, it becomes an MCST asset. So certain component we feel is important for us to put it together as an asset, an ongoing asset performance. On the other hand, we also recognize that Central Plaza is an office building, not really our core asset. But if you look at the asset itself, it is performing well, but we still feel that there is opportunity for us to continue to push the performance a little bit better. So we will always be looking at the possibilities of what do we do with the asset. But as of now, I would say that there is still room for us to further improve the performance, both in terms of occupancy and in terms of the rent.
Can you sell this to the sponsor and then technically it is still under the family, so MCST issues and all that will be more seamless then.
I cannot speak for the sponsor whether this is an asset that they would consider. But we are always open, we are always exploring possibilities, alternatives, use, and so on. But as of this time, we do not see this as something that is right on top of our agenda.
Okay, last question. FY 2026, what is your focus going to be?
Focus, of course, we acquired South Wing, where we also mentioned there are certain things we want to do at South Wing. We want to improve the performance organically while we continue to look out for some AEI opportunities. That is one. Because we acquired this asset this year, we want to make sure that it delivers what we have set out to do. Secondly, there is actually a lot of opportunities in terms of AEI. One is the big one is NEX that is coming up. We have obtained the written permission. We are still targeting a June, July commencement of AEI. That is a big one. It is talking about massive 50,000 type of NLA square footage.
Yeah.
That would take us for two years. The other one is, of course, focusing on repurposing or backfilling the cinema space as soon as we can, if possible. If not, then we look at the best alternative use for that space, and there could be some level of AEI required in order for us to repurpose the space.
Fair to say for FY 2026, you are focusing on organic improvement, operational improvement.
I mean,
rather than M&A.
Acquisition M&A is always opportunistic. It's something that we cannot control what comes out to the market, what is available in the market. Even if whatever that is available in the market, whether it fits our portfolio structure, the type of assets that we want, whether the pricing is something that we can afford. What we can always focus is something controllable, and those are the controllable aspects.
That is it for me. I will jump back to the queue.
Richard, can I supplement your response to Yew Kiang 's first question in terms of sales growth? Yew Kiang , if I may refer you to the
Yeah
circular or the presentation that was done for the acquisition of Northpoint City South Wing. We did have a slide that actually shows the growth in the retail sales index of Northpoint City South Wing versus some of our dominant malls, which includes Waterway Point as well as Causeway Point. From there, you see that the growth trajectory, since 2019 to 2024, has been very strong. 2024 can be taken as a reference point. I think Singaporeans have been going across the border all this time, when the exchange rate was very favorable, and so forth.
Yeah.
That's one point. I'll be happy to send you that slide for your reference.
Okay. I'll look for it. If I can't find, I'll get you the data.
Sure. I think the other point is also, if you look at the performance matrix of Causeway Point and Northpoint City in terms of occupancy and all that's at 100% now. In a way, it ties back to the sales performance. I think retailers would not be renewing or so keen to take up space if they are not trading at a healthy level. I'll leave these thoughts with you.
Okay, sure. Thanks, Pauline.
Thanks, Yew Kiang , for your questions. Next up we have Geraldine from DBS. Geraldine, can I invite you to unmute yourself, please? Thanks.
Hi. Morning, Richard.
Morning.
Yeah. Maybe just following on to Yew Kiang 's question, strategy for 2026 is organic, but if the right asset comes along in the market that you like, and thinking about how your share price has done really well to trade 10% above book, would you then want to be a bit more aggressive in taking on an acquisition at this point in time or still too early?
Okay. Hi, Geraldine. Again, going back to acquisition, there are many components to consider when we look at a specific acquisition. Of course, firstly, it's opportunistic, if there's an opportunity available in the market. Then we have to evaluate the asset, whether we think that the asset is something that can improve the portfolio further. We look at the bottom line, whether there's opportunity to further improve the performance of that asset, or if the asset has already been significantly optimized. And definitely in terms of the pricing. We do note that there are instances where a seller bids very aggressively. If you look back, for example, at Seletar Mall, nobody really knew what's the final price because it's not publicly available. Of course, you hear in the market and so on, but if those numbers were true, it was very aggressive.
Something that I think would be very difficult for ourselves to be part of it because we believe if you buy something, there must be value. It may not be immediate, but at least over time, the performance of the mall must be commensurate with the pricing that we go into. So those are all the considerations. So there isn't a short answer to it and say, "Yes, we will do it," or, "No, we won't do it." But if all those factors, having taken into consideration, are favorable to what we have today and something that we believe is going to be positive for our shareholders, of course, we will be interested to look at it.
Okay. Thanks, Richard. Since everyone's taking a look at The Clementi Mall. Maybe a second question, if I may. The AEI opportunities at Northpoint as well as NEX, the increased NLA. So if you are thinking about ROI margins, are they going to be much meatier than the 7% that you have at Hougang Mall?
I think typically we try to at least target that range, 7%-8%. When it's meatier, it also comes with a meatier cost as well. So it's a balance about both. And when we upgrade the malls, we take the opportunity to also improve a certain component of the mall as well. So for NEX, it's a very big AEI. Not only we see it as an opportunity for us to improve the performance on a near term, but whatever that we are doing, we believe is going to be good for us on a longer term as well. Improving circulation, making bigger space available for us to do other activities in the mall, et cetera. So by and large, we will still look around between 7%-8% kind of return.
Okay, thanks, Richard. Maybe just squeezing a very quick last one. In terms of occupancy cost for Causeway Point, Northpoint City South Wing, our portfolio average is at 16%. But for these two malls, are we above at or lower than the portfolio average?
If I can remember, Causeway Point is below. I think Northpoint City South Wing is also below.
Oh.
If I remember correctly. But definitely not higher than what we have on the average.
Okay. It is still a very good place to do business. I hope the market dynamics will run its course. Thank you.
Thanks, Geraldine, for your question. Next up we have Terence from JP Morgan. Terence, can you unmute yourself? Thanks.
Yeah. Thanks, Judy.
Hi, Terence. Morning.
Hi, Richard. Congrats on the good set of numbers. I just wanted to ask on Cathay. I understand that on a year-on-year basis, actually, the NPI has been quite flattish for the two malls impacted by February, Causeway Point and Century Square. But looking at the second half, we saw maybe a 2% drop versus second half last year. Can I just get an understanding that Cathay was not contributing to NPI in the second half, or was it for the full FY 2025?
Okay. Cathay's contribution, I would say, pretty much reduced significantly as we progressed through the year. When the first round, when we came out with the serving the notice, et cetera, that's when they already stopped paying the base rent, but they were still paying some contribution. That kind of slowed down, trickled down significantly. So by and large, I would say the contribution, it's very minimal, if any, towards the second half. And you're right, the drop that you saw is mainly contributed by Cathay.
Okay. That's a very good number to start with from second half NPI. I think it's not a very significant drop. I think most of the other malls will be able to carry it. Also asking about Cathay, wanted to understand, what are you looking at? Are you trying to bring in another cinema tenant or are you trying to repurpose for other users? Could you give us a sense?
Okay. I would say that we are currently exploring various options. If there are operators today that are prepared to consider the space and they can come in and operate very fast, that's one alternative that we could consider. But at the same time, if we feel that certain, okay, there are two spaces we are looking at. If the spaces present a very strong opportunity for us to repurpose the space and then can bring in a strong anchor tenant to anchor that space, and that gives us a longer runway in terms of sustainability of the traffic, the mall, and so on, then that's another consideration. So I would say, at this point in time, we are actually very excited with a few options that we have on hand.
Some of them, because of the repurposing requirement, will take a bit longer because you need to engage authorities, et cetera, and so on. We should be able to come back and give some sensing, definitely by the first quarter in terms of the direction we are heading. And if, let's say, there's any opportunity to probably replace with an existing tenant on a one-on-one basis or that somebody can take in faster, that would be even better for one or two of the space.
Okay. That's great. Also, I noticed or understand that there was a one-off distribution from JV this year. Could you share on the amount of the one-off?
Maybe I would hand over to Annie to give a little bit more color on that.
Yeah. Hi, Terence. Yeah, the one-off distribution is from NEX, is due to the excess cash at the entity level, which we assessed that it's no longer required, and it is distributed out as a dividend.
Can you share the value? And this came into DPU, right?
Yeah. It is about SGD 9 million, the one-off distribution.
SGD 9 million. Was that in the second half or in the first half?
Yeah. I think most of it is in the first half. Some came into the second half.
Okay. That is great. Maybe a final question from me. 3.5% fourth quarter funding cost. What is the expectation for next year, FY 2026?
Yeah. At the current rate level, we are looking at about 3.3%, 3.4% for the next year.
Okay. That is great. Very encouraging.
Okay. Thanks, Terence, for your questions. Next up, we have Rachel from Macquarie. Rachel, can you unmute yourself, please? Good morning.
Hey. Morning. Can you all hear me?
Yeah. Hi, Rachel.
Yes.
Hey. Great.
All good?
Yeah. Hey. Hi. Good morning, Rachel Tan team. And congrats on this good set of results. Maybe just firstly, in terms of reversions, I saw that actually second half probably moderated a little bit. So if you could guide us, what you're looking at on reversions for next year.
Okay. We did share that this number, again, is a very strong number that you could see. First half was stronger compared to second half, partly due to the constituent of the leases up for renewal. Sometimes when you have more specialty, for example, that leases comes up in the quarter itself, probably the reversion could be a little bit more aggressive because smaller spaces and so on. It is a combination of the profile of the expiry that we have between first half and second half. Going forward, and this is something that we shared before, we believe that going forward on a more sustainable basis, we are probably looking at about mid-single digit positive rental reversion.
Okay. Thank you. Can I just ask, in terms of the tenant sales, I think it has been very strong in the fourth quarter. Is there any impact from the Tampines mall being included if we are able to still exclude Tampines? What kind of tenant sales will we be looking at? What is your opinion on, I know this year we have a lot of government vouchers, but if government vouchers was to taper off, what is your view on tenant sales moving forward?
Okay. First and foremost, I think definitely Tampines 1 has also helped contribute towards the strong sales that you saw. But even if you strip out Tampines 1, the sales were still positive for the rest of the portfolio. You are right, to some extent, this year we had a lot of goodies, a lot of handouts, SG60, CDCs, and so on. We believe that even come, I believe, end of the year, January, there is another tranche CDC voucher that has not been distributed. Probably some of these so-called handouts or incentive goodies may last a little bit longer, because I do not think it is easy for them to just wean off or cut off immediately. They probably have to wean off over time. But fundamentally, I think what is important, Rachel, is also looking at the big picture. Those one-off and all this, yeah, you get it is fine.
It is a bonus. What is more important is the underlying macro perspective, what we are seeing is firstly, it is increased population base. That actually is a fundamental. You have bigger numbers and also the income level of our people are growing. This is largely supported by, again, what you call that, Judy? The Progressive Wage Model.
Progressive Wage Model. Yeah.
Or movement between Progressive Wage Models. That, to me, is actually more significant and more sustainable. Because if you look at how the Progressive Wage Model works is, there is a kind of minimum starting point, and there is a fixed growth for the different sector of worker that you see. Whether it be cleaning, security, retail worker, F&B operators, landscaping, M&E, engineers for the lift and escalators. But if you just take an example of a general cleaner. From 2023 to 2029, the same person will likely almost double the salary for this period itself. So to us, this is actually a very important aspect that is going to kind of underpin the growth that we expect from our suburban malls. Because by and large, most of these progressive wage are targeted at the mass market, and that's the market that we are serving.
While we get the one-off, the goodies, that's good, it's helpful. But I believe the growth in population and also the growth in this ability to spend, that will again be the one that underpins the performance of our malls.
Okay. Thank you, Richard. My next question really is on Isetan. I think we saw that they are exiting Tampines Mall. Could you remind us again when is the Isetan lease expiring in NEX? And has negotiations been going on? Are they talking about exiting or downsizing?
Yeah. For this, maybe I would ask Pauline to share some color.
Rachel, I think because of some privacy details, I cannot say much. What I can say is we do have plans for this space, and it is positive plans. You are aware that we are doing the AEI for NEX as well.
Even the lease when they are expiring, like one year, two years from now?
The lease will be coming up next year.
Next year.
Next calendar year. Yeah.
Oh, okay. All right. Thank you. Yep. Okay, I will leave others to ask questions then.
Okay. Thank you.
Thanks, Rachel. Next up we have Terence from UBS. Terence, can you unmute yourself, please? Thanks.
Hello. Good morning. Terence from UBS. Just using the closure of Gong Cha as an example, I am going to presume for FCT that any bad debts exposure is probably quite low. More broadly, my question is, have we hit the point of saturation for certain trade categories, be it bubble tea, the coffees, or even potentially even some of the Chinese restaurant chains?
Okay. The first part of the question, Terence, our arrears is very minimal. The exception is Cathay, for different reason and perspective. By and large, we follow a pretty strict guideline and processes whereby if the tenants do not pay up within a certain period, we will actually engage them, serve them certain notice, and will repossess the unit within a certain period of time. So that is how we manage to keep our arrears actually on a very thin level. If you look at Gong Cha or many other news that you have seen in the market of closure, people exiting and so on, I think this is part and parcel of F&B scene. You do get certain products, certain brands that have been here for a while.
Gong Cha in particular, what I read was more because the owner of the brand itself wanted to exit, and then potentially come back again at some point in time. But that is news. In terms of F&B operator, I think you see there are churn. Certain brands, certain products, they are probably very trendy at certain point in time, and that fad can run its course, and then they are no longer here. But then you see another new concept will pop up. That is the beauty of F&B. Something that is changing because the taste change, the preference change, and competition is also there. So the stronger one, the better ones come in, and then you see those are not able to keep up or their products are deemed less exciting or maybe in terms of taste and so on, it is not as good.
They will then be the ones that has to review their product, or they may exit the market. But then the new ones will come. So be it bubble tea is not new. Back then I used to say that Waterway Point has the most bubble tea operator. We have about six operators, but now you reduce to about maybe three. That is one example. Coffee chain, similarly, you have different types of coffee, different operator, different type of taste that appeals to different shopper. A different customer. Again, is it too many? The market will dictate whether that is too many or they still see opportunity to grow new offerings. That is no different. The long and short of this is that what we see is a lot of movement, a lot of churn, but the demand for F&B space continue to be very strong.
That is from our own perspective as an operator, we see that as, again, a sector that is continue to develop, continue to evolve, but we see very strong demand.
Got it. Just circling back to the question on acquisitions, now that Northpoint City is underway, is it then reasonable to expect that FCT will have to start looking overseas to acquire?
Not really. We still have joint ventures, partners in two assets, Waterway Point and NEX. We continue to cultivate the relationship with our partners, and hopefully at some point in time, they may look at redeploying their capital. They may look at exiting the malls at some point in time. If you add those two together, it is close to SGD 2 billion. So significant size opportunity that is still available for us in mid to longer term. What we are focusing a lot is, just now they are talking about what do we focus on FY 2026, what is the main focus and concentration? There is a lot of areas that we think we can still harness, a lot of value we can still create based on our existing portfolio. So there is actually a lot of work for the team on the ground.
AEI is one big area that we are focusing on, and AEI is one that we believe will continue to, again, give us value. Tampines 1 has been proven to be very successful. Again, for Hougang Mall, Pauline has shared the performance in terms of the leasing commitment, very strong, which we will see contribution once it is fully completed. NEX is going to be the next one to go, and we are now looking at also plans for the other malls in the portfolio. So we have continued to work on it. So we are actually kept very busy, while at the same time looking out, if there is any opportunity that comes to the market, we will evaluate it and see if it makes sense. The long and short of it is we will stay really focused on what we have today.
Got it. Earlier there was the guidance on where funding costs would trend towards 3.3%-3.4%. I just want to understand the thinking behind the fixed hedge profile. Is it a plan to keep it at a relatively high level such that the flow through is rather muted? Why is it this thinking then?
Okay. Maybe I will just give you a color. Annie can chip in as well. You are seeing a little bit of elevation in terms of hedge portion now at this point in time, because when we bought over Northpoint City South Wing, we took over the debt for the asset. We do have refi coming out in January, February for the FY 2026. Once that is done, we will probably review the hedging again, and it is likely to come down from this level.
Okay, got it. Thank you.
Okay, thanks, Terence. Next up we have Derek from DBS. Good morning, Derek. Would you like to unmute yourself? Thank you. We cannot hear you for now.
Hi, Judy. I think there's a problem with Derek's mic.
Okay
I'll ask his questions on behalf.
Okay.
First is on tenant sales. If you can give us some color, what is lagging?
Oh, you mean what trade is lagging, is it?
Yeah. The trades that are lagging.
Oh, okay. Pretty much most of the sector are actually performing positively with a few exception. Maybe just give a little bit of color. Department store, I think it's a little bit of a drag. Books and gifts, it's a bit of a drag. Infocom, a little bit. Fashion accessories, it's seasonal. By and large, I think these are the few sectors that we saw a little bit of a drag, but the rest seems to be pretty positive.
Mm-hmm. Okay, understand. Yeah. Maybe, Richard, there's a second part, maybe some idea on Metro or what to expect when it's expiry?
Okay. Metro, again, it's a case of we are evaluating the options. We are working with the tenants to see what are some of the ideas, concepts that they could be able to introduce. I think there's a lot of news articles on their collaboration with Shinsegae and other retailers in Korea. So we would like to find out what is it that they are able to bring to the market, and specifically if we continue to work with them, what can they bring to Causeway Point. So it's an ongoing conversation, but at the same time, we also recognize that they take up a significant space. So the question is about having Metro, not having Metro, having Metro but maybe right-sizing Metro. So those are the possibilities that we are exploring. There's not a finality at this point in time.
Okay. Thanks, Richard. Just one quick last one. For your leases expiring in 2026, where will it be and which malls?
Oh, it's pretty much cutting across all malls. Because our leases are on three years basis, right? So just now when we shared the lease expiry profile, it's quite evenly spread. So we do have expiry across the whole portfolio.
Okay. Understand. Okay, thank you.
Thanks, Geraldine. Up next up, can I invite Brandon to unmute yourself to ask your questions, please? Morning, Brandon.
Hey, morning, Richard. Can you hear me?
Yeah. Hi, Brandon. Morning.
Hey. Hi. Hey, Richard. I just want to ask you on the tenant sales growth, if you were to exclude the T1 and all this cinema, everything, what's the net growth for FY 2025?
Okay. It's slightly below two.
Slightly below two?
Yep.
But Richard, that includes the drag from the cinema.
Oh, yeah.
We haven't taken out that.
We haven't taken out the cinema.
Yeah. So probably about two-ish.
Yeah. Okay.
So 2%-ish , huh?
Yeah.
Yeah, because if you are looking at your forecast on this reversion going to next year, right? Looking at your occupancy cost relatively flat, right? So basically, your outlook on tenant sales growth is quite muted. Is it? Can your forecast on that imply that?
No, not really. I think we still continue to expect positive sales coming in from our retailers. But it's a case of, again, depending on the composition of your type of leases that's coming up for expiry. Of course, I would also like to say we typically will build in a little bit of conservatism when we look at the expiry or the reversion for next year, right? Which is why we say it's about mid-single. We've been doing 7.7, 7.8, for the last two years.
Richard, maybe I supplement that point. Brandon, I think we are not relying solely on organic growth per se. There's a lot of proactive tenancy management, if I may say. Proactive tenancy management in terms of working with the existing tenants to drive their sales. I spoke about the refresh rate, which means that we are constantly looking at weeding out or changing out some of these weaker performers and bring in the more trendy and more sought-after brands. So that is also part of the active management as well. It's not so much just relying on the organic growth of our existing pool of tenants. With the AEI, it gives us that opportunity to actually do more of that refresh. So I think we should take all of this into consideration.
Okay. On the revaluation, I realize this second half, you did not provide the cap rate. So what is the trajectory from FY 2024, and also what is the revaluation loss of the SGD 11.1 million due to?
Okay. You are talking about trajectory from FY 2024 in terms of the cap rate? Or the cap rate?
Yes
They have stayed consistent.
Okay.
Yeah.
I think all the malls saw partial reval up, but then you still recognize a loss, right? So what is driving that?
Yeah. Okay. Maybe Annie could give a bit of color on that.
Yeah. Okay. Brandon, you can see that it's an SGD 11 million loss, but actually included in this SGD 11 million loss is an accounting fair value loss of about SGD 41 million, which arose from the acquisition of Northpoint City South Wing because of the accounting treatment of it traded as an acquisition. So if you exclude that accounting item, there's actually a fair value gain from the investment property of SGD 30.7 million. Yeah, maybe I should also add to say that the fair value loss accounting includes the transaction cost that was also capitalized. So you should strip out the accounting loss and look at the true fair value gain of the investment property, which is about SGD 30.7 million.
Okay. So basically transaction costs are of no point.
Yeah.
Okay. Just last one. Richard, I think if you look at your portfolio today, just looking at it from a divestment and acquisition standpoint, would you be open to still owning or acquiring more or divesting malls where the size is below a 200,000 sq ft kind of range?
Okay. By and large, our preference is definitely moving towards stronger, bigger, more dominant mall, as what we have been doing for the last couple of years. Today we have four of the top 10 largest mall in Singapore. But those opportunities comes far and few in between. The next level we look at is probably the likes of our 200 over thousand square feet malls. And then the last category will be the 100 over thousand square feet mall. Again, if we have an opportunity to reconstitute, to replace something stronger, of course, that is something that we would seriously look at as part of the overall reconstitution and strengthening of our portfolio.
Okay. Thanks a lot, Richard. Thanks. All good. Thank you.
Thank you.
Thanks, Brandon. Okay, we've got Jonathan from UOB Kay Hian, who has got a question. Jonathan, can you unmute yourself? Good morning.
Yeah. Good morning, and congrats on the good results. Could you touch on AEI for Northpoint City? In the past, you've talked about a holistic AEI. Could you touch on some of the key enhancements that you're planning? Right next to it, Yishun 10. Would that be redeveloped into residential, and how does that impact your AEI? Give us some sense of timing. Thank you.
Okay. Maybe we can look at the two questions there. The first one is probably easier to explain, that's Yishun 10. Yishun 10 we have divested to Frasers Property, so they did have some announcement in terms of their plans on that. You can look that up. We are not sure exactly what will be undertaken. What we know is that, in the past we have kind of engaged the authorities before. It's not going to be another mall that's coming up, so it's not going to be a fully new mall that's going to be developed. That's one thing we know, but beyond that, we do not really know what ultimately will come out there. That's for Yishun 10. It will not affect any of our decision as to what are we going to do with South Wing.
For South Wing, when we did the acquisition, we spoke about a couple of pockets of opportunities that we saw and something that we're going to undertake over a period of time. One of them, which is organic, something that we feel that we could improve in terms of the performance at the mall level, whether it be OpEx or revenue. This is something that it's work in progress. We also identify some opportunities for maybe releasing about 5,000 sq ft of NLA. That is work in progress, because in order to do that, we need to go through several rounds of approvals and getting agreement and consensus from the various authorities. That's work in progress.
That will take a little bit longer, but the work in progress now really is to tighten up any bulk purchase arrangement and getting the best outcome in terms of the mall performance at this point in time.
I presume timing-wise, more likely FY 2027.
For the AEI itself?
Yes.
The 5,000 sq f t we talked about? Yes, likely. I do not think we will get everything through in FY 2026.
Okay. Just-
It will commence probably in FY 2027.
Yeah. Just a brief follow-up. The Isetan, what is the square footage that they occupy at Tampines 1?
Isetan is not in Tampines 1. Isetan is in Tampines Mall, which we don't own.
Okay. Yeah. I thought it was mentioned. I thought maybe related. No worries. Thank you.
Thanks, Jonathan. We've got Rayson from HSBC who's got questions. Good morning, Rayson. Can you unmute yourself? Thank you.
Thanks, Judy. Hi, Richard and team. Just a few questions. Firstly, just looking at the Hougang Mall AEI, more than 80% committed. I think it probably moved about 6% or so, versus the last quarter. If I recall correctly, for Tampines 1's AEI, you were actually more than 90% committed before the works commencement. Just comparing these two pre-commitment rates, is sentiment getting a little bit weaker? For the Hougang space, are you reserving some of the space tactically for certain trades? Just on top of this, if you can just share how your tenant curation strategy takes into consideration the upcoming mall beside it.
Okay. Maybe I'll share my perspective, and then Pauline can also jump in. If you look at the overall pre-commitment, I think it's very strong because we kind of have different phases, right? The phase I that's going to be opening at the end of this year is actually almost 100%, short of one small leases that's currently under negotiation, which I think probably negotiation is already done, probably documentation. The phase I is fully committed. The phase II is going to go on until towards the later part of FY 2026. We still have a bit of time. The question is, sometimes you want to make sure that you also get in the type of trade that you want, and that negotiation can take a little bit longer than usual.
But getting over 80% pre-commitment, I think it is still a very healthy, strong kind of indication in terms of demand for the mall. Right? The second question you have is in terms of what is going to come up. We don't really know what the final form product that's going to come out in the new GLS. But what we can do is look at ourselves and how we can, in a way, strengthen Hougang Mall, and that's part of the reason why we are doing this AEI. We have expanded one of our key anchor, that's a library. We brought them up to the highest floor. We gave them more space because for library to stay, it's an important component because library, despite whatever people talk about reading and so on, they actually bring in a lot of traffic.
They also help us in terms of place making activities and so on. It is a very ideal case for us to strengthen our positioning by also locking in some of anchor tenants. We are also working with another anchor, our supermarket operator, to see how we can improve the supermarket itself. Those are various components that we look at positioning ourself with to complement whatever that is going to come out in the future on the GLS side.
Okay. Just another question on the management fees in units, because I think it is about 50% for this FY. If we are just looking at FY 2026, which is going to be very AEI-focused, should we expect the management fees in units to exceed 70%, which was when T1 was undergoing the AEI? Or would you prefer to just phase out the AEI instead? Yeah.
Okay. I don't think it will reach that level. Probably it will be higher. We could expect it to be higher than this year, but maybe not that level. But then again, it depends on, again, at which point in time we are going to commence our next AEI. Say, for example, at NEX, that will bring into play again in terms of requirement to use some of our NAV in unit. Where we can, we of course, try to spread it out, but sometimes because of timing, because we believe that we want to capitalize on the opportunity faster as well. So that could be an overlap, right? Because the faster you complete, the faster you can also generate the income. Especially when there are strong demand of retailers wanting to come to a mall like NEX, we want to get it done.
We want to start fast because we see a lot of opportunities coming up then. By and large, I think it is likely to be slightly higher than what it is for FY 2025, but may not reach that level that you mentioned.
Okay. Thanks, Richard. Thank you.
Thanks, Rayson. Okay, next up, we have Vijay from RHB. Vijay, would you like to ask a question? Morning.
Morning. Good morning, Richard and Judy. A couple of quick questions from me. Can I know what is outstanding rental arrears from Cathay at this point of time? Should we have to assume that this won't be recovered? Also, earlier you mentioned in the plans of repurposing the space, if somebody can take it up as it is, then it would be a faster way to recover the space. Are you looking at a cinema operator to replace the Cathay?
Okay. Maybe I will attempt to answer the first part first. I think it's something that it's out in the market that we actually sent in a SD, probably about two months ago. Pauline , was it two months ago?
About July.
Yeah. Okay. Yeah, about maybe slightly over two months ago. The SD amounted to SGD 3.3 million, if I get that number correctly.
SGD 3.3 million.
That is official. We are going through a legal process, a legal proceeding to recover that amount. We have to let the process run its course before we could comment as to if we could recover the amount or if we could recover how much of the amount, is it partial, fully, or what's the amount? We do not have that response for you today, but definitely we are going through the legal process to recover as much as we could, right?
Richard, if I may add on to that. The quantum SGD 3.3 million also includes a portion that relates to the outstanding security deposit from this tenant. What is really owing is actually lower than that SGD 3.3 million that is out there in the market. That is one point. I think the other thing is we have other legal recourse. To answer your question, Vijay, are we writing off this amount? At this point in time, no. We are still pursuing the various legal recourse that we have.
Okay. Repositioning the space, are you looking at a cinema operator, or if not, what other types of segments you are looking at this point of time?
We are looking at various options on the table right now. We have cinemas, we have non-cinema operators. There are a few options that is available to us to consider.
Okay. But what would be your preference at this point of time?
It depends on what is the offer and also what is likely contribution that the tenants can bring. Whether we think that a certain trade may be able to drive stronger shopper traffic as opposed to the other. Those are considerations and of course, the economics as well.
Got it. Second question is, what is the proportion of variable rent as a percentage of total rents in your portfolio at this point of time? Is there a change in terms of variable rent mix, especially for sectors like F&B, which are facing a bit more challenges at this point of time?
Not really. GTO is about 5% of our total revenue. It is still a very small proportion of our overall rental structure. I have not seen really a significant change in terms of the overall GTO proportion, whether be F&B or the other trades.
Okay. Thank you. That is all I have.
Okay. We just accept one last one from Derek from Morgan Stanley. Derek, can you unmute yourself?
Hey, Derek. Hi.
Hi, Derek. Okay.
Thank you.
Otherwise, we will take one question from the chat as well. There is a question coming from one of them. It appears cost pressures have built in 2025 while other S-REITs saw utility cost decline. Why is there this difference?
Okay. Again, it depends on the base. Some of the other operators, they actually had a higher cost base before that, but we have been quite active in hedging our utilities over time. If you look at, we have managed to bring it down in the previous year so that that movement may not be as significant, because for the last 12 months, 15 months, it has been quite steady. The rates has been quite steady. So when we hedged it, we hedged a forward. So we capitalize on that as well to make sure that we are not exposed to any significant risk, because you do not know, there is a lot of dynamics that is going around, whether Middle East, Russia, Ukraine, and so on. So that is a lot of uncertainty. So we took that position. But you have to look at the starting point.
Did they come off from a higher base or they were already lower than us and they got lower? So that is the question.
Thanks, Richard. Derek, are you able to ask your question? Maybe some issues with his sound system. But anyways, I think we are out of time. So, thank you so much, everyone, again, for joining us in FCT's results briefing. If there are any further questions to follow up, please feel free to reach out to me, and thank you so much again for joining us today. I will end the call right now. Thank you.
Thank you. See you, guys.
Thanks, Richard and team as well.
Thank you.
Thank you.