Good morning, everyone. Welcome to Frasers Centrepoint Trust's full year 2026 financial results briefing. We are pleased to have announced a very strong set of results with a DPU of SGD 12.35 cents, a new high for the REIT since our listing in 2006. I have with me today the management team, Mr. Richard Ng, our Chief Executive Officer, Ms. Annie Khung, our Chief Financial Officer, Ms. Pauline Lim, Managing Director of Investment and Asset Management. Without further ado, let us commence today's briefing.
Thanks, Judy. Good morning, everyone. Next slide, Judy. Yeah. Next slide. Yeah. Okay. As Judy mentioned just now, we are very happy to share with you the set of results. She mentioned, this SGD 12.35 cents is the new high that we have achieved. It comes across from all sides of things. From the organic growth, from the AEI that we have done, completed T1, and also recently completed Hougang Mall, and also all the other cost-saving initiatives, et cetera, that has given us this set of good results. Just going to run through very quickly in terms of distributions to unitholders. It's at SGD 252.2 million, 8.2% year-on-year increase. Distribution per unit is 2% year-on-year increase as mentioned. Capital management, aggregate leverage, you can see there are two numbers there. The reason is because of just a one-day difference in timing.
Because when we divested White Sands, the funds came in on the 30th of September itself. There was a slight delay before the funds could be placed back to the bank. That's the reason why we showed two numbers. As of now, our gearing is at 36.8%. Cost of debt has also come down significantly compared to last year. 60 basis points dropped from 3.8%- 3.2% today. In terms of the performance of our portfolio, I think there's a lot of questions around what do we see the business on the ground. We are happy to share again, in terms of committed occupancy, it's almost 100%, still at 99.7%. Rental reversion, again, came in very positive at 6.6%, though we have shared or kind of guided to a mid-single, so we kind of outperformed there as well.
We have also been quite active in the market with some proactive capital recycling. We divested White Sands, as all of you would have known, and also divested into a development project at Bayshore Drive. That again, going to provide us with a new pipeline due for completion in 2030. I mentioned a little bit about AEI. Of course, the completion of Hougang Mall AEI at an ROI of around 8%. It's again coming in higher than what we have mentioned or what we have actually guided. We guided about 7%, so we came in again higher, just like what we did for Tampines 1. The team on the ground has put in a lot of efforts on this. AEI at NEX is going well for the phase 1. Again, some of these details will be shared with you later on.
But the other thing that some of you may have also seen is we have signed an MOU with NLB on this space, what we call The HomePage @ Causeway Point. Later on, we have a video to share, and also Pauline will share a little bit more details on our AEI for Causeway Point. Next.
Okay, just a very brief sharing on the overall retail outlook in the market. I am not going to go into the GDP and inflation numbers. All you guys are well-versed in that. For retail sales, I just wanted to highlight that, especially for F&B sales, if you look at it in Singapore, overall, there is a growth of 0.3%. But for FCT, our F&B sales actually grew by 2.4%. Again, this is slightly different narrative because we see a lot of articles, a lot of announcement on closures, consolidations on F&B, which is true.
I think it is happening in the market. But again, I do not think it is something that is generic that is happened in every part of Singapore. So, just wanted to highlight the fact that the F&B operators in our malls are still doing very well. So we have a growth of 2.4%. Some of the top-performing trade categories for this full-year results include jewelry and watches. Of course, you know that gold prices have been going up. That is one reason. And the other reason is also the fact that people are also coming back to buy some of these products. Education continued to be very strong. This is an area we see a lot of opportunities for us to continue to expand this particular trade in some of our malls. And as mentioned just now, F&B is still doing very well at our portfolio. Next slide.
Okay, in terms of the supply side of things, we have tabulated this from an extract from CBRE report. So if you look at from 2026- 2029, if you just focus specifically on the suburban supply, we are looking at about 490,000 sq ft. But these are broken down into many different shopping centers, malls, because some of them are actually quite small, from 40,000, 24,000. I suppose probably one of the largest could be around 130,000 in Chencharu.
Pretty much smallish type of malls, not the ones that you are expecting to have that you are seeing in our portfolio. Again, limited supply, limited competition. Okay, the next segment is going to focus on financial highlights, and I am going to pass over to Annie. Annie, over to you.
Yeah. Thank you, Richard. Good morning, everyone. Let me take you through the financial highlights. The H2 FY 2026 gross revenue and NPI rose 8.7% and 11.5% year-on-year respectively. This is mainly due to a full six months contribution from the acquisition of Northpoint City South Wing, which was completed in May 2025, as well as the higher passing rent across most malls. Correspondingly, you can see that the distributions to unitholders increased by about 3.3% to SGD 127.2 million in H2 FY 2026, and this also takes into account that we retained about SGD 3 million distributable income for AEI and other working capital. Yeah, next slide please. On a full year basis, the NPI is about 15.7% year-on-year as a result of full year contribution from Northpoint City South Wing, coupled with the organic growth from the existing portfolio.
Distribution from JV is also lower in this year due to the absence of the one-off dividend that was paid last year. Distribution to unitholders increased 8.2% and this excludes the SGD 7.6 million, which we retained for AEI and the working capital purposes. So together with the SGD 4.6 that was retained, so full year we retained about SGD 7.6 million. So with this brings us the total DPU about 12.35 cents, which is about 2.2% higher than last year. Next slide, please.
Yeah. The NAV increases to 2.32 cents, mainly because of the fair value gain that was recognized for the investment properties as well as the change in the fair value of the derivative financial instruments. Next slide, please. Yeah. We are pleased to report on the healthy financial metrics with the lower cost of debt in FY 2026. As mentioned earlier, the aggregate leverage is at 38.7%.
It is further lowered to 36.8% after you take into account the repayment of borrowings with the divestment proceeds that came in at year-end. The interest coverage ratio increases to about 4.37 times as a result of fair value gained, and our cost of debt for full year is 60 basis point lower than last year, which is at 3.2%. The percentage of fixed debt is at 68.6% with the post-year-end repayment borrowings. The percentage of fixed debt increases to about 75.1%. Next slide, please. We have established a loan facility for the borrowings that are due in FY 2027, and the loan will be refinanced to FY 2032. Yeah. With this, there is no more refinancing for the whole FY 2027, and you can see that the debt maturity profile is well staggered with the weighted average debt to maturity of 3.41 years.
There is also no more than 30% borrowings due in any single one year. So with the 75% borrowings already hedged into fixed rate, there is a minimal impact from the increased interest rate. So our guidance for next year, if the rates stay at current level, will be about 3.3%. Next slide, please. Yeah. The aggregate appraised value for the total portfolio, including the proportionate share of the two property in Nex and Waterway Point, increased by about 1.7%. This is mainly because of the stronger performance across all assets as well as the AEI uplift from the Hougang Mall. Yeah. The capitalization rates used by the independent valuers remain unchanged from previous year. Yeah. Next slide. The DPU of 6.214 cents for this period to half will be paid on the 27th of November 2026. With this, I will hand over to Pauline for the portfolio highlights.
Thank you, Annie. Good morning, everyone. I am delighted to share a good report card as we end financial year 2026 and embark on FY 2027. This slide, I think Richard touched upon it, no need to belabor. Our portfolio has been operating close to full occupancy, and if you see some of the variances on a quarter-to-quarter at the mall level, it is largely due to transition of leases as we change out some of the leases. Next slide, please. Revenue and NPI by property. Across the portfolio, all our assets have reported increase in revenue as well as NPI on a year-on-year basis. This demonstrates the focus that we have on driving both the top line and also optimizing the cost for our malls. There are some initiatives that were taken across the portfolio that has actually borne good results.
For example, integrated FM, whereby we combine cleaning as well as security services to actually optimize the use of headcount. We also implemented diagnostic and preventive maintenance for some of our M&E equipment, and this has allowed us to reduce the frequency of the maintenance and in turn, reduce the operating cost. I just wanted to provide a little bit of details on Northpoint City. We have actually reported it on a blended basis, North Wing and South Wing. Also for FY 2025, it is only four months of South Wing following the acquisition. But I wanted to assure everyone that both wings, in terms of the NPI performance, has improved on a year-on-year basis. When we acquired the asset, I think our commitment was the fact that it is one ownership, we are able to leverage on both wings to optimize the operating costs.
I am happy to say that, in terms of the blended NPI margin for both wings, we have actually achieved a stronger NPI margin over the course of the one year or so. Next slide, please. I think this slide shows the fact that we continue to focus on driving shopper traffic to our malls and also converting the traffic to sales. We maintain the positive trajectory. We have been maintaining the positive growth or positive trajectory over time. In terms of the tenant sales for the fourth quarter of FY 2026, it may appear somewhat anemic, but that is due to the fact that during this quarter, we do have some bigger spaces that were undergoing refurbishment works or refresh works by the tenant. Which is very much in line with our ethos to always refresh and update the offering to the tenants.
But that has dampened the sales somewhat during this quarter because the tenants are not operating. But if we were to adjust for some of these works, in terms of the sales growth for the quarter, we are looking at somewhere in the region of about 1%-2%, 1 over percent. Next slide, please. All right. Occupancy costs, maybe I would like to draw attention to FY 2019, which is the pre-COVID level. FY 2019, our portfolio occupancy cost was at 17%. Over the course of the past few years, whereby we have enjoyed strong rental reversion, our occupancy cost has actually maintained at quite comparable level. In fact, somewhat lower at 16.3%. This is a function of the fact that whilst we drive the rents, there is also a lot of focus on the operating sustainability of the tenants.
There's a lot of effort on driving sales, right-sizing to ensure that the tenants are trading at optimal level. This is how we have maintained the EOC at still very sustainable levels. EOC is important because it's a barometer of the tenants' trading health. Next slide, please. Richard touched on this, 6.6% rental reversion, and this was actually achieved across the portfolio. All our assets have reported a positive rental reversion for FY 2026. The other point to highlight is tenant retention at 80%, which is a good level. It's also indicative of tenants' willingness to remain and renew their leases. We've achieved that 81%. Just a flavor on what were some of the stronger demand that we have from different trades.
F&B performed well in terms of leasing traction, beauty and healthcare, as well as fashion and accessories. Next slide, please. Lease maturity profile, you see that for FY 2027, we will be starting the year with expiries of about 32%. There is no concentration risk if we look across the next few years. This is important because it provides some assurance on the stability of our cash flows. When we look at WALE, at 1.8 years, it is largely reflective of the fact that our average leases is about three years. Next slide, please. Judy, next slide, please. We have 107 new-to-portfolio brands in FY 2026. If you recall, our retention rate was 81%.
For that 20% of leases whereby it's bring in new tenants, I wanted to say that this 107 new-to-portfolio brands actually constitute 50% of the new tenancies that we brought into our portfolio. This is important because the intent is to bring in new brands and also incubate them to bring them to the rest of the system malls. This is an area of focus as well, and it brings fresh excitement to the shoppers at our various malls. Next slide, please. For the next two slides, I wanted to illustrate through the pictures our focus on placemaking and also positioning our malls that are located in the heart of the heartlands as community landmarks. Signature events and fairs, especially at our larger regional mall. Our ambition is not just to cater to the immediate catchment.
For our larger malls, there is opportunity to actually cater to a wider catchment, the destinational crowd, through the mall signature events. The focus remains on drawing footfall, and recurring traffic to the mall, and driving the sales, and also enhancing the retail journey. It's not just something that is transactional. The retail journey is enriched through some of these events and activities. Next slide, please. With this, I'll come to a very exciting segment, actually the second pillar of our growth strategy, AEI. Next slide. Happy to share that the Hougang Mall AEI has largely concluded, and we have done very well in delivering this AEI. When we first announced this AEI a couple of years back, in terms of the target ROI, we're looking at 7%.
We have achieved about 8%, and this 8% is driven by two areas. One is the CapEx spending. We have come in lower in terms of the CapEx spending. In terms of leasing, we have also outperformed. If you look at the committed occupancy, it is close to full occupancy as we end the AEI at 99.7%. We have created 13,000 sq ft of NLA, and more importantly, we have improved or enhanced the quality of these spaces by bringing them to the prime retail floors at basement and also level 1. Also level 3, if you recall, the library was at level 3. That was actually moved to level 5, and level 3 was repositioned into an F&B cluster.
We have also brought new concepts to the mall, 49 new-to-mall concepts, which constitute more than two-thirds of the units that were affected by the AEI works, and about 50% of the mall overall. Next slide, please. Next AEI, we have commenced the AEI. In fact, phase 1, which affects the ex-Isetan space, is progressing well with 98% leasing pre-commitment. Again, there is a focus on bringing new concepts to the malls. We will say 6% are new-to-mall brands. We will be starting or embarking phase 2 AEI in January 2027. That is where the bulk of our value creation will happen, with 44,000 sq ft of NLA. If you recall for Nex, a key part of this, the value proposition, was the fact that we decanted car park space and converted that to commercial NLA.
For phase 2, this is where the bulk of the works will happen. Already the team is very much into leasing up the spaces in phase 2. Some good results that we will share over the course of time. Next slide, please. This is something that we have been actually working very hard on. It is very exciting. I think Richard did share previously that we are looking at the AEI for Causeway Point. I wanted to say, a picture tells a thousand words, but a video tells more. I will get Judy to share the video that we have prepared for Causeway Point AEI, and it shows the vision that we have for the repositioning of this mall.
From Causeway Point in Singapore's north, the Thomson-East Coast Line connects through the city and, in future, directly to Changi Airport. At the heart of this connectivity, Causeway Point, a leading regional mall, serves one of Singapore's largest and fastest-growing residential catchments. Located near Republic Polytechnic, Causeway Point also serves a vibrant community of students and educators. Beyond education, Woodlands Hospital is just one MRT stop away. Just 15 minutes from Mandai Wildlife Reserve, Causeway Point is also well-placed to welcome leisure and cross-border visitors. Linked by the North-South and Thomson-East Coast lines, and soon strengthened by the RTS link to Johor Bahru, Causeway Point is more connected than ever. At the center of northern economic hub, Causeway Point is now entering its next chapter. The refreshed tenant mix will renew key destinations across the mall, from supermarket and food hall to fashion, beauty, lifestyle, and F&B.
This is the new Causeway Point. Directly connected to the MRT, a refreshed arrival experience is more open, more visible, and more inviting. A 24-hour walkway keeps the mall connected day and night. Anchored by a strong supermarket offering, the journey continues through vibrant yet nostalgic dining options featuring time-honored brands. A reimagined retail experience unfolds around the heart of the mall, blending expanded international concept stores with well-balanced essential offerings. Across 32,000 sq ft, Frasers Property is partnering with the National Library & Archives Board to introduce one of Singapore's largest publicly accessible collections of pre-loved books in a destination designed for reading, discovery, and community. Integrated with a cafe, indoor theater, and play area, it offers more than just a reading space. It is a place to connect, explore, and linger.
This iconic red brick entrance honors the library's heritage, with the dining hall just beyond, serving local flavors. Here, every space carries a story waiting to be discovered. Bringing every experience together in one destination. Causeway Point, a regional mall ready for its next chapter.
I hope everyone is as excited as we are with the plans that we have at Causeway Point. At this juncture, we are not ready to show the financials because we are undergoing tender, et cetera. But I wanted to assure everyone that we have looked at the sources of value creation as well. The library, the iconic library space that was featured in the library, we have obtained CSFS status with NLB. That means that we are able to decant the space, which is currently the cinema space, which is under a tenancy following the exit of Cathay, and also some car park spaces. That area will actually be brought down to higher-yielding floors. I'm not sure whether you noticed, we'll be creating that B3, which is currently nonexistent, with some of these spaces that we decant from the higher floor.
But I wanted to say that it demonstrates our commitment to creating spaces for good. We have reimagined the spaces, and we have effectively also turned challenges to opportunity. With this, I will hand over to Judy. Thank you.
Thank you, Pauline. On the ESG front, pleased to report that we have achieved 100% in green financing as well as 100% in terms of green certified properties within Frasers Centrepoint. In 2026, we have achieved the highest five-star GRESB rating, maintaining this rating for the last six consecutive years. Again, demonstrating our longstanding commitment to the highest standards in ESG. The next slide, we have basically covered a few of the initiatives on the environmental front, where we are translating our net zero commitment into tangible impact. We have got a pilot program looking at cutting our HVAC power in our buildings through participation in the Go 25 movement in Singapore. We have also achieved some 9%-12% in terms of cooling energy savings, as well as also partnering with the BCA on the GBIC program.
All these are, of course, in addition to all the other various ongoing initiatives we have at Frasers Centrepoint, such as Singapore's first brownfield DTC program, as well as our largest solarization rollout, which we have launched over the last two years or so. Next, I will pass on to Richard to conclude the briefing.
Hi. Yeah. Thank you. Thanks, Judy. Just to do a quick roundup. First and foremost, looking at the growth driver. I hope that going forward, both you guys and also the investors would appreciate more and more on our focus and attention and delivery of our capabilities in terms of the AEI works. We have seen it at Tampines 1. Now we are seeing it at Hougang Mall. Of course, these two AEI are actually relatively smaller, so maybe perhaps the financial impact has not been as greatly felt as what we will expect to see when the AEI at NEX completes and the AEI at Causeway Point completes. But at the end of the day, all this AEI able to give us a better outcome in terms of the NPI, the performance of the mall, and also value creation at the mall.
It is definitely an area that we will continue to focus on. We also talk about Bayshore development. There is a new pipeline, a new opportunity for us to look at, and we will be ready in 2030, and we are very excited with that development as well. But at the end of the day, the focus is still a lot on the organic growth. How can we continue to leverage on our strength, our capabilities to look at tenancy remix? And what Pauline mentioned, right-sizing tenants, bringing in better performance tenants, weeding out those tenants that are not delivering, not performing, so that we can provide or underpin the performance of our malls by improving our margin as well. At the operational side and ESG, again, as what was highlighted by Judy, again, we are very happy to get the GRESB five-star for six consecutive years.
It is not just about getting the five stars, but what goes behind it, right? What are the things that we have to do to get five stars? That is where we are seeing savings coming through. Or if it is not directly that you are seeing at the results, these are also providing to be cost avoidance, right? Had we not done a lot of these initiatives, like Smart FM, the integrated facility management, we potentially would have seen a bigger increase or increases in our cost. But because of all these initiatives, we were able to maintain or manage the cost at a more reasonable level, right? The other part that we are also quite happy to share is in terms of our capital management. Our leverage is now at a pretty healthy level, 36.8%.
The fact that as Annie has shared, our percentage of fixed debt is now over 75%. So that kind of helps us to mitigate any increase or further increase in the cost of funds. Okay. With that, I end our presentation and let us move on to Q&A. Back to you, Judy.
Yeah. Thanks, Richard. We have got a number of hands already up for a while. So, may I now invite Terence from JP Morgan to unmute yourself and ask your questions. Good morning, Terence.
Hey, thanks so much, Judy. Congrats, Richard and team for the strong results. Yeah, just maybe two questions from me. First question is on the retention, SGD 7.6 million. How do you intend to use that next year? Perhaps you could share why you decided to retain because as you rightfully pointed out, gearing is quite healthy. How should we think about your retention policy going forward next year? Second question, I know you cannot share the financial details on the Causeway Point AEI, but could you share on perhaps, what is the impact on some of the spaces created? How will the NLA change? I mean, BT covered a little bit of this, but the Metro, what is going to happen to that? Yeah, thanks.
Yeah. Okay. The first question, first in terms of retention of SGD 7.6 million. If you look at what we are planning to do going forward, we are looking at two very large AEI programs that will be in place concurrently. In an ideal situation, we would not have wanted to do concurrent AEI and especially the big ones, right? Given the opportunities and also the circumstances around this asset, we had to do it. As a result, there is going to be some disruption to our NPI. Some of it will be mitigated by AM fees, but there could be potential timing whereby we may need beyond the AM fee support. This is where the SGD 7.6 million comes in. It is our plan to actually release this SGD 7.6 million in 2027, right?
Again, it is not something that we just keep for the sake of keeping, but we do see a use of it come 2027, right? Long and short of it is we plan to release this in 2027. Hope that answers your question. The second part is details on AEI. I would ask Pauline to share a little bit about the NLA and so on. By and large of it, we will see an increase in the overall NLA for the mall. With regards to Metro has also came out and done their own press release to talk about their business model going forward. What you are not going to see is a Metro in its current form, right?
The typical department store of about 50,000, 60,000 sq ft over multiple levels is not going to happen, and that is not what we want at Causeway Point or the transformed Causeway Point that we would like to see. But they also shared that they are going to be looking at certain modular concept that works in different places, and we know at Causeway Point, some of the modular concept may work here. So we are currently in talks with them, and potentially they could come back, but in a different format. Pauline, you want to provide a little bit color in terms of the NLA?
You said everything, Richard.
Okay. All right.
Maybe just the GFA. The GFA from the CSFS space is about 32,000 sq ft. We will actually be converting that GFA to NLA. Overall NLA will increase. Also, some of that value creation comes from right-sizing of some of the anchor spaces. For example, Metro, they've actually announced the undepartmentalization of their concept and so forth. In terms of the count of retail offering, we are looking at increasing the offering to about 250 from current, I think it's about 210, 220. Just a little bit of perspective on, I think this kind of provides a little bit of details on the sources of value creation that we have for this mall. Yeah.
Yeah. Maybe just wanted to add on a little bit about our vision for this mall. We talk about transforming Causeway Point to a regional mall. The question has always been about, what do you mean by a regional mall? Perhaps, one of the key components, not just the only thing that we're talking about, one of the key part of this transformation is The HomePage @ Causeway Point. We're going to create this 32,000 sq ft of space. Of course, it is a space that is for reading, but also a lot of social integration is going to happen within that space. The sheer size of this space itself, is where we are not just going to cater to the population or catchment market in Woodlands.
We are hoping that spaces such as this will attract people beyond Woodlands, especially in the northern region. Because of the connectivity of the Woodlands MRT station, we will attract people from all parts of Singapore and even potentially visitors. Visitors who are using the TEL line, the North-South line, if they want to go into JB or from JB, they're coming to Singapore. The whole idea here is bringing this mall to the next level and focus a lot more on its ability to attract a bigger catchment market.
Thanks so much, Richard. Maybe just a bit of a clarification. For the retained sum, is there any tax implications for-
Oh, no.
Bringing it?
No, there's no tax implication.
Okay, thanks. Maybe I will leave it at that for now. Thanks.
Thank you.
Okay, thanks, Terence and the team. I will next get Geraldine from Jefferies to unmute yourself and ask your questions. Good morning, Geraldine.
Hi. Morning, Richard Ng . Yeah, very happy to see such a stable set of results. Maybe just leveraging onto Terence's questions, I saw that income was retained, and no top-ups was done, and fees and units has not been pushed very aggressively. So looking forward at DPU into the forward years.
Sorry, Geraldine, we lost you.
Yeah. Richard, can you hear me?
Yeah. Now we can.
Oh, okay.
I thought I lost you for a while.
Okay. So how should we look at DPU going forward? Because this year is a record high, but next two years, you are going into a very AEI-heavy kind of cycle. Do you foresee yourself topping up to match this year's DPU?
Our focus for DPU has always been one whereby we see gradual growth. After all, we are a REIT, right? The whole idea is to be able to provide our investors, and we do have a lot of investors, both institutional and also retail investors, that look at DPU as a key source of income. The whole idea is to be able to provide gradual growth in our DPU, and that's also our main focus, right? Which is why we provided some retention. Hopefully, that can help us to, again, given the strategy that we have in terms of our DPU payout.
Okay. Thanks, Richard. Maybe just one more on the AEI at Causeway Point. Can you share with us maybe how the library tenant compares to your typical anchor tenant? How aggressive are you going to push for rents, and how long the lease is typically with?
Yeah.
This new tenant?
Okay. This is a CSFS space. That is a Community Sports Facilities Scheme, meaning that it is not a rentable space. It is a space that is given for community usage. What we did is we actually used the space, 32,000 sq ft. We decant this space and put it into other parts of the mall. That is where we then charge rental on those spaces. For this current space, we only charge them on a service charge, like what we do in all the library spaces in, say, Northpoint City, Nex, Hougang Mall, right? So it is no different. We do not really charge them rent for this space. But the opportunity that we can create a space like that and bring in customers, bring in shoppers, that is where the focus will be. A lot of programming is going to happen.
If you look at this picture, where there is an open space directly below the social steps, right? So that is where, again, a multiple type of myriad type of activities, exhibition, programming can happen. However, there is this cafe inside this whole The HomePage @ Causeway Point itself, and that is actually a leasable space. So that particular cafe is owned and run, or rather a space that we will lease out to an operator, and we will collect rent from that particular space.
Maybe I just add on to the activation part, right? From this slide, you see that there is a tree house. So there will be a kids' play area within the library as well, right? There will also be a space that is dedicated to the screening of movies and so forth. So it is intended to be not your typical library. It is intended to be a community hub, iconic, right? So it draws people to come from across Singapore and also maybe the cross-borders travelers as well. So, that is the elevation, right? In the status of Causeway Point to a regional mall that we have in mind. That very much leverages on its strategic location because it is actually located at the confluence of two MRT lines, right? Very close to some of the destinations like Mandai and so forth.
If you look at the Thomson-East Coast Line, it actually brings people to a lot of places of destination as well. That is the additional, I would say, that additional catchment that Causeway Point can avail following the AEI.
Just wanted to do a bit of marketing on this space, right? I'm not sure whether you guys caught it. This is not your typical library. There's no borrowing of books. All the books here are pre-loved. What it means is literally you can take a book, read it, you like it, you bring it home. Right? It's one of its kind, which is why it's one of its kind. From what we understand from the NLB side, this is probably the largest of its kind. They did not want to put it out because you need a lot of verification, but it's either one of the largest, if not the largest in the world.
Oh, okay.
Again, it's very unique. You're not going to see this in Singapore for at least, the commitment is at least for a while. A lot of focus, a lot of attention is being put in to make this not-- which is why we are not calling it a library. We are calling it The HomePage @ Causeway Point. Also it allows people to bring pre-loved books and drop off. There will be a drop-off station for people to bring pre-loved books. This is how we kind of close the loop for second life, so to speak, for books.
Thanks, Richard. In that case, will they actually co-share in the CapEx for this space? Because it looks very CapEx intensive, given the very elaborate designs.
Okay. This is a conversion for cinema space. This will be part and parcel of the AEI cost, right? Because we need to make that space, if not for this purpose, it is for other purposes. So it will be covered under the AEI cost.
Okay.
But the operation and the running of this space will be done, provided by NLB.
Okay. Thanks, Richard. Yeah, sounds like the best. I agree on the best MRT line.
Yes.
Thank you.
Thanks. Thanks, Geraldine. Next, can we invite Tabitha from DBS to unmute yourself, please? Morning, Tabitha.
Good morning, Richard and team. Congrats on the good results. My first question is also on the Causeway Point AEI. The social and reading hub sounds quite interesting. For the tenant remixing, can you share what trades are you looking to reduce and focus on more? Can we expect similarly a high single-digit ROI kind of range similar to your past AEIs?
Okay. Hi, Tabitha. The quick response to it is our AEI target has always been about 7%. I would say that for this particular AEI, that's where our target's going to be.
Yes.
In terms of trade mix, we will be looking at, as part and parcel of the opportunities that we see that is growing in the northern part of Singapore. Plus, of course, there is no hiding about the fact that RTS is going to be running. There will be some trade mix that will be more impacted than others. So that is where we are going to calibrate the trade mix, looking at those trade mix, perhaps that is more susceptible to competition from across the Causeway. We will reduce those provision, but we will play up on a different aspect of provision. For example, F&B will come in again very strongly. Enrichment, education sector will also be at large, expanded.
What we are also going to be bringing in is a lot of brands that could be brands that we are familiar with, but they will do and provide something different. It could be in terms of the size, in terms of the product range, in terms of customization, in terms of experiential. So every one of the tenants that we are looking at, we are paying a lot of attention on creating some form of differentiation, especially on the mini-anchors. We are not going to have a lot of anchor tenants because we are going to cut up whatever space that currently is occupied by Metro.
It is not going to be in that format, but we are going to bring in a series of mini-anchors, and each one of them should bring something different to the table, something that you do not see that is available in the typical suburban setting. So again, the team is working very hard. So we are actually very excited. We are talking to multiple tenants currently. But unfortunately, because the agreement has not been signed, so we cannot share the brands and the names now.
Yeah.
But we hope to be able to share with you in the first quarter business update in January, both in terms of the costs, the ROI, and some of the brand names that we have been bringing in, and what are some of the differentiation that we are going to be bringing forward for Causeway Point.
Yeah. Maybe, Tabitha, just to add on, right? I think in terms of the repositioning, we are not saying that we want to convert Causeway Point into an Orchard Road mall. I think given its location and so forth, it still needs to remain relevant, right, to the immediate community and immediate catchment, right? The transient crowd is something that is on top of the catchment within Woodlands and the northern part of Singapore, but it's still remaining true to its identity and its positioning as a suburban mall, right?
Yeah.
There's a lot of opportunities there. We see number of houses growing, working population increasing as well. I hope that gives you a little bit more perspective of what we are trying to do.
Okay. Thanks so much for the color. My next question is on tenant sales. The quarterly tenant sales appears quite weak in both 3Q and 4Q. Even the adjusted 1-plus percent is a bit lower than the first half. Are you seeing any signs of a broader slowdown? Will you be able to maintain your mid-single digit rent reversion outlook for FY 2027?
Okay. In terms of rental reversion outlook, we will continue to stand on our guidance, a mid-single digit. The sales, unfortunately, as what was explained by Pauline, how we measure our sales is slightly different with some of our peers, right? What we measure our sales is the total sales. That means whatever sales that comes in through the POS system, we take that sales, we compare year-on-year. So when you have some disruption to anchor spaces, like NTUC was doing their work at Waterway Point, so they had to close for a period of time. There's a section on Tampines 1 where the previous Daiso space has been kind of reconfigured. We cut up the space. We don't really call them AEI, even though they are a smallish AEI in nature. So the whole area was disrupted.
All the income was not taken into consideration when we compare year-on-year basis. We still continue to see pretty strong sales coming through for those that are operating. If you ask me, am I seeing a significant drop in sale? I do not see it. It is a case of waiting for all the tenants to come back on stream, and that is when we can then again measure more one-for-one basis. I know some of our peers are actually measuring it on a different format. It could be on a per square foot basis. When a certain area is not contributing, they do not count those, so it is slightly a different format. Whether it is more accurate or otherwise, I would not think one is better than the other. But that is how we have been reporting, so we are continuing to report on that basis.
Yeah. Maybe I just add on to that. Like what Richard mentioned, because we actually use total sales, so it is impacted by disruptions. But if we are looking at sales productivity on a year-on-year basis, the sales productivity increased across our portfolio is close to about 3%. It goes to show that we are continuing to drive the productivity of our tenants within the portfolio.
Okay. Thank you. That is all from me.
Thanks, Tabitha. Next up we have Andy from OCBC. Andy, can I invite you to unmute yourself?
Yeah.
Good morning.
Thanks, Judy, and morning Richard and team. For the first question, can you maybe explain why there was a slight year-on-year decline in distributions from JVs for the second half?
Annie, you want to take that?
Yeah. I'll take that. Judy, are you going to the slides? Yeah.
Yeah.
I think there was a slight decline because you can see that in last year there was actually I think next page. Yeah. We explain here that in last year there was actually a one-off special dividend that was paid. If you exclude that, the dividend from JV is actually in line with this year.
But for our second half, I think it was down 1.5% for second half.
Yeah. Just timing different. Second half last year and this year is quite comparable. Yeah.
Okay. Nothing too material in terms of operations, et cetera?
Nothing material, other than the NEX, which is under ongoing AEI in this year.
Okay.
Yeah. Last year there wasn't.
Okay. For the next question, in terms of rental reversions, any reason why you have not broken it down by asset? Maybe can you give some color in terms of the range or which are the malls that did better in terms of reversions and which are the ones that-
Yeah.
Kind of lagged behind?
Okay. I think generally all our rental reversions were positive.
But of course, we continue to see stronger performance from the larger, dominant malls. We have four of them. You look at Causeway Point, Northpoint City, Waterway Point and NEX. So those are the dominant ones that continue to contribute very good rental reversion. But across the board, they are all positive. I do not see any specific need for us to detail down the rental reversion because we also need to acknowledge that there are competition around some of our malls. We are just giving more information to our competitor. That is all.
Got it. Okay. If I can squeeze in one more question, maybe looking at it from a more medium-term perspective. For your Bayshore GLS, can you maybe share what is the cash flow kind of impact? Because I am assuming when it goes TOP, the interest cost it will flow through to your P&L, right? But it takes time for the mall to rent out, in terms of the cash rental coming in. So maybe can you just share how long would it take before that potential commercial component will become a bit more DPU neutral or positive?
Okay. Annie, you want to take that?
Yeah. During the period of construction, there is no impact to the DPU. There will only be impact to the gearing because the interest is capitalized. We will only start to see the impact from the interest that will reduce the DPU, only after TOP. During this period, you will not see any impact to the DPU for the interest that we are paying.
Yeah. What I am saying is that once it goes to TOP-
Yeah.
Then your interest cost will go to P&L, right? But because your mall operations, your occupancy takes time to ramp up, so there will be an initial negative impact. I am just trying to-
Yeah.
Yeah.
Get a sense of how long-
Yeah .
That negative impact could be.
So maybe to answer that question is, typically before even the mall receive its TOP, by then we would have either fully let or significantly let. So it's a case of once TOP, the tenant may take, the smaller ones, maybe four weeks to fit out before they operate. The bigger ones could be maybe six to eight weeks to operate. So I don't see it as a negative drag for the full year. So it could be just a little bit on the upfront before the whole mall starts operating. And like what I say, most of the leasing are going to be done ahead of time.
Yeah, okay. That's helpful. Thanks, Richard. No more questions from me.
Great. Thanks, Andy. Next up we have Vijay from RHB. Vijay, good morning. Can I invite you to unmute yourself?
Morning. Thanks, Judy.
Morning.
Congrats, Richard and team. It is a good set of results. I have two questions. My first question is, in terms of NAV, good to see that going up in this market. Maybe a few questions around here. Was there any changes in the cap rates? Second, I noticed that Northpoint, sorry, NEX saw the strongest improvement of 5% NAV growth. Any specific reasons why? What is the assumptions for valuers for Causeway Point in terms of growth perspective or tenant sales perspective?
I will take your first question first, and then maybe you can clarify your second question. Cap rate stays the same. There is no changes to cap rate. That is an easy respond to that. For NEX, as you are aware that NEX is currently undergoing AEI and then it is going to be done in phases. Typically, when they do the DCF, they will capture what is it going to be post-AEI, where some of the upside that the AEI may be bringing in once it is completed. But of course, they have to lease out the cost. They will continue to pick up some of this increase as and when we start doing the phases. For this instance, it is capturing a bulk of the phase 1 AEI that is going to be due for completion by the end of this year. Vijay, can you-
Yeah.
Go to the second question again?
Got it. The last part of the question is that there has been some questions about Causeway Point, sales leakage, et cetera-
Okay.
Valuers still expecting income growth for this Causeway Point mall?
Actually, to be fair, I think they do, because if you look at the reversion, just now there was question on reversion. Causeway Point reversion is actually higher than the average number that you saw. The question is really the narrative about sales leakage. Is it something that we know better than the retailers do? Because our occupancy at Causeway Point is almost 100%. Our rental reversion is very, very strong. And the valuers would take in whatever statistics and facts that they are seeing on the ground.
Got it.
They still expect it to perform well. But of course, we are going to start our AEI next year. Right.
Okay.
Maybe if I may add on. For Causeway Point, the valuation has not taken into consideration the upside from the AEI as well. Also going back to the earlier point on Nex, I think in addition to the first phase, there would be some upside from the value creation in the subsequent phases as well. But over time, the headline valuation will increase as we progressively, how would I say, pay up on the CapEx or utilize the CapEx for the AEI.
Got it. That's comforting. My second question is, in terms of the other gains, there was a cash flow realized hedges of about SGD 7.5 million. Is this an actual gain, and where did it come from?
It's a non-cash gain, is accounting where we had to unwind some of the pre-acquisition reserves. So it's non-cash.
Got it.
Yeah.
Okay. Thank you. That's all I have.
Thanks, Vijay. Next up, we've got Rachel from Macquarie. Rachel, can you unmute yourself? Good morning.
Hello. Good morning. Can you hear me?
Yes.
Yes.
Loud and clear.
Okay, great. Thanks. My first question is back to the retained distributions. I just want to understand that, can you retain these distributions, like, forever and there's no tax impact at all? Or is there a hard deadline that you must distribute up by the?
Yes. A quick answer is yes, we can retain it for as long as we want. It is tax-exempt. So it will remain so. It came from our performance, our operating performance, so there's no tax implication on that.
Okay, great.
As we shared, our plan is to distribute it in 2027.
Okay, great. Thanks. My second question, I am not sure whether I missed it, but is Metro going to still stay in Causeway Point?
Okay.
On a smaller space maybe.
Yeah, Metro definitely will not be staying in its current form. That's very clear, right? Even for their business strategy, they already said they are not going to operate department stores anymore. But they are looking at taking bits and parts of the business and put it in a modular form. What do they mean by this? For example, they could just focus on, in some instances, they can just focus on beauty hall, where they do beauty products, cosmetics, perfumeries, and so on. That's one modular concept. They could also look at just doing the households item, right, as another modular concept. Another example is maybe bedding, mattresses, beddings, and so on. Another concept. So depending on what we think it works for, let's say for example, Causeway Point, what are the modular concepts that we feel that it's workable or potentially is workable for the small?
Then we will work with them on just bringing in that module. So their size will be significantly reduced, and they will call it differently as well. There'll be different names for their different modular concept. We are working with them. Currently, we are talking to them. We have not come to a conclusion exactly what are the modules that we think we want to continue to see in Causeway Point.
Okay, got it. Can you share, like roughly how much they would retain from their existing space?
We really can't do that right now because like what I said, it's still very much in discussion. Certain module that they may want to bring, but we may not see value in it, or we rather have other operators taking on to some of those modules. So at this point in time, it's very hard for us to really pin down exactly what kind of sizing that is going to be.
Okay. Yeah. But we are likely going to hear something by next quarter.
Yeah. By January, we should be able to share some of the names, the brands that we are going to be working with for Causeway Point.
Okay, great. Just maybe just squeeze in one question, which is a small thing. I am not sure if I calculated correctly, but has your AM fees in units ticked up a little bit, or is it still about I thought it is slightly above 50%.
Can I take that, Richard?
Yep.
Yeah. On a full year basis, it is about 54%. Yeah, it creeps up because of the AEI. Over quarters, it will creep up. But on a full year basis, FY 2026, we pay about 54%.
It goes up and down, right? If you recall back in, was it two years ago when we did Tampines 1?
T1, yes.
Yeah.
T1, yeah.
It went as high as 70%.
70.
It depends on the programming, the timing of the AEI. For some AEI, we may need a little bit more at a certain point in time.
Yeah, that's fine. Okay, all right. Thanks, Richard. Thank you.
Thanks, Rachel. Next up, we've got Jonathan from UOB Kay Hian. Good morning, Jonathan.
Yeah. Good morning, Richard and Annie. First question relates to Causeway Point. Could you share the duration of the AEI and when you expect completion so that we can better understand any overlaps? Also, the additional NLA that you will secure, is it mainly coming from B3 through decanting the car park? So first question. Second question relates to the guidance of 3.3% in cost of debt for FY 2027. Given that SORA has dropped so much, it looks a very conservative guidance. Can we understand what's the implied level of SORA or the implied level of rate hike that you have assumed to derive at that 3.3% guidance? Thank you.
Annie, you want to take the second question first, and then maybe Pauline, you want to take the one on Causeway Point?
Yeah, can. Yeah. I think, Jonathan, it's difficult to predict where SORA will go. So 3.3 is just based on if the rate continues to stay at current level at around 1.2%, 1.3% at 25% unhedged, our guidance for next year is 3.3%. We will review the guidance next quarter again if there's any change in the interest rate outlook.
Yeah. Okay. On Causeway Point, the AEI duration will be two years. We are looking at second quarter of 2027 all the way to second quarter of 2029, right? Your question about where we are taking the space from, we're actually taking the space from the higher floors and bringing it down. The cinema space, which is currently on level 7, and bringing it down to some of the lower floors. So basement 3 is a newly created space.
Okay. Then the more intense value creation or the more intense work, would it be more in FY 2027 or FY 2028?
The more intense work will be likely in FY 2028 because the first phase will be taking back some of the lower-yielding spaces, right? And converting the space and creating. That means extracting the value from the lower-yielding spaces first.
Yeah.
The opportunity cost for some of these spaces.
Then the second year, you add the additional space?
No.
Not really. Maybe just to chip in here. What is going to happen is, say, for example, the B3 currently is a car park space. When we start working on it, the only impact that we are expecting is the car park income potentially, which is not very significant. That is one area that we work on first. Plus, The HomePage @ Causeway Point space at the previous cinema space. Again, that is another area of work. The first phase is likely to be not as intensive as the one, as Pauline mentioned, that in 2028. I think that is where the disruption into current operating areas will be more significant.
Yes. The creation of new space will be in the first phase as well. Bringing the GFA from the higher floor to the higher-yielding lower floor will be in the first phase. We realize the value creation upfront.
Okay. Yes.
Am I-
Yeah. Confusing.
No. But maybe explaining a little bit more about the second year, where does the disruption come from?
The other floors, you saw from the fly-through, there are also other parts of the mall that will be affected as well. But we always focus on taking back the spaces that is lower yielding and also creating the additional value up front as soon as possible.
Okay. Yeah.
Your earlier question, where is that value creation? A lot of it will be front-loaded.
Yeah.
Yeah. Okay. Thank you, Richard, Annie, and Pauline. Thank you very much.
Thanks, Jonathan. Next, we've got Brandon from Citi. Brandon, can you unmute yourself? Good morning.
Hey, morning. Morning, Richard and Annie.
Morning.
Hey, just want to touch a bit on, just now Pauline was talking about all the various initiatives on improving the NPI margin, right? If you look at this year, it is about 72.3%. So it is actually pretty near your peak level, I think 72.5% a few years back, right? Can we assume that this is the level that you are targeting for the next couple of years, especially given the AEI that CWP is going to go through?
If you ask me, Brandon, our target is actually higher than that. That is the reason why we are putting in place a lot of initiatives. Some of them are coming through as we speak, right? We have not completely benefiting all the various initiatives that we have put in place. So some of them will continue to drive this cost management perspective. As we upgrade the malls, of course, we also will put in better operating, better productive equipment in place that will help us, again, to save cost in terms of maintenance, energy cost, and so on. As far as possible, we will try to push on in terms of the margin.
But again, of course, you are probably also aware that there are many other aspects that can disrupt that portion of it, including manpower costs, which with the progressive wage model, a lot of the contract services that we are seeing is actually seeing a hike. But because of the various initiative technology usage and all this, we are trying to mitigate that as far as possible.
Okay. Basically, it is good to assume that the 72-ish number as a very baseline conservative guidance.
Not conservative. Something that we are working very hard to maintain, at least. Yeah.
Okay. Just second one. Are you comfortable to share with us the revenue and NPI split for South Wing and North Wing for FY 2026?
South Wing and North Wing.
Just a rough contribution. Yeah.
Yes. Pauline, you can go ahead.
Yeah. Okay. Brandon, I do not have the exact numbers with me now. But I think when I presented this slide, I did make the point that if you look at adjusted for ownership period, the NPI for both North Wing and South Wing has actually improved on a year-on-year basis. Because we only own South Wing for four or five months in FY 2025. So that is why you see a big jump in the blue number.
Yeah. Correct. So just now I am asking for FY 2026 or is there a stabilized proportion that we can roughly find out the performance of these two wings?
I think we can come back to you on-
Yeah. Okay. Can. No problem.
Okay. Get back to you on that.
Okay. Thanks. That's it. Thank you.
Thanks, Brandon. We've got Darren from Phillip Securities as well. Morning, Darren.
Yeah. Hi. Thanks, Judy. Hi, Richard and team. Just one very broad-based question. Where is the tenant demand primarily coming from to support this mid-single digit reversion? Are you still seeing stronger demand from overseas brands like F&B, wellness and such, or any new-to-market tenants? Alternatively, is rental growth still driven by the existing tenants renewing at higher rents or expanding the operations? Yeah, thanks.
Okay. I think it's quite broad-based. Of course, we shared the three categories that has performed well, that it's F&Bs.
Beauty and healthcare.
Jewelry and watches, and beauty and healthcare. This continue to be a strong driver for our sales. We also see uptick in areas like fashion, sundries. Sundries services would include even things like your pre-loved product and so on. That is another category that we are seeing quite a good traction. Education, as I mentioned just now, continues to do very well, especially because the fact that our malls are located in the suburban area, and that's where we see potential for us to, again, increase the offerings and the clustering of such products. Overall, I would say, most of the trade mix have actually been producing quite good results. But definitely F&B is one of the bright spots still.
Yeah. Thanks. Mainly on the overseas brands, are we still seeing a lot of demand from these overseas brands trying to enter into Singapore?
Oh, yes. There's a lot of overseas brands, not only just from China, which was at one point in time, we were hearing a lot of narratives about how the China F&B brands are actually coming into Singapore in a very big way. But now we are seeing another wave. Right now, it's the Korean food. You go to a lot of malls today, you see a lot of Korean restaurants propping up, or a lot of them are actually undergoing renovation before they enter the market. Even for Hougang Mall, for example, we brought the first restaurant called Sansok. I think it's called Sansok. A restaurant that is actually brought in by one of the chef. If you watch K-drama, Culinary Class Wars, one of the chefs that appeared in the drama series is actually the owner of that restaurant.
They brought in the first of its kind into Singapore, and they chose actually Hougang Mall. You do see a new entrance into the market, not just the Chinese brand, but also other offering. That's what we want to see. A more vibrant type of offerings, various kind of offerings that can then cater to the different palette of our communities.
Okay. Yeah, thanks for the color, Richard.
Okay.
Thanks, Darren. We've got Wai Fai from HSBC. Good morning, Wai Fai.
Hi. Thank you very much for taking my question. Just one very quick one on Causeway Point. Are you able to give us a sense on what will be the average occupancy during the two-year AEI, and what is the lowest point that we should be expecting? How does this kind of tie in with the 50%+ lease expiry this year? Thank you.
Okay. I will ask Pauline to attempt to give you that number. If the concern is whether the reduced occupancy is going to be a drag to the DPU, that's where we talk about how we can try and make up for this gap. Firstly, we'll be using AM fees to help us to patch some of this impact or loss in income. The other one is, of course, we have this retention that will be used in the event that if AM fee is still insufficient to cover some of the gap. If you are looking for just specific kind of sensing in terms of occupancy, maybe Pauline, you might have a better idea on that.
Yeah. I'll try, Wai Fai. I think we are still in the process of working out the phasing for the works. But in general, we try to maintain a certain portion of the malls operating. If I take reference to some of the earlier AEIs that we've done, I think in terms of the disruption, it's probably in the 10%-20% range at any point in time for an AEI. Did I answer your question?
Okay, that is clear.
Yeah.
Going back to what Richard mentioned, from what you are saying, AMV and your retained income would be able to fully offset whatever disruption that we could see. Is that correct?
Yes, that is the aim.
Okay.
For us to provide sufficient kind of funds available to cover the impact of AEI.
Okay. Thank you very much. That is clear.
I think we have got the last question from Vijay, RHB. Hi, Vijay. Can you unmute yourself?
Yeah. Hey. Thanks. One last question. I think looking at the next 6- 12 months for FY 2027, you have plenty going on with NEX and Causeway Point and the Bayshore. How should we look at inorganic growth for FY 2027? Are you still looking at acquisitions, probably in some of your JV malls or third-party malls? Or would you be looking at some development site for FY 2027?
Okay. Our hands are actually very full. In terms of acquisition is always opportunistic, right?
Yeah.
We don't know when the sellers are ready to sell, just like any other REITs. Unless it's a sponsor-driven sale. For us, at this point in time, we no longer have a sponsor pipeline as we speak. We'll be looking out if any of our partners are interested in that, so it's opportunistic. Our focus is really now on this AEI for NEX, AEI for Causeway Point, and also for the Bayshore development it's going to be taking in stages. It's going to be done over the next four years. Those are going to keep us very busy, actually, for the next couple of years.
Got it. Not a priority, more of opportunistic for FY 2027.
Any acquisition will be opportunistic.
Thank you. That's all I have.
Thank you so much for all your questions today. I think we have come to the end of the Q&A for FCT's results briefing. If there are further questions, feel free to reach out to any of us, of course. Thank you, and have a great day ahead.
Thank you. Right.
Thanks.
See you guys soon. Bye.
Thanks, everyone.