CapitaLand Integrated Commercial Trust (C38U) Earnings Call Transcript

Good morning. Welcome to CICT's First Half Results briefing. Today, we are in summer special, the Paragon Club is the member's lounge reserve for its top-tier members. And if you like to return, you can start spending after the briefing. And remember to spend generously to support our economy and of course, our tenant sales. Thank you very much. Jokes aside, we are very happy to have you with us today. And to those joining online, thank you for dialing in. In a moment's time, we'll have our CEO, Choon-Siang, walk us through his key highlights for the first half results. Following that, we'll move on to the Q&A segment with the rest of the management team. And with that, I would like to hand the time over to Choon-Siang.

Thank you, Allison. Good morning, everyone, and thank you for joining us today. If you're wondering why we gather all of you here today, it's not because we have a major [indiscernible] to announce someone asked me that this morning. So I thought I'd get it out of the way. We just wanted to showcase the beautiful property that we have just acquired, nothing more than that. And I think most of you will not have been into this cloud before because it's actually quite new. It was recently renovated sometime early this year as part of amenity perk to some of our higher tier members in the Paragon Club. So before you leave today, please sign up for the Paragon Club membership for the use of this lounge, I think you just need to spend $25,000 a year. Shouldn't be hard? 2 watchers will do that you. Okay. Anyway, without further ado, let's start off with the presentation proper, you guys would have seen the results that we have put out early this morning. We're very pleased to present the results for our first half of 2026. The past 6 months were marked by very strong execution of our growth strategy. including portfolio reconstitution, you have seen our announcements in terms of the sale of Bukit Panjang, the bidding for the [indiscernible] land and then the acquisition of Paragon, together with the divestment of Asia Square. So we have also very active asset management as well as very disciplined capital management. All of those things have contributed to our very strong results. So these efforts have enhanced the quality of our portfolio and position CICT for future growth. So I'll walk you through some of our financial highlights as well as our operational performance. So we delivered a very strong first half, as you can see. NPI increased 8.7% year-on-year to $630 million. Distributable income increased 13% year-on-year to $466 million while DPU grew 7.1% year-on-year to [ $0.062 ]. Importantly, this DPU growth was achieved despite the enlarged unit base, following our equity fundraising in April this year. This reflects the strong operating performance of our portfolio, the step-up acquisition of Capital Spring supported by lower interest expenses. Operationally, occupancy remains high at 95.6%, while rent reversions are healthy at positive 4% for retail and 7.6% for our office. At the same time, we continue to maintain a healthy balance sheet, lowering aggregate leverage from 38.5% to 37.4%, while keeping our average cost of debt at 2.9%. As part of our strategy to grow the portfolio, both organically and inorganically we have been actively executing various initiatives. We completed the acquisition of Paragon on 1st July. This strengthens our presence in Orchard Road and adds a freehold premium integrated development to our portfolio. On the divestment front, the sale of Asia Square Tower 2 remains on track with completion expected in the second half of the year. We are also progressing with several AEIs and upgrading initiatives across the portfolio. These are aimed at uplifting our assets to strengthen income resilience and drive long-term value creation. Together, these initiatives demonstrates our active approach to growing the portfolio. Our company small AEI is progressing well with about 96% of the AEI space committed or in advanced negotiations. We have curated a lineup of brands across beauty, F&B shoes and bags and fashion accessories among other categories. Several brands have already opened. More brands were progressively open through the second half of the year. As more of these concepts come on stream, they will further elevate the more retail proposition, deepen stronger shopper engagement and reinforce the mall's long-term growth potential. Let me take you through the summary of CICT's first half results. Gross revenue increased 7.5% to $846.8 million and NPI grew 8.7% to $630.5 million. This was driven mainly by CapitaSpring step-up acquisition and the contribution from Gallileo, partially offset by the divestment of Bukit Panjang Plaza. Distribution income from joint ventures was lower at $16.7 million, down 19.5%. This decline is optical rather than operational as CapitaSpring income is now fully consolidated at the NPI level following the acquisition of the remaining 55% interest, so it no longer flows through the JV line. Next, distributable income rose 13.3%, $466. 7 million, a strong double-digit uplift. DPU grew 7.1% to $0.062, a robust increase, although roughly half of the growth of the -- in the distributable income. The difference is due to the enlarged unit base. On a weighted average basis, units in the issue grew 5.8% to about $7.73 billion, reflecting largely the private placement of 326 million units used to fund our Paragon acquisition, despite absorbing a 5.8% increase in unit base, we still recorded a 7.1% increase in DPU. For the second quarter, gross revenue increased 7.0%, while NPI grew 9.6%. We have covered the first half performance, so I'll move on to the next slide. Our portfolio continues to deliver income diversification, which provides resilience, enables us to capture opportunities across sectors while mitigating concentration risk. We have paid an advanced distribution of $3.98 for the period from 1st January to April on June -- 8th of June 2026. Unitholders may wish to note that the remaining distribution of [ $2.04 ] will be paid on 25th September 2026. Our balance sheet remains healthy. NAV increased to $2.15 from $2.14 from 31st December 2025. We continue to strengthen our balance sheet through disciplined capital management. With the temporary repayment of debt using proceeds from the equity fund raise, aggregate leverage has reduced to 37.4% from 38.5%. Average cost of debt remains stable at 2.9%. Our debt maturity profile remains well spread out with maturities extending to 2025. This helps reduce refinancing concentration and gives us flexibility to manage funding requirements across different market conditions. Our interest rate exposure remains manageable with 1% increase in interest rates. The estimated DPU impact is about [ $0.27 ]. On our portfolio and asset performance, occupancy remains high at 95.6%, up 0.4%, supported by proactive leasing and active asset management will remain stable at about 3 years. Top tenders or tenants is unchanged. They contribute only 16% of gross rental income and no single tenant contributes more than 5%. As such, tenant concentration risk remains low. Lease expiry profile relatively balanced across the next 5 years. These expiries in 2026 are manageable with 5.8% of the 9% lease expiries already in advanced negotiations. Our tenant base remains diversified across multiple trade sectors and will continue to support our portfolio resilience. Leasing activity remains healthy across both retail and office portfolios, and they continue to register high retention rates. For retail, demand in the second quarter is mainly driven by F&B, beauty and health and fashion accessories. While for office, demand is mainly from IT and telecoms, legal and banking, insurance and financial services. Retail occupancy remained strong at 97.7%, well above Singapore's retail market occupancy. There is a slight drop in the downtowns occupancy, mainly due to the AEI at Plaza Singapore and The Atrium and Orchard as well as some natural lease expiries. For the first half, we continue to deliver positive rent reversions across both our downtown and suburban portfolios. Suburban malls achieved stronger rent reversion of 5.1%, while downtown malls recorded 3.2%, resulting in a retail portfolio rental reversion of 4.0%. Our retail portfolio continued to deliver resilient tenant sales growth. Portfolio tenant sales increased 1.6% year-on-year, supported by new store openings, seasonal promotions and healthy trading across key categories. Fashion and accessories and jewelry and watches were among the key contributors. Downtown malls were resilient, achieving growth of 1.7% while suburban malls recorded an increase of 1.6%. A slight moderation from the previous quarter, consistent with the broader retail environment. We continue to curate our tenant mix with new to market and new to portfolio brands and concepts across F&B, hobbies and lesion entertainment. Our [indiscernible] portfolio remains resilient with occupancy improving to 94.4%, up 0.7% from the previous quarter with uplifts across Singapore, Germany and Australia portfolio. In Singapore, average office rents continue the upward trend reaching $11.03 per square foot per month. Across our Singapore Grade A office assets, the expiring rents in 2026 are largely below prevailing market rents. This positions us well to capture positive rent reversion when leases are committed. Leasing discussions are already underway for a majority of the near-term expiries. Looking ahead, CICT's growth trajectory remains firmly on track. We have clear income drivers that will continue to support growth including progressive income contribution from Gallileo, the addition of Paragon following its completion on 1st July as well as the continued flow-through of positive rental reversions achieved across our portfolio. At the same time, we remain disciplined in managing our cost and capital. Energy rates for our Singapore portfolio have been hedged through to mid-2027, providing greater certainty over key operating costs, supported by a strong balance sheet, a diversified portfolio of high-quality assets, we are well positioned to navigate market uncertainties, capture growth opportunities and deliver sustainable long-term value to our unitholders. I'll conclude the presentation here. Happy to take any questions easy.

Hold your horses. May I invite the rest of the management team on to the front. Okay. So now let's come to the most anticipated part of the briefing, the Q&A segment. Before I start, I would like to introduce the management team. So on Choon-Siang's right, we have our CFO, Wong Mei Lian. And on Choon-Siang's left, we have Head of Investment, Jacqueline Lee. And to her left, we have Head of Portfolio Management, Yi Zhuan. Okay. A bit of housekeeping before we start. We will take questions one person% at a time. If I have more than -- and we'll ask that you only ask 2 questions per round, you have further questions, we'll come back to you. And okay. And in keeping with tradition, we will have [indiscernible] with the first question. The floor is yes.

Mervin from JPMorgan. Congrats to on excellent results, keep outperforming expectations. So my first question, obviously, we have very strong results over the last few years is the best we've seen? Will things start to moderate from here? Second question, any updates on [indiscernible] at Capital Sky? And in terms of tenant sales for suburban seems to have slowed down a little bit in the second quarter relative to the first quarter. What's happening there?

Okay. I'll take the easy first question, and then Yi Zhuan can take the hard questions. Okay. In terms of performance to date, I think based on pure numbers, it is our best first half, I think, ever. But let's not celebrate too early. We are waiting to see hoping that the performance continues for the rest of the year, but as we have highlighted. We do have some growth drivers. I think first half results have not captured. I mean, to answer your question on whether this is the peak. We don't think so because we -- this set of results have not captured some of the growth drivers that we have embedded as part of our initiatives that we have -- some of the acquisitions that we have done in the past as well. And I think I've alluded to that in the last slide as well. I mean Paragon has not been accounted in the first half numbers, and that should be quite a strong driver, given the 1.7% accretion that we have articulated when we did acquisition. So that should bode well for the second half results. Secondly, Gallileo, I think that has contributed to some of the performance in the first half and will continue to drive the performance for second half because that was not fully accounted for in the numbers last year as we have fully handed over to the tenant pretty much early this year only. There was a little bit of income last year, but not that much. Third, thirdly, I think organically, we have rental reversions are still positive that will continue to help drive the growth for the organic portfolio. Fourthly, companies more. There was some downtime in the past few months because of the AEI, Lot One as well. Those will progressively start to contribute in the second half of this year for [indiscernible]. And I think for Lot One, we should expect the contribution from early next year. So there are still quite a few drivers that we have put in place that will continue to drive the performance of the REIT going forward. And we have not gone into interest expenses. I think Mei Lian and the team has done a very good job managing our interest rate exposure. We are now below 3% on average. And our marginal rate is still below that. If you look at our borrowing rates today, we're definitely borrowing below 2.9%. So although we are getting closer to our margin rate, so the rate of decrease in interest expense would have really come down but we still expect it to inch lower going forward? Yes, there's the second question.

Yes. So for all the sales right. For [indiscernible], we are already in talks with some tenants on prospective tenants. So it includes some tenants while expansion space within the building. So hopefully, we have some good news to share in due time. And as for sales, for second quarter, sales is true, it's a bit slow I mean, the travel tourist arrivals has been softened. We also see consumers sentiment has also softened a little bit, and it kind of translates in the number for second quarter. But generally, overall, it's still relatively resilient. So is this the peak or moderate thing. I would say that probably you will see a bit of moderation in the near term, but it should pan put well full year's perspective.

Do we have the next question? Yes, [ Rachelle ].

Congrats on very strong results. So my first question is on Paragon Mall AEI. What are your thoughts about it? You have hold it for like a 1-plus month really can give us some details. Second question is on your divestment -- the thoughts on divestments of assets. Any chance on divesting your overseas assets or still very much Singapore non-core assets?

Okay. So I think for Paragon, I don't think we have very much more to -- I think we put up a statement earlier on the Metro when Metro announced that they will stop their large-format stores both Paragon as well as cost point. I think the position remains the same. So we are reviewing what we want to do with the space as discussions are still ongoing. So I don't think we are -- we have a definite plan to announce yet. But there are a few things that we are looking at. I think we have mentioned in the statement some low-hanging fruits like connectivity to the neighboring buildings to improve the footfall. I think that we are also looking at pushing out some of the basic amenities. This is case impact, there are some ongoing are that the previous management team has already done, which is, for example, this Paragon Club that was recently completed. But of course, I think on top of my mind what we're going to do in the metro space. Unfortunately, I don't think we want to get into a discussion on debt as discussions are still ongoing with both Metro and other potential tenants. So there will definitely be some reconfiguration of the existing space that's -- but in what form and in what format, I think give us some more time before we are ready to make a full announcement on the AEI plan on that space. What was the second question? Divestment. I think divestment remains quite similar to what we have said before. I think we want to focus on the divestment in Germany. Unfortunately, I think the environment is not so easy with the higher inflationary and interest rate environment in the eurozone. So I think that becomes a little more challenging. But definitely, we are -- we are definitely looking at starting a process over there. So we will see whether that is us to anything. But as always, nothing to comment or announce until there's something to.

Do we have the next question?

Having said that, I think that's not. Sorry, just to add on. I think on the divestment, actually, we have done quite a bit of divestment in the last 3 or 4 years, although the headline has been around the acquisition of Paragon -- as let's not forget that actually, we divested Asia Square Tower 2 which is still in the progress happening. We divested Bukit Panjang Plaza at a very attractive premium to valuation just February this year. Last year, we divested a service apartment tied to the CapitaSpring spring, which allowed us to acquire the 55% of -- so a lot of things were done that actually dovetail quite nicely with the whole acquisition story that we have been writing over the last 24 months. And then the year before that, of course, we also divested the [indiscernible]. So you can see that actually, we have done a very systematic portfolio reconstitution, getting out of assets at a low 3% to 3% and mid-3% new and acquiring assets at a much higher yield. So I think all of that has together help to drive our DPU growth in a cumulative manner over the last few years quite significantly. Sorry.

You can go ahead.

Congrats on the good results. I just want to check your views on [indiscernible] putting up some of the sale of assets in Orchard Road. Is there any synergies that you see together with our portfolio? And would this have also had some impact on your valuation on Orchard assets by the end of the year? And then second question is on the Australia portfolio. Can you give us some updates on the office market there? What's happening there?

I'll take the [indiscernible] question and then maybe [indiscernible] can take the other. So I think on [indiscernible], are there any synergies? Do you mean if we have bought it, would there have been synergies not because we didn't buy it, so there's no synergy between us and Hong Kong Land.

I think they will have another one in the sub for sale so potentially [indiscernible].

[indiscernible] is not connected to [indiscernible]. But you know you that asking you for the asset. It's I think it's sub 2%. Although there are some -- I think they have received some offers, but I think the [indiscernible] up 2%. On an as basis by is freehold. So I think it attracts a different set of buyers for the assets that potentially buyers that are looking more long-term hope. Okay. So the question is whether we look at asset probably not because of the [indiscernible], right? I don't think anybody -- any of our investors would like us to look at something like that. [indiscernible] Yes. I think [indiscernible] has always been there competing with ION in a way or maybe competing is not the right word. Actually, there's also -- I mean it does help if we not do well. It doesn't mean that [indiscernible] not do out anyway. Anyway, has always been there, sitting side by side to -- just because the ownership change doesn't necessarily change the dynamics of the 2 months unless there's a major redevelopment that happens. But I think we are very far from that scenario. So yes, I'm not sure if I answer your question on that. There's not much more to add. I don't know what we are I don't know what the buyer is going to do with the asset. I think on as basis, it won't change the dynamics of that whole area, I think because they have coexisted side by side for the -- for a long time already. If anything, I think [ Aon ] probably adds to the value of your lot more than the other way around. Okay. I don't know if that answers your question. Yes.

As for Australia. Unfortunately, there's not much to share difference from the last quarter in terms of Australian market, not much a shift there actually. If we look at the CBD office market, it's generally still very centered around the core CBD very premium assets. So those definitely have seen improvements in rents, and we are also seeing signs that the incentive level for those came off a little bit to the low 30s, 30%. But unfortunately, for the rest of the French CBD, you're not Sydney, our Midtown or Southern -- actually Southern is actually not doing that well. Midtown is a little bit stabilizing, benefiting a little bit of flow-through from the core CBD. North Sydney is still having a vacancy kind of issue because it costs not fully absorbed at this point, there's a little bit of pressure in terms of vacancy. So rents has been relatively stagnating. Sorry, yes, I think -- and so for our own portfolio, the good thing is that the team has been doing pretty well, defending the occupancy of [ 101 Miller ] as well as [ 66G ]. We have also seen a little bit of improvement in 100 after occupancy rise. So we are working hard to try to stabilize the occupancy but we wait for the market to turn.

Can we have the next question from Vijay Natarajan on to [indiscernible].

I have 3 questions. Maybe firstly, on Germany. What's the cash occupancy of Gallileo at this point of time? And what would it go to in the second half. Earlier, there was a discussion on putting these assets on divestments, German portfolio? Has there been any updates on this? Secondly, in terms of Singapore office portfolio, I noticed there has been some last tenant movements in the [indiscernible] area, Allianz, Deloitte, et cetera. I mean, what's driving this? Is this purely rents or is there some other bigger factors why the tenants moving to newer buildings in this market. Third finance cost. I think team has done really well. What's the guidance, should we expect it to go up?

There's a lot to digest. I think for the first question on -- what was the first on Germany, right? Divestment in Germany. So I think the cash occupancy of Gallileo actually is almost 100%, 97%, 98%, maybe Yes. it's fully and sort of small amount space is pretty much fully handed over to the end tenants already. So that's the first part. Divestment, as I mentioned earlier, we have started a process, but more on the MAC, which is the main airport because we have not fully handed over Gallileo. So we -- and we have only just completed it. So we want to make sure that we see through the handover. So we're no hurry. In any case, that's almost 100% occupied and we're earning good income from that asset. So no hurry to divest. So we want to focus on -- if you want to look at testing the [indiscernible] market, we got to look at the airport asset first. In terms of third question on [indiscernible] Pagar, right? I think on the tenants moving up. I think it's very circumstantial and opportunistic. I think maybe than, you can elaborate on some of those. So I think specifically asking about Allianz and [indiscernible], right?

I think for [indiscernible] case, it's pretty much a case where, firstly, the some of the buildings that's new to the market, right? And there's a lot of starting to build out the occupancy, they can offer very competitive rents. So definitely, at times, certain tenants will actually fit the account profile where they will move for rents as one of the consideration at the same time, getting a better quality asset in a way, right? But location probably not so sensitive. So in [indiscernible] case, probably similar where they are actually moving to something where the direction of how they want their office and the location and is one of the driving factors. So then the next question is why some of these tenants can come into us when some of these bigger [indiscernible] we always have this problem where at this point, our occupancy is relatively healthy. So actually, we do have a few tenants in the market there [indiscernible] 100,000 square feet, for example. And those are not quite we can accommodate. So there's always some of these music [indiscernible]. So right now, if you look at which office buildings now can accommodate big size, right, short tower and [ Kepper ] South Central. Sometimes it's not just fully because of the asset or the location, right? It's really down to whether the availability of space. And so what's driving some of these movements, right? I think in market, everybody is very aware that actually, if you look at new supply in the next 3 to 4 years, it's actually quite limited in CBD. So not a lot of corporate real estate, they are struggling with this dilemma. On one hand, the cost of moving is very high. On the other hand, they are aware that if they need certain size, they need to make a call at this point. And some of them -- so even for landlords like us, right, we are already talking to tenants in [ 227, 228 ] from both trying to get tenants to join us but on the other hand, it so to be defensive or intention, right? So we're speaking to some of these tenants really early. So a lot of decisions they are also kind of forced to make early because if they want to wait for another year, that space may not be available in the next year or so, especially if they are very particular about quality or location. So some of the tenants also have been coming to us to try and see whether or not they can actually secure their expansions and renewals spaces within us. And so some of these movements that we have seen just now we start off with one of our [indiscernible] Sky tenants, right? Some of these movements are actually good for us because it actually allows some of the tenants within our own buildings to grow. Like CapitaSpring, I also faced an issue where when a lot of tenants -- when they signed at a peak of COVID or post COVID, right, where everybody is very cost conscious and everybody is that the [indiscernible] work from home. They can of underprovide for the space, right? They really -- and when they need expansion space now, they struggle to expand within the same building. But everybody is trying to consolidate at the same time space requirements. So every time when we have new builds like this where some these pressures, we expect some of these music [indiscernible] that will happen and that's why we are seeing the market now.

We're not too concerned about it because I think what you're going to say. I think this is really timing, right? I think everyone has a new building like [indiscernible] so you expect a little bit of musical share. But I think show is pretty much, I think, 60%, 70% fill ready. So I think the remaining spaces, they will not be able to cut brand to try to entice people because they probably need to make the underwriting. And I think that exit rents for some of these tenants on specifically, for example, it's quite below where the building passing brand is. So I think we are quite confident that we'll be able to lease out with positive rental reversions if we need to fill up this space. In fact, I think the momentum is there. I think we are seeing quite -- you have seen our office occupancy moving up as well. So the leasing momentum is there across all of our buildings, and we expect this momentum to sustain for the next few quarters because I think now most of the new buildings have already been spoken for in terms of the anchor tenant. So I think the supply -- and continues to be tight. We do expect occupancy to continue to improve. I think that was the third question on financing costs. Mei Lian can take that.

Okay. On financing costs, first half is 2.9%. So between first Q and second Q, it's relatively stable. But for -- going forward for this year, in second half, we do see that we have to take up more loans for the acquisition of Paragon and because it's happening ahead of the divestment of Asia Square, there is a [indiscernible] bit of floating rate loans that we have taken. So that has the effect of lowering the cost of debt in the quarter prior to the completion of AST tool. Yes. So that would sort of have some effect of allowing the average cost of debt to inch down slightly.

Just 2 quick ones. I think first on reversions. I think retail is down from your usual 5% or higher. So what's driving that? Is it macro? Is it spending concerns on RTS. And with Paragon and your AI competition, are you expecting that to come in a bit higher. For office as well, I think next year, you have some quite large anchor leases to renew. Are you expecting debt to stay or go even higher? Yes. So that's my first question. I think second on pipeline development and AI looks very fruitful from now to 2030, are you actively looking to add on to that?

I think for rental reversion, it has softened a little bit. I think it's partly due to a few large leases and Yi Zhuan can comment on that also. There is also a bit of the effect of the AEI because when you -- when we are going through some of the AEIs, of course, some of the renewals, we will not be able to be as aggressive as for a normal mall. So I think I'll let Yi Zhuan elaborate on that. And for rental reversions, maybe I'll touch on the second question first before I hand it over to him. In terms of our pipeline, as you really pointed out, I think we have a very strong pipeline. We already have the outcome development. We have some AEI. We have Plaza Singapura, AEI potentially in Paragon. So we are -- I think ideally, we want to have a consistent flow of AEI so that there's an entry and exit in terms of cash flow. That's what we are trying to do, build up a consistent portfolio of AEI, so to speak, maybe 2 or 3 that are -- so that you can recycle them every 2 to 3 years so that cash flows can match. I think we are open. I think we still have some capacity in terms of our balance sheet, in terms of our resources and in terms of our ability to commit because [indiscernible] small and no one will get completed end of this year anyway, so that you will free up some capacity in terms of both management resources as well as financial resources and our development limit is not anywhere close to threshold yet by virtue of the fact that we have such a large asset base. But I think all this is very opportunistic. Of course, as with all things, we look at everything with very keen financial eye and perspective. We only want to do things that ensure a certain area of returns to our investors, [indiscernible] done. So we'll see what comes up. If there's anything interesting, we will definitely want to participate if it makes sense. Zhuan maybe you can just.

So for the reversions, yes, it's true that this quarter is a little bit lower. It's really quite specific to a couple of assets and leases in the downtown, right, where we are undergoing AEI. So that kind of help pull down everything well. The suburban is helping on the other hand, maintain some of these. So suburban rent reversions is still relatively healthy. Overall, I think at this point in the market, retailers are kind of under pressure in terms of the margins, manpower costs, operational costs. And we always stress that when we look at some of these rent reversions, right, we want to make sure that the trade mix is correct. The tenant is correct. And then when we look at the reversion, we just want to hope that it's actually something that's sustainable that is in line with growing their business with us.

Yes. It's still within our range of mid-single digits, 4% for -- I do also do and grow at 4% to 7% is not too bad. If you look at the GDP numbers that came out yesterday, 5.9% GDP growth in second quarter forecast of 4.5% to 5.5%. I think all of this will have positive spillover effects to retail spend in general. I think if you look at retail sales, it's been up quite consistently despite what's been happening around the world in terms of geopolitical tensions, but Singapore seems to be holding up quite well, both in terms of GDP growth, retail sales and overall economic environment. So I think generally, I think the mood is actually quite optimistic and bullish is my sense.

Joy from HSBC. Choon-Siang, we're still seeing you bidding for the [indiscernible] as well. So I guess from a development perspective, what -- how much -- what percentage of our balance sheet will you be happy to sort of spend on the development projects? And also just broadly, if you think about investing for growth going forward, how would you stack sort of core assets development, AI and where you're seeing best returns at this point?

I think -- I mean, our regulatory limit is 10%. Fortunately, we have a very large asset base. So we are nowhere close to that. I don't think there's a target we're trying to hit. If you ask me 12 months ago, maybe the number is 0. But I think it really depends on the opportunity. I think [indiscernible] was quite a unique opportunity. Make sure we did participate. But I think it's not it's slightly different. I think our approach to the [indiscernible] bidding is a bit different. I mean if you look at the pricing that we enter it and all that, it's actually quite different from how we price outcome. It reflects our desire for that site as well. So that's because we before side doesn't mean it's a [indiscernible] win side also. So then we just price accordingly based on the attributes, the attractiveness of that location, right? So in that sense, we do view [indiscernible] as a more attractive proposition to say [indiscernible], right? Because it's a much larger and much more -- there's a bit more scarcity element in that location. So yes, so how we bid also reflects our risk appetite for that location. So just because it doesn't mean that we are trying to grow our development pipeline, right? So that answers your first question. I think the second question was on -- okay. So I think if you look at how we look at investment returns, naturally, AI offers the ballast return usually because we have always talked about ROI of about 7% but unfortunately, the capital deployed for AEIs usually is quite small. So even if you get 7% on $100 million, it's not as meaningful as 5% on the $3 billion of, for example, right? But -- and there's only so much you can do for AEI. We cannot do 5 AEIs at any one time. So that, to me, forms the base of our core value add Development provides a better return than, say, buying core asset outright, but it comes with its own risk and timing constraints as well. So I think -- to us, development will never make up more than -- by the fact that we are limited anyway, we're not making [ 10% ] anyway. So it will continue to be a very small part of our portfolio. So I would say that the bulk of our portfolio is still going to come from organic, inorganic in terms of acquisitions with a small contribution kicker coming from development. It's not going to be a key focus for us.