At this juncture, I would like to introduce the team today. We have Richard, the CEO of the Manager, Audrey, the Chief Financial Officer, and Pauline, the Head of Investment and Asset Management. Let me invite Richard to bring us through the first quarter highlights of our business update. Richard?
Yeah, thanks, Fung- Leng. Good morning, ladies and gentlemen, and, first and foremost, a very happy New Year. Hopefully, your Rabbit Year has started off well. Let's get on to the first part of our presentation, Fung- Leng. Just give you a very quick overall highlight of what was achieved during the first quarter for our FY 2023. Firstly, in terms of occupancy, we continue to see improvement. We have grown now up to a healthy level, 98.4%. Shopper traffic, retail sales have also grown. Tenant sales is 13.4% year- on- year. If you look at comparing with pre-COVID level, the year-to-date average is about 12% higher. Shopper traffic, it is about 38% year- on- year.
Even though it is not back to pre-COVID, but I think it is at a level whereby it is actually helping us with the sales, and the productivity of the customers is actually improving as well. For that part, Pauline will run through in more detail later on. Couple of things that have also happened in terms of looking at hedging strategies, especially financing, is one area that I believe everybody is focusing on. We are now at about 73% of our total borrowings being hedged. Next up is in terms of energy purchase. We shared this a couple of rounds before. What is happening is our hedges is only coming in towards the second half of FY 2023. At the moment, we are continuously monitoring the market.
It has been pretty positive as far as we are concerned because the rates, if you compare to probably June last year, it has come off quite a bit. We are continuing to monitor, and as I have shared before, we have full flexibility in terms of how we intend to hedge our energy purchases. It could be short-term, free float, et c. One important area to also highlight is Hougang Mall has also been awarded BCA Green Mark Platinum. What that means is all 10 of our buildings, including Central Plaza, now has been certified at least GoldPLUS and above, and about 50% of them, in fact, are actually platinum rated. Just a little bit about the market. I am not going to go into the economy, the market as a whole, but more so in terms of what we are seeing in the retail sector.
The sales of retail sales continue to improve. If you look at for the November numbers, it is up 8.7% year-on-year. Also, certain element or certain component, in fact, has a more impressive growth, 24.7%. Notably also from the CBRE research report, you can see that from the rental perspective, there is a recovery from both the Orchard prime area as well as suburban prime. For suburban prime, rents has gone up 1% quarter-on-quarter and 2.3% year-on-year. CBRE expects the overall rent to continue recovering in 2023. Next up, I will hand over to Audrey to take you through the financial position. Audrey, please.
Thanks, Richard. I will run through in terms of capital management. Aggregate leverage as at first quarter of FY 2022 is about 33.9%, relatively similar to last quarter level. Our average cost of debt for the quarter is at 3.5%, higher with the higher interest rate environment. Our average debt maturity is about 1.8 years, or 73% of our borrowings are hedged to interest rate. 31% of total borrowings is actually relating to green loans. In terms of facilities-wise, we have about close to SGD 600 million untapped RCF facilities, and we are rated by S&P BBB stable, and also by Moody's Baa2 stable. With this, I will hand over to Pauline on operational performances.
Thank you, Audrey. Good morning, everyone, and [Non-English content] to everyone. I am very pleased to update you on our results, as well as the developments to portfolio in this segment of the presentation. This is for the first quarter of our new financial year, and I think it actually shows a good start to the Rabbit year. This slide shows the committed occupancy of our portfolio. On a quarter-on-quarter as well as year-on-year basis, it has actually been improving. It stands at 98.4% for the entire portfolio as at 31st December 2022. So it is a picture of a robust as well as a resilient performance coming out from the pandemic. I wanted to highlight a few key takeaways from this slide.
We see that two of the malls in our portfolio, namely Northpoint City, North Wing, as well as Hougang Mall, has achieved 100% occupancy. On top of that, there are a few other malls, in particular, the larger malls like Causeway Point, Waterway Point, Tampines 1. These have actually achieved occupancy that is near to 100%, so touching 100% above 99%. The other point to note is also for malls that were more impacted over the pandemic period due to where they are located or a function of the lease expiries, is also demonstrating good traction in terms of recovery. We see that Changi City Point has actually improved, in terms of occupancy, by about 4.1% point over the quarter. Also for Century Square as well, the occupancy has improved. There is advanced negotiation ongoing for the anchor space, the cinema space.
That 8% is not reflected in this 89% occupancy. Next slide, please, Fung-Le ng. I think we are quite familiar with this slide. I think there are a few key takeaways from the footfall trends as well as the sales trend. We see that after the reopening of the Singapore economy in May 2022, the footfall has actually recovered to about 80% compared to pre-COVID. It is maintaining at that level over the past few months. We believe that this is a function of the fact that our malls are actually very well located near to the transportation hubs. So there is a certain proportion of the footfall going through that is transient footfall. People going to work or coming home from work. With the hybrid work arrangement, some of that transient footfall has actually fallen away.
However, if we look at sales, it shows a very positive trend. Across 2022, calendar year 2022, we see the sales performance, our total sales performance actually exceeding pre-COVID, by about 12%. That is a very consistent trend for the past year or so. We do attribute this to the fact that our malls are very integral part of the heartlanders' lifestyle and everyday living. Next slide, please, Fung-Le ng. This slide shows the WALE at about 1.8 years- 1.9 years. It is a healthy WALE. It has been increasing or improving over the past quarter and over the past year. It is also reflective of the fact that our average lease tenure for the retail leases is about three years or so.
Also the fact that we have actually leased out or recommitted some of the bigger spaces over the past financial year and in the first quarter of this year. If I may draw your attention to the two bars sitting on top FY 2023, you see that the drop in the bar from the gray bar, 28%- 20%, reflects the leasing activity or the commitments in the first quarter of this new financial year. So that demonstrates a good traction in terms of renewals as well as new lease take-up. If we look beyond FY 2023, there is actually no concentration in lease expiry over the near term. Next slide, please, Fung-Le ng. A key focus of our retail strategy is to continuously refresh the retail offering in order to excite our shoppers. This slide shows a few things.
I think firstly, the retail scene in Singapore remains active, very vibrant across various trades, not just F&B, across different aspects of retail as well. We see new entrants coming to the market. Existing retailers also reinventing themselves, rebranding themselves. We also see brick and mortar complementing. So there are retailers that have thrived on e-commerce are also coming out, venturing out to brick and mortar. An essential part of our strategy is to actually cultivate some of these new retail concepts. If they are proven successful, we will then bring them to the rest of our portfolio. Next slide, please, Fung-Le ng. Our malls are all mainly located in the heart of the heartlands. So the focus on placemaking and being integral and relevant to our community is an important aspect of our management strategy, our retail management strategy.
And with the reopening, we are able to then bring back some of these signature events and programs to our malls to activate and attract the footfall back to the malls and remain relevant to the community. So our malls become almost like a third place for the heartlanders and our shoppers. Next slide, please. Right. So very happy to share the much-awaited news of the asset enhancement of Tampines 1. As we have shared previously, growth through value enhancement is very important or integral part of our portfolio management. And I am very happy to update that we will be commencing a SGD 38 million asset enhancement initiative on Tampines 1 in the second quarter of this year.
The target is an 8% ROI on an unlevered basis from the enhancement CapEx that we would be spending for this AEI. And this is on the back of very rigorous and diligent retail, as well as financial visibility. There are a few key areas of value enhancement. One is the higher rental productivity for our asset. We are looking at increasing the NLA by 8,000 sq ft, and this is actually leveraging various bonus GFA schemes, including the CSF Scheme, as well as the recent participation in the distributed district cooling initiative that has actually given us some bonus GFA as well. So we will be deploying this additional GFA to the prime areas within the mall, namely at basement, level one and level two.
That will then give us the higher rental productivity as well as higher rents from the additional NLA, as well as the enhanced real estate through reconfiguration. Tampines 1 had not undergone any major refurbishment over the recent past years, so this is an opportunity for us to also refresh the retail experience for our shoppers. And Tampines 1, where it is located, actually enjoys a very strong catchment. It has a somewhat differentiated concept or retail positioning from its sister mall, Century Square, as well as the competitors within the trade cluster. It is positioned as offering more of that trendy and contemporary fashion, as well as F&B to the catchment. So we would like to take this opportunity to also refresh the offering and also deepen and strengthen its positioning as well.
We want to upgrade some of the key shopper touch points, including the entrances, some of the common walkways, as well as toilets and car parks, such that shoppers will actually enjoy a more refreshed shopping experience in addition to the new retail offering that we have curated. And in terms of the leasing momentum as well, that has actually garnered pretty good traction. Even prior to commencement of the AEI, we have achieved committed as well as advanced leasing negotiation level of more than 70%. So more than 70% of the spaces that is impacted by the AEI have been pre-committed or are in advanced negotiation. And some of the retailers that we will be bringing to the mall post-AEI are homegrown favorites like Love, Bonito, Tiong Bahru Bakery, new to the suburban space. Some of these brands are relatively new to the suburban space.
So we are very excited. The AEI will take place in phases. We are not closing the mall. The mall will continue to operate in phases from the second quarter of this year and complete in the third quarter of next year. But of course, a lot of the higher yielding spaces, the commercial spaces, will actually be front-loaded to be completed earlier. Right. Next slide, please. Yep. So that is what I have to share with everyone. Thank you.
All right. Thanks, Pauline. Let me just do a quick roundup of our presentation, and then we can move on to Q&A. So first and foremost, you could see from the set of business update that we have shared with you, we are riding on the momentum of a recovering retail market. Our occupancy continues to improve. Tenant sales improving. Shopper traffic has gone up marginally. Pretty much what we have been seeing for the last couple of months if you compare to pre-COVID, and Pauline has actually explained the rationale behind not getting 100% traffic volume back to pre-COVID level because of the proportion of people are still working from home, and this is likely to be the new norm, as what we are seeing. So first quarter operational performance also continued to remain strong with the healthy demand, as what Pauline has also shared with us.
The other aspect is definitely despite whatever that we are seeing right now, retail sector remains an attractive asset class. And if you look at what CBRE research report has alluded to, rentals are recovering, and they are expecting this to continue with the momentum that we are seeing right now. The AEI at Tampines 1 is one that we have actually been talking about without going into details because we have shared with you guys that we are looking at AEI opportunities. We are waiting for approvals. We are getting some of the plans done, et c. And we are very happy that finally this has come to fruition, and we're going to start in the second quarter. However, in between the period of time while we are going through the works and getting all this ready, the team has been working very hard on the ground.
And as what Pauline shared, about 70% of the areas that are up for AEI has already been either pre-committed or in advanced negotiation. So that's actually a very encouraging number. Very good demand, and we are seeing pretty good brands that's coming through, and that will bring Tampines 1 to the next level. And as you are aware, for shopping malls, we always need to refresh, need to invigorate, bring in new trade, new tenants to again give whatever that our community is looking for. So we are very excited, very happy to see this is finally getting off the ground. And definitely, when it's ready or along the way during the progress of the AEI, we'll continue to update all you guys. And similarly, as I have shared before, AEI comes in all shapes and sizes.
Some of them are smaller, some of them are bigger, and the team will continue to work hard. The asset management together with the property manager will continue to look hard to look for opportunity for us to continue to add value to the portfolio. Last but not least, just a couple of points to recap about where we are, who we are, and definitely in terms of from FCT perspective, you can see the competitive advantages that we have. Our assets are located in good location, well connected. We have the scale today to benefit from economies of scale. We have the scale to also do certain things, have a larger network of retailers, et c. Fundamentally, we continue to focus very much on essentials. That is our bread and butter.
Even though we may bring in new brands, infuse new types of trades, but fundamentally, we are still very much on essentials. Omnichannel is something that we continue to pursue to work with our retailers, and that is something that we believe is going to grow and continue to grow because it benefits everybody. It benefits the retailers, it benefits the shoppers, and definitely as landlord, it is actually benefiting us as well. Last but not least, in terms of sustainability, it is something that we continue to be part of our strategy as we embark on achieving our net zero carbon by 2050, and that comes as the umbrella of the entire Frasers Group. With that, I will end the presentation for the first section and happy to take questions. Fung- Leng, back to you.
Right. Thank you, Richard, Pauline, and Audrey. We are now ready to take questions in relation to the first quarter 2023 business update. The first questions that we have in the queue comes from Terence Khi of JP Morgan. Terence, please go ahead.
Thanks so much, Richard. [Non-English content] Just two quick questions from me. Wanted to ask on expected interest costs for this FY. Noted that it has gone up from 3%- 3.5% for the quarter. What is the outlook for the full year, especially with that 21% of debt expiring this year? Second question I wanted to ask on when should we expect Century Square anchor lease to be backfilled? That is all. Thanks.
Right. I would start off and then maybe Audrey or Pauline can jump in later on. In terms of the expected interest cost, we have stated in the presentation that this quarter is at 3.5% compared to 3% in the last quarter. You also rightly pointed out that we have some refinancing coming up along the year as well. This is where we are continuing, still monitoring the market. The rates is still a little bit volatile. We are seeing some signs that it's actually coming off. That is something that we are watching, we are monitoring. We continue to do this until it's time for us to look at our strategy, again, what kind of proportion are we going to lock in, going to hedge? What kind of tenure are we looking at? Whether are we going to consider having secured, unsecured?
All those flexibilities that we have today will vary the rates. Terence, I can't really crystal ball and tell you what's that going to be like. I think it's fair to say that likelihood it's going to be on the higher end of the 3%, potentially. If the rates continue to come down, we are keeping our fingers crossed that can then bring it back to closer to where we are today. From where we are seeing right now, being a little bit conservative, we feel that probably is in a high 3% for the year. That's for the interest rate. For Century Square, we are currently in talks negotiating with an operator to take over the cinema space. A lot of progress has been made. We're just fine-tuning certain aspect of the negotiation.
If that's done and when that's done, that would take us by increasing the occupancy by another about 8 percentage point to about +96% . Right. Once that's done, I think Century Square, in terms of occupancy, will be pretty much back to about 96%- 97%.
Richard, if I may add on.
Sure.
Terence, this is an anchor space, right? The cinema space is an anchor space. We are very careful and considered in terms of leasing up the space. We look for strong operators that will actually work with us to activate the mall and also to draw strong footfall to the mall. Appreciate your patience. I think there is good traction. We hope to actually have the deal committed within the second quarter of this year. Thank you.
All right. Thank you, Pauline and Richard. Move on to the next question from Geraldine Wong, DBS.
Hi. Morning, Richard and everyone. Happy Lunar New Year. I just have one question. For Tampines 1, post the 8,000 sq ft AEI, will it move the needle for passing rent?
Sorry.
Okay. Yeah, Pauline, you want to go ahead?
Yeah. Geraldine, I think I mentioned in my presentation earlier that the focus is on improving the rents, as well as the rental productivity. Because what we are also doing is to update the space configuration as well as the physical real estate to actually make them more relevant for the retailers, some of these fashion retailers and so forth. So definitely, more rents, and also higher rental use. Did I answer your question?
Okay. Thanks, Pauline. Sounds good.
Thank you.
Sounds like getting higher rents there. Thanks.
Right. Thank you. Moving on to the next question from Joel Gindill, DBS.
Hi, Richard and team. I just had two questions. Firstly, Happy New Year. The first question is regarding the AEI at Tampines 1. I am just curious on how it would impact the current occupants, and is there some slight impact on rentals? My second question is, I noted that gearing rose slightly to 33.9%. I do not think you closed on the additional 10% on Waterway Point, so I was curious what caused this increase. Thanks.
Okay. Let me take the questions on AEI first. For AEI, of course, what is going to happen is certain parts of the mall will be impacted at different juncture. As Pauline mentioned, we are going to start in second quarter and complete in 2024. This is going to be done in phases. So we are not closing the mall. The mall will continue to operate. So we will do in phases, section by section. Even let us say, for example, you take basement one, it is not the case of doing the entire basement at one point in time. So we would work on it portion by portion. So that will allow the mall to continue to operate and also our retailers to continue to operate. So definitely there will be some impact in terms of occupancy along this way.
Also, I think we have shared before, and that is something that we have done before, that during AEI, if there is any disruption to our income, we will be looking at asset management fee as one means to actually patch the impact to the overall performance of the mall during this AEI period. This is something that we will be evaluating as well for Tampines 1 AEI. In terms of the slight increase in gearing, that is a result of the funds that we require for payment of our DPU. So when we do that, there is a little bit of bump up in terms of gearing percentage.
Just to add on what Richard shared, it is also working capital requirements. As we draw, it is very typical that in the first quarter you do see increase in terms of the debt as vs the full year.
Right. Thank you very much. Moving on to Terence Lee from UBS.
Good morning.
Just in the interest of time, we will move on to the next session after the current queue. Thank you.
Got it. Do you mind sharing the reversions and occupancy costs for the last quarter and also your outlook ahead?
Hi, Terence. Unfortunately, for business update, we do not go into specific. What I can say is that the reversion continues to be in a positive position. It is only first quarter, so not a lot of leases are up. So two things, right? Not a lot of leases are up for renewal, only a proportion of it. It is still in positive. We still see the positive trend continuing. In terms of occupancy costs, again, it is only a quarter. So seasonality plays a part. Sales definitely is higher during this period. So occupancy cost for first quarter, typically, it is actually lower than the annual average.
Got it. Also, do you mind sharing the cash ROI for the Tampines 1 AEI excluding the valuation gains? Thank you.
This is excluding the valuation gain. This is just strictly on the incremental income that we are generating. If you include the valuation gain, it will be higher than that.
Yeah. This is on an unlevered basis. Also, just to add on, in terms of the revaluation gains, it will be in the positive territory, the net revaluation gain.
Got it. Thank you.
Thank you. Moving on to the last question in the queue from Vijay Natarajan, RHB. Vijay, please go on.
Yeah. Hi, morning. Happy New Year. Just a few quick questions. Can you give us some color in terms of what is the variable rents as a percentage of overall in some of the new leases you have signed at this point of time? Also, can you name some sectors where you are seeing strong tenant demand in some of your malls? Has there been any changes in post-COVID? One last question is that, has there been any impact from GST hike so far? I know it is still too early, but is there anything which you see in the mall so far?
Okay. Vijay, let me try to get this through as quick as I can. In terms of variable rent, typically, our variable rent is about 4%-5% of revenue. That continues. We are still seeing that same trend moving forward. The sector that has been doing well, a couple of sectors, notably beauty, health, fashion. So those are some of the sectors that has been doing well. Partly also maybe perhaps more people are also going back to work. It is a combination of also seasonality due to festive period. This year because Christmas and Chinese New Year was very close, right? So we can expect some pent-up spending as well during this period. So those are some of the sector. F&B, of course, continue to be one of our key contributors. So those are some of the sectors that has been doing well. Impact to GST, not significant.
I do not believe that for our malls will be significant because again, firstly, it is only one percentage point different, and secondly, because we are basically essential product that we are having most of our space actually for essential products. So again, it is bread and butter. This is something that we feel that consumers continue to come to the mall to purchase, right? So we do not see a significant impact on GST.
Okay. Thank you. That is all I have.
All right. Thank you very much for all your questions for the first quarter update.