City Developments Limited (C09) Earnings Call Transcript

Okay. Good morning, ladies and gentlemen, friends from the media, analysts, bankers, investors and CDL colleagues. My name is Belinda, and I'm the Head of Investor Relations and Corporate Communications at CDL. On behalf of the CDL management, thank you so much for joining us today for CDL's briefing on our first half ended 30th of June 2025 financial results. Now the first half 2025 was a significant period for our group, but I am so delighted to see everyone here in this room at the M Social Singapore as well as the hundreds of you joining us virtually online this morning. So for today's briefing in line with CDL's commitment to environmental sustainability, we encourage you to please scan the QR code on the screen earlier that was -- so that you can download the documents that were uploaded on SGX. So here is the QR code. For those that are joining on online, you can also similarly download those documents, which are available on the SGX website as well as our CDL website. Now they include firstly, a copy of the detailed financial statement; secondly, a press release summarizing the key highlights of our first half 2025 performance; and thirdly, a presentation deck that the management team will be walking through very shortly. Now for all our guests joining us virtually, you would similarly be seeing these documents online. I would like to introduce you to the CDL management panel. In the center, we have our Executive Chairman, Mr. Kwek Leng Beng; followed by ExCo members, Mr. Sherman Kwek, our Group CEO, on his right; Mr. Kwek Eik Sheng, our Group COO, on his left; and then Mr. Chia Ngiang Hong, our Group General Manager; and Ms. Yiong Yim Ming, our Group Financial -- Group Chief Financial Officer. Now the format of today's briefing will be in 2 parts. We will kick off with a presentation of some of the key highlights led by Sherman, then later followed by Yim Ming on the financial highlights, and then we will hit off with the Q&A for an opportunity for us to engage with the panelists. So without further ado, I would just like to invite Sherman to please come forward and then let's kick start the presentation. Thanks.

Okay, got it. Good morning, everyone. Thank you for taking the time to come attend our briefing for our first half results for 2025, and of course, a warm welcome to everyone online as well. I think today, a lot of people joining us online. So great to see your interest. I will take us through our results along with Yim Ming and subsequently we will open up for Q&A. So as Bella's mentioned, I'll present an overview and strategic initiatives. Yim Ming presented financial highlights. We're not presenting the operations review as always, and that's just for your leisure reading in the deck. Okay. So just an overview of our results for this year. We have done better than the first half last year. Obviously, it could have been a lot better but were hampered by unrealized net exchange losses. This is basically because of USD-denominated loans that we had made to our U.S. operations. So -- and you can see in the text there, right, if not for -- and last year, by the way, was a big gain as well. So this year, the loss was $63 million versus last year, the gain was $51 million. So if you net all that out, that's already a big swing. And as we have put in that small yellow text box there, our PATMI would have gone up by 323%. If not, if you put aside these foreign exchange losses and gains. So a little bit disappointed exchange didn't work out in our favor because the U.S. dollar depreciated. But otherwise, it was a good set of results, and our Singapore performance on the development side was strong. We also had some divestments. We don't double count. So these divestments that we mentioned there like this Ransome's’ Wharf Site, we sold in London as well as the office component of HLCC and Suzhou, I mean because they completed in January, so it's counted in this year. But in terms of our divestments, I mean, we counted as part of last year. So this -- but putting aside divestments, the core earnings were actually stronger this year. And you can see that actually on PBT and PATMI, we did have a good show and we were helped, obviously, by an EC project that completed in the first half of this year, which is a Copen Grand EC is a JV between us and MCL Land. And as per accounting rules for so-called EC projects, you will recognize the full revenue and profit upon completion. So some highlights of our NAV and our RNAV, which is actually more the reflective number, which includes the fair value of IPs. So of course, we've also given you a snapshot of what it looks like if we also fair value in our hotels. So you can see that we are still trading at a discount, and we do want to close the gap. NAV has gone down slightly, but we put down the reasons there. So we are doing a special interim dividend of $0.03. And of course, this year, we're expecting quite outsized investment -- divestments. So therefore, hopefully, we'll have a nice surprise for all of you at year-end. Share price performance. Of course, until 30th June, it was $5.19. And since then, it has continued to trend upward. So we are also grateful for the market momentum. Key highlights for this year, as mentioned earlier, we had a total sales revenue, so the amount of the value of units that were sold this year has -- [ $2.2 billion, ] which is a 90% increase over the first half of last year. We have sold 903 units, and this is obviously powered by The Orie in [ Topaio ], which is our joint venture project. And since then, we've also started to replenish sites. So the res -- we've replenished actually 3 sites. One is Lakeside Drive in [ Jurong ] West. And the other 2 sites are not awarded yet, but hopefully, it should be awarded soon. And those are the 2 EC that we recently garnered [indiscernible] at [ Senja close ], which is in [ Bukit Panjang ] and the other is Woodlands Drive. And investment properties portfolio across our group remains stable. As you can see, Singapore office retail has been strong. U.K., I think since last year, we've suffered some effects from the weaker market there. But overall, our 3 commercial properties is still performing well. And of course, the living sector continues to be very, very resilient and we are grateful for that. In terms of the hotel operations, it hasn't been that strong of a year for our hospitality side. Notably in Singapore and the U.S. against last year, which were stronger years, we've seen a bit of a dip. But overall, I think the hotel division still performed relatively well. And some of the new acquisitions that we have made have actually come in and provided strong contribution. So things like the Hilton in Paris, in the [ Oprah District ] that was acquired early last year. So that has also come in given a full half year of contribution. In terms of capital recycling, I think that's something that since last year, we have committed to our shareholders that we will accelerate that. So, so far this year, we have -- out, we have achieved more than $1.5 billion in contracted divestments, meaning divestments that we contract this year. So again, this amount does not include Ransome’'s Wharf, Suzhou, office and retail component and stuff like that. So no double counting. And of course, we also sold a few other properties in Singapore, City Industrial Building, we are under contract for Piccadilly Galleria, which is the commercial component for our JV project, Piccadilly Grand in [ Fair Park ], and of course, the biggest one was South Beach, which we're selling our 50.1% stake to our joint venture partner. In the U.S., we also have managed to get 2 sales, 1 completed and 1 contracted. This slide, we flash it up at every briefing, but hasn't changed much. I mean, the top line -- the top row represents basically at our book value. And so the more useful 1 is the bottom row, which is the fair value of our IPs and hotel assets. And same here, you can see Singapore still accounts for close to 50% of our total asset base. Obviously, the 1 on the right -- business segment will vary. It depends on how much land, development land that we replenish in Singapore at any 1 time. So between IP, which is investment properties and DP, development properties, it will fluctuate somewhat. But it gives you a good snapshot of kind of where we are at right now. Okay. So on to our GET strategy, which everyone is very familiar with, so I'm not going to elaborate on it. As mentioned earlier, I think we have been very disciplined in our land replenishment strategy, and we are very pleased that this year, we've been able to replenish 3 sites because we are running somewhat low in terms of our land bank. We do have Newport residences, which thankfully, we don't have any pressing deadline. So we're still kind of holding there to see when it would be optimal time to launch this luxury project at the Greater Southern Waterfront. Zyon Grand is our JV with [ Mitsui Fudosan Asia ]. And so that we're targeting for early Q4 launch. Hopefully, that will do well. I think all of you have seen the previous weekend, the 1 before this past weekend where I think there were 2 new launches in that area, and [ River Green ] and [ Prominent Peak ] and both have done well. So hopefully, that's a good sign in [indiscernible] well for Zyon Grand. And yes, the only launch we've done this year is The Orie, which we are 92% sold right now. So we continue, I think, to do what we do best, which is Singapore land development. And at the same time, obviously, we that we keep our gearing in check. So obviously, our gearing has ticked up a bit because we have done 3 GLS tenders in Singapore successfully. So -- but with the contracted divestments that we've done this year, I think that will hold things in check. And plus, I mean, there's a pipeline of many more divestments to come. So hopefully, I think people, shareholders will be very delighted with the news as we announced them over time. But this is what we have done this year. And just, again, to give you a bit more insight into this, we -- although I had verbalized it in previous analyst briefings, but just to say again, the numbers are a bit skewed because on the divestment side, we don't include residential unit sales, right? So if I buy a piece of land in Singapore, it's included in my investment side. But when I sell the individual units, I mean that I don't include that in divestment. So divestment is really for pure divestment of assets or land that's undeveloped. So this number is going to look a bit skewed. But having said that, despite that we have $1.2 billion of investments this year for the first half of this year, and the whole amount of that was for the 3 GLS sites in Singapore, we still have actually done divestments that's far greater than that amount. So I think this will show you our discipline as we move forward. Now doesn't mean that we won't make any more investments for the second half of this year. I think as you divest, I mean, you -- we are trying to optimize our portfolio, and we're also going to seize on good opportunities that allow us to either grow our future land bank, be it locally or overseas or have assets that are very complementary to our portfolio that are currently undervalued because certain markets are weaker or dislocated. So from time to time, we will still make investments, but I think we are trying to demonstrate our commitment to having an active divestment strategy, capital recycling strategy, as I call it, that will move forward and be a constant part of our business because we can't just keep buying. I mean, we also have to sell. This slide just showing you our so-called accolades and recognition that we gained so far, especially on the sustainability side. I've mentioned earlier, I think it's an important part. I mean, we have to care about this planet that we live on as part of our social responsibility. And so I think we continue to push forward on this front where I would say we are one of the leading firms in Asia when it comes to CSR. On to the last bit, which is on transformation. Just to give you a flavor of where we're at now, why do we put the global living sector within transmission. I think 2 reasons for it. One, it's -- these are kind of new asset classes to us, while it is real estate, but these are all basically recurring income in nature and therefore, people that live in -- and so because we decided since a couple of years ago that we're going to focus on building up scale here, we've been gradually leaning towards it and hasn't been easy to make good acquisitions to gain scale. For instance, you can see there in Japan now we have 40 operational multifamily assets or PRS as we like to call them, private rented sector, a term we borrow from the U.K. But these are basically rental housing, and our portfolio is pretty newish in Japan. Average age probably around 3 years plus. So new portfolio also is a good thing because you spend less on repair and maintenance, and they are up to the later specs. So it's been -- not been easy for us to actually accumulate this whole portfolio. So therefore, we put it in transformation because, a, it's the living sector over the last, I would say, 4, 5 years has been a new angle for us. And also the other reason that we put it in transformation is because these assets can then go on to seed a lot of fund management platforms that we would like to do. So a GDV, gross development value of [indiscernible]. But at the right time, we will obviously try again. We believe that belongs better in a public format, which is a REIT. And at the same time, we are also managers for 2 REITs, [ I-REIT, ] which is our partnership with TKO, one of the bigger U.K. Europe fund managers. And so we are a joint manager for [ Ari Global ] And of course, the very REIT that we listed and sponsored, which is CDL Hospitality Trust so we continue to actively work on both of these REITs to try to help them propel their growth and these are platforms that are great for us. I think we can demonstrate our management skills as well as in the future. I mean, we could provide further asset sponsorship to both of these REITs. And of course, we're looking at the private side as well also. We've been working at it for a while. So hopefully, in due course, we can share some good news. If we're able to do some private equity funds using what I mentioned before, some of our global living portfolio to, I think, to seed some of these funds. So -- and again, I think the reason for going down the fund management route, of course, many of the other developers in Singapore have done a great job on this front. It's because I think we want to have part of our business go more asset light. So we're really managing third-party money here rather than warehousing everything on our balance sheet and the fees, the recurring income from the management fees and all the good stuff from fund management will really help, I think, to improve our recurring income and strengthen our return on equity, too. Okay. My last slide before I hand it Yim Ming. These are our key priorities. We kind of flashed it up at the last analyst briefing. We condensed it a bit more, and so we're just pulling up. Again, I think we aim to have a resilient portfolio, which means that we do need to exercise strong investment discipline, be it locally or overseas. We want to achieve diversification across asset classes and geographies. I think this is important if we had all of our assets concentrated in 1 sector or in 1 country. I think that's actually pretty risky. So I think we've, over the last -- we started this diversification push, if you don't -- into the hotel since 2010. And I would say, over the last 15 years, we've achieved, I would say, a very decent results outcome when it comes [indiscernible] verification push. Capital management, as mentioned earlier, we'll continue to accelerate our capital recycling. And we aim to strengthen ROE as well as ensure that we have sustainable and hopefully, growing dividends. And of course, we need to continue to future-proof our business. We harness innovation and AI in various aspects of our company as well as we have to ensure that we are responsible to our planet. So I think answer shareholders. So these are our key priorities, and I will field more questions during Q&A later. May I now pass it over to our CFO, Yim Ming. Thank you.

Thank you, Sherman. Morning, ladies and gentlemen. We'll move on to PBT by segment first. DP segment performed well, and PBT has jumped significantly. Contributors to first half of 2025 include Ransome’'s Wharf, the office block of Suzhou Hong Leong City Center. Singapore projects such as Myst, Norwood, [ Union Square ] residences, while the previous year contributor were largely from [ Shenzhen, Tech Park ] as well as other residences. Our revenue for this segment increased 24%. PBT increased substantially due to JV projects, Copen Grand, which -- in April '25, CanningHill Piers, Orie and Tembusu. In line accounting standards for JV, these projects do not contribute to revenue but contribute to profits as the equity accounted for. Hence, you see a huge jump in profits for first half '25 versus '24. So just for information, these projects -- these JV projects will have contributed $1 billion in revenue on a like-for-like basis. For hotel operations, revenue fell slightly despite a 0.5% increase in RevPAR. The next slide will have more color on RevPAR, but the lower hotel operations is due to foreign exchange impact, particularly for our U.S. hotel operations, which are translated at a lower rate with the depreciation of the USD as well as lower F&B revenues. The group adopted a natural hedging for all its operations geographically. USD has a sharp decline from April following the U.S. tariffs. The U.S. hotel revenues is about 20% -- 28% of total hotel revenues and the lower exchange resulted in a decline. However, as the U.S. operations is overall a marginal loss for first half '25, the FX impact on the bottom line is not material. So while the P&L FX is not significant, the unrealized FX arising from the balance sheet translation is material. So the hotel operations has a significant foreign exchange loss, which Sherman has mentioned, arising from intercompany loans that we have extended to our U.S. operations for hotel acquisitions and working capital in the past, especially during the corporate years. I just want to remind that this is unrealized FX, it does not affect cash flow and operations, and this position will reverse should the USD appreciates. So this segment reports a loss of $84 million for first half '25 due to exchange losses as mentioned, financing costs and inflationary cost pressures. However, do also note that hotel operations are seasonal in nature. The first quarter is usually the progress as we geographically dispersed. So overall, hotel reports are weaker EBITDA by 19%, hit by weaker performance in the key markets we operate. In Singapore, RevPAR declined 13.6%, London, a decline of 2%. And for New York, while RevPAR increased marginally, the New York was faced with challenges from various fronts, including the social downtown New York, which had reduced room inventory as it was undergoing renovations as well as inflationary pressures and F&B losses. Investment properties, fairly stable for revenue. The group has a geographical portfolio of properties. Decline in rentals from the U.K. commercial were offset by [ Republic Plaza ] and the renovated City Square Mall as well as [indiscernible] and our living sector assets in U.K. and Japan. So as part of our active recycling, the group divested City Industrial Building, Strata units in Fortune Center, the [indiscernible] at The Venue and of course, the [indiscernible] City Center. So these divestments brought in gains of $97 million, which is lower than last year, which comprised divestment in Strata units in our other industrial portfolios. So the lower PBT for this segment is due to lower divestment gains and higher net financing costs again due to exchange. Hence, looking at EBITDA as a better indicator. So if you look at the IP segment, excluding divestment gains on a like-for-like basis, EBITDA actually have increased 4%. Other segment revenue increased due to our facilities management arm and higher management fees that we charge our JV projects. And again, the loss is due to flux in FX. So delving a little deeper into RevPAR by region. So do note that this is on constant currency. So if we move the effects of exchange and these are [indiscernible]. Singapore RevPAR dropped 13.6% due to fewer large-scale events such as the famous Tailor Swift concert and the biannual Singapore Airshow, which boosted the previous half year 2024. Decline in RevPAR is in line with mid-tier and high-tier companies, hotels across Singapore. However, our Singapore hotel was reliant on the shipping segment, which was hit by the global turmoil and affected occupancy for a few of our Singapore hotels. Rest of Asia, RevPAR is boosted by M Social [indiscernible] , which had full operations and offset by our [ baiting ] hotel, we saw lower demand. Australasia, RevPAR boosted by acquisition growth for Mayfair Christchurch. For New York, RevPAR increases is due to 2 hotels, which is built more [ LE ] as well as M Social Downtown, which commanded much better rates after -- for the renovated rooms. Over to London. Decline is largely due to [ Gloster ] [indiscernible] due to rate pressures. Notably, Mayfair performed very well with an 8% increase in RevPAR. Rest of U.K., again, impacted by acquisition growth, which boosted the 2025 performance. So overall RevPAR -- ops increased 0.5% with a slight decline in occupancy, but a 1.7% increase in rate. This is boosted largely by acquisition growth. So excluding the 2 acquisition growth, RevPAR [indiscernible] actually have marginally declined a little bit. [indiscernible] margin decreased 2.1%, largely due to Singapore, rest of Asia and U.S., contributed by lower revenues compounded by higher costs. Next, we move on to revenue by segment. Overall revenue, up 8%, largely due to the PD segment, boosted by Ransome’'s Wharf and HLCC -- Suzhou. The PD segment did well. Hotel operations marginal decline, I mentioned due to FX and lower F&B, IP and the other segments are fairly resilient. Next, we move on to EBITDA by segment. Growth of 21%, largely due to the property development segment, which increased twofold. Hotel EBITDA is resilient at $94 million, while it's challenging if the cost pressures and macroeconomic conditions, all regions are EBITDA positive, except for U.S., which we bought a marginal EBITDA loss. EBITDA is also largely driven by divestment gains, which led the [ IP bar ] to be much higher. The group looks at EBITDA very closely, and we always endeavor $1 billion in EBITDA annually. Now let's move on to EBITDA -- PBT by segment, declined by 10% to $140 million. So it's impacted by financing costs and depreciation, sounds like broken record. We account for our properties and the cost model and depreciates them vis-a-vis the fair value model. So the decline is largely due to hotel operations reporting a loss. As I've mentioned earlier, the unfavorable exchange -- a great blow to this segment. So PBT has surged to $152 million. So I [indiscernible], but I think the emphasis of the results is that CDL as a real estate player across various core segments across various geographies. So with our diversified portfolio, we're able to weather various challenges. On the balance sheet, we continue to have strong and robust fundamentals. Cash is $1.8 billion, along with committed credit facilities, $3.5 billion. You might have noticed that it has dropped from FY '24 by $1 billion, and that's because of the amount -- the monies that have been expanded to complete our [indiscernible] acquisition. Gearing stands at 70%, marginal increase from 69% in December '24. Average borrowing costs lowered to 4%. We're [indiscernible] at the latest rate cut by Bank of England, waiting for at least 1 or 2 more. So we will definitely close the year below 4%. SGA rates have declined gradually, the group took the chance to increase our fixed rate portfolio, and now it stands at 43%. We have a balanced expiry and debt currency. So for remaining of 2025, we have already made arrangements for refinancing and repayments. We will also look at a window to issue more fixed rate bonds in the next 12 months. Lastly, for FX risk, so we adopt a natural hedging and do not speculative position. So this slide shows the FX exposure in the key geographical and you can probably see the U.S. natural hedge is only about 51%. But overall, we still have a strong natural hedge about 77%. That's all I have. Thank you, everyone. I hand over to Belinda.

Thank you very much, Sherman and Yim Ming for the presentation. We are now moving into the second part of today's briefing, the Q&A. As they have mentioned, some of the key highlights. Today's briefing is primarily on our first half 2025 performance. So I really see a hand out there, Terence from JPMorgan. If you could just address your questions to the panelists, please.

Thank you very much for the opportunity. Congratulations on the set of results. I'm Terence from JPMorgan. I just had 2 questions. Maybe to start off with, want to add on opportunities for net divestments. Congratulations on the very strong sale of South Beach. And I noticed that this year, the divestments are exceeding the pace of investments. So you're actually seeing positive net divestments. I wanted to understand whether management has a number in mind for net divestments this year. And also potentially, how would you look at addressing gearing? On my second question, I wanted to ask on potential, maybe rewards -- further rewards for shareholders. I understand that you had a very strong, specially for first half. So looking into the second half, given that there are some divestment gains coming in from South Beach, how would you look to perhaps reward shareholders?

Terence. Thank you for your kind and -- hello? Okay. Terence, thank you for your kind and encouraging comments. In terms of your first question, we don't -- as I said, it was last year that I kind of [ early ] threw out this divestment target of [ 1 below ]. I do remember the AGM, someone had asked me, so what's your divestment target for this year. So I was a little bit apprehensive then, but I said, okay, I hope to achieve at least the same level of divestments as last year. Obviously, now with what we've achieved, we far exceeded last year and this year. So we hope to continue to make further divestments throughout the second half this year. Some of the divestments may close in early 2026, but a majority will close that you've seen on the screen will close by 2025, almost a bulk of it. And then we may contract a few more new divestments, but those may close in '26. So will be a delayed boost to our gearing then. . In terms of net divestments, and I must I'm assuming you're saying divestments in Singapore, is that correct? Okay. So as I presented earlier this year, right, you can see the full $1.2 billion has actually been into the 3 local GLS tenders. So if you don't include that, then this year, really, our divestment has been -- the net divestment has been the full amount the $1.5 billion. But as I mentioned earlier, it doesn't mean that we will not make any overseas acquisitions as well. I think we are seeing some good opportunities in overseas markets. And we are very selective and very disciplined about how we do acquisitions, especially overseas when obviously, the risk is a little bit higher when compared to -- on home ground. So we will approach this cautiously, but I still anticipate ending the year with a higher level of divestments than investments even if you factored in the local GLS tenders. So that's 1 piece of good news. And it won't always be easy to achieve this sort of parity or balance because, as I mentioned, right, the investment amount includes the GLS tenders, which the proceeds, I don't include in the divestment side. But this year, certainly, I think divestments will be a stronger -- a higher bar than the divestment bar that you saw, sorry, than the investment bar that you saw earlier. So that's one. In terms of rewards, also, as I alluded to in my presentation earlier, typically, I think for midyear, we will give a special half year dividend. But really I think we want to see where the year ends and with a strong tally of divestments garnered for this year. I do anticipate that this year, when we announced our full year results in February next year, we should be able to announce something that would be very well received by our shareholders. Thank you. As you may just reminded me on gearing. We added last year at about 69%, right, 69%. We had -- obviously, in the so-called short to medium term, we do endeavor to get gearing down to the low 60s or high 50s. This is similar to what I mentioned at the AGM as well. It may take us a bit of time to get there only because we were -- it was very fortuitous that we managed to acquire these -- managed to win these 3 land tenders in Singapore, one of which is awarded the [ 2G EC site ] because it was just so recent [indiscernible] but likely to be awarded, I would say. So because of this, our gearing is going to go up, but again, as I mentioned, we have a slew of divestments planned for the second half this year and going into 2026. So hopefully, that will help to offset any potential short-term increase in gearing. But definitely in the medium term, we're moving towards low 60s, maybe even high 50s. But I think we don't want to reduce our gearing to an abnormally lower level also because it's very healthy use, appropriate amount of debt in your operations and investments, right? I mean, that has a more efficient balance sheet. But yes, those are where our near-term targets are.

Okay. Maybe I'll take Brandon first, then I take [indiscernible] Okay. So Brandon, can you introduce yourself?

Brandon here of Citi. Just 2 questions, starting with the hotel sector. I think recently, [indiscernible]you guys coming out to say that you intend to triple your hotel exposure globally. Can you sort of explain how we're going to get there? And that approach to going towards more management contracts, does it mean that we could see a faster acceleration in the divestment of your hotels, right? So that's the first question. The second question would be, would you be open to review again the share buybacks that you sort of did a bit of it last year? Yes. Thanks .

I'll just answer your second question on the share buybacks. Actually, hope I'm allowed to share this info. Actually, our Board has been very receptive. And obviously, when our share price dipped to a low, our Board had approved a significant buyback, but subsequently, the share price started to run up. So there wasn't a lot of opportunity for us to get the buyback started. But absolutely, Brandon, I think we have heard feedback over the years from our shareholders and our investors. And I had another year for that at the AGM as well. So we do know that share buybacks are important, and it's a way, I think, for -- to do some shareholder return as well alongside dividends. So it's something that we keep in mind. I mean, as I said, the Board has approved the buyback program, but we are just waiting to see when we can start that buyback. Even now, I mean, our share price is still, I would say, hugely undervalued compared to or be it our [ NAV or RNAV or the second RNAV that ] I showed earlier. So it's certainly something that we will keep in mind. . As for the hotels, perhaps I can invite our Chairman and Eik Sheng to share more on that. I think it's certainly a personal ambition and dream of our Chairman to be able to continue to grow our hotel portfolio and to strengthen. I think the brands within now stable, be it [ Millennium ] or [ Coplon ] or the build more brands, but perhaps I should let the man himself tell you about some of his ambitions and dreams. Chairman, would you like to address this about this 500 hotel target that you had mentioned during your interviews with the press?

I think for hotel, I've always believed that there are a lot of future because hotel is something that you wait for cash flow to service. At the end of the day, if you want to sell away a hotel and then you can have a lot of capital gain. I believe this is the right strategy. And if this is correct, then I aim to have 500 hotels. That's not too ambitious, I assure you because that can be done easily. .

Yes. Answered this question on -- sorry, [indiscernible] Brandon, this question on the management contracts. Will that be one of the new ways that you will...

Maybe I can just add 1. So I think we have done, obviously, very well with the owner-operator model, what Chairman explains that we continue to generate earnings from the hotel. And then, of course, we reap capital gains as we have done before with [indiscernible] Hilton and others like South Beach. So this model, of course, we will continue with this owner operator model. Ways we can get to 500 hotels, of course, do include management contracts, franchise opportunities. For example, in the Middle East, we currently do have 50 hotels on the franchise. And they also have pretty ambitious targets on where they want to grow that to. And there are markets where we're currently not in. So I think what Chairman is sharing about his ambition for 500 hotels, I think this is -- there are many ways we can get to that. I think we will share more details as we develop this. .

Okay, thank you. I think [indiscernible] Joy.

Joy from HSBC. Two questions from me. First of all, on capital deployment. We've seen you doing a lot more land bank replenishment. Will we continue to see that? And in terms of deployment, would you do more DP versus IP? and early on, I think [indiscernible] you alluded to overseas investment. Could you just elaborate a little bit on the opportunities you're seeing overseas? So that's the first question. And second question on finance cost. I noticed that rate has come down. But actually, overall financing cost is still up year-on-year. Could you sort of guide for the full year, what are we seeing? And also in terms of the refinancing coming up, what are the currencies that you're refinancing in?

Okay. I will take the first question. Joy, good morning, Yes, I think we -- the last couple of years, I mean, I think we're aside from -- we have continued to replenish I think our GLS sites. So last year, obviously, we acquired this site near [ great world ] that is now going to be launched this year, which is Zyon Grand. So we do this land replenishment every year. Obviously, this year, we have been very lucky, as I said, have garnered 3 sites year-to-date. So probably, we will slow down a bit on the GLS for the rest of this year. I think we don't want to be overburdened with too much land bank as well in any particular location, as I mentioned earlier. I think it's about diversification across asset classes and geographies to -- so -- and whether it's DP versus IP, obviously, for Singapore, especially, I mean it's for us, it's always been a strong DP play for development properties because most of the sites that we go for are usually either pure residential sites or even if they are mixed use, they're still majority residential in nature. Overseas, we continue to focus on our key overseas markets that we had shared earlier over the last couple of years actually. It's been, always been the U.K., China, Japan and Australia and to a smaller extent, Vietnam. And we continue to push forward on these overseas destinations. I think we made good ground and depending on which country it is, I think it -- we have a different asset class focus. So like in Japan, you will see that we did have a DP project there, which is the [ Shirokane ] site, which we managed to sell at a huge gain. We bought it for JPY 30 billion, and we saw that JPY 50 billion, okay? So there was a nice so-called divestment opportunity, even though it said we didn't develop the site because it was a gorgeous site in Tokyo and Central Tokyo. But that site also gave us a lot of good insights, right, that DP is actually very difficult to do in Japan, especially when you're not Japanese. So therefore, you can see since then, we've actually been only focused on investment properties in Japan. So basically recurring income in nature with all living sector portfolio. So as mentioned earlier, we have 40 multifamily assets in Japan that are operating very well, high occupancies and rents have been strengthening every year. We also, of course, have 2 hotels in Japan, not including the ones that CDL Hospitality Trust, but we directly own 2 hotels, the 1 in Ginza in Tokyo as well as the 1 in Osaka, the [ bespoke ] Osaka, [ Shinsaibashi ]. So I think for Japan, it's going to be more of an IP play. And in the U.K., I think it's a mixture. I mean, we own office buildings in the U.K. And also, we own development properties that we're developing build to rent, which is really developing it into our future multifamily housing. So we do both that there. And then China, right now, I would say it's really only more on the residential sector that we're focused on. China's market are going through some turbulence, but end of last year, we announced, obviously, the acquisition of our [indiscernible] in a joint venture with a [indiscernible] partner, [indiscernible] acquired a huge site in [indiscernible] area. And that site is majority residential anyway. It's about 77% residential. And so far, projects in Central Shanghai have been doing amazingly well. So fairly strong and irrespective of what's happening in the broader market. So I think we will continue to focus on residential DP in China. Investment properties, unfortunately, are quite oversupplied in China at the moment. So I think all of you have seen in the news, even some prominent developers and funds have sold office properties even in Shanghai, which is already the strongest and most promising city in China. I mean, I have sold them at big discounts, right, to their acquisition cost, I mean, 40%, 50% discount. So I would say the commercial side of things are pretty oversupplied at the moment that there's no pricing power. So probably not so much for us. So it's still going to be a residential play in China. . So okay, maybe I'll pass it over to Yim Ming to talk about the financing cost.

So I think you look at net financing costs on the face of the P&L. So actually, if you delve into the details, we have classified exchange inside net financing costs, which is why the cost the delta. So it looks like net financing cost has actually increased. But actually, if you look into the details, the financing costs, which is just gross interest expenses, it has actually gone down by 6%. So where do we look at full year probably in the same tandem thereabouts, we should be able to still achieve about 6% from previous year. So looking at where we are financing in terms of our loan portfolio. So it's largely for 3. One, of course, is [indiscernible] that there's -- we're looking at the construction financing, and that's looking very, very good. I must say the support that we get from the Chinese banks, we exceeded my expectations in terms of pricing. And then for Singapore portfolio, there will be the usual for developments that we'll be doing repayment. I am keen to do issue some more fixed rate notes. Hopefully, [indiscernible] money at max of [ 3% ], that will kind of help us in terms of [indiscernible] , help us in terms of fixed rate portfolio and bring down the average interest rate as well. Then, of course, our biggest exposure that's open, so to speak, is our [ GPP ] portfolio. We have about 80% is [ floating ] right now. There isn't much of a window for the hedging. So I think we are able to do a wait and see. And then we also want to do that alongside, it is not a flat one-dimensional thing. Also want to look at as we had divestments coming in, what [ SFPs ] go to price. But definitely, a window we're looking at not the right time for us to do hedging right now. .

Okay. I'm just going to take -- okay, I'll take Rachel and then I'll come back to Dexter and then [indiscernible]

This is Rachel from [indiscernible] Just 2 questions. I think firstly, you spoke about the U.K. [indiscernible] listing. Just wondering whether you have any time line or is that something that you are looking for before you can [indiscernible], like say, U.K. office market recovering the Singapore -- I believe Singapore rate has also come down. There's more IPOs in Singapore. So give us a sense of what you're looking for? My second question is your dividend. This quarter, we saw [ special ] dividend is up, is that an indication moving forward? And secondly, if you talk about a lot more divestments coming through, would you have a policy on how you want to share your gains from divestments in the future?

Okay. I'll take both questions. For the U.K. REIT listing, I realize that every time I mentioned that, the press and the media latches on that quite tightly. I think there is no fixed time line for that because really it's contingent upon capital markets and obviously, interest rates, right, are big determinant of how attractive and how successful REIT listing would be. I'm very pleased to see that U.K. [ rates ] have been. Interest rates have been trending down and any luck and with a couple of interest rate swaps, I think now we should be able to get our U.K. borrowing for new borrowings of sub-5%, I think going forward, right, Yiming, I would say, should be doable. I mean, this is compared to when rates whether it's peak, right, in the U.K., I mean, developers are paying 6%, some maybe even more. So I think rates have come down quite a bit already in the U.K. and hope that the Bank of England will continue to surprise us with good news going forward. So that needs to strengthen itself out first. I mean, it's very hard to do a new rate listing when the interest rate environment is not favorable. And obviously, investor appetite is something that's very critical as well. So that's why I mentioned the capital markets conditions have to be favorable, too. So we would like to explore this again when situations permit when the conditions permit. I mean, it's been a couple of years, I think, since we kind of shelved the idea. But then, of course, the idea was also different. Back then, it was 2 of our assets combined with an asset owned by a third party, a very big asset owned by a third party. So now obviously, since then, we have acquired [ St. Kathrin ] stocks, this was 2 years ago now, right? [indiscernible] in March of 2023. So since then now we have a portfolio that's worth at least GBP 1 billion already. So we have the scale to be able to move forward to do a REIT listing on our own. So it really -- but it will be quite a substantial sizable listing. So you really do need conditions to be conducive for such listing. So we're keeping it open. I would love to see it happen earlier than later, but let's see what happens. And again, as the U.K. office sector recovers, I don't have [indiscernible] mission, so we can take this further. But yes, we will always remain open flexible to all potential opportunities on the table. . As for dividends, yes, we did do a special half year dividend. And again, as I alluded to earlier, we want to see where the full year lands before we hopefully announce something that would reward our shareholders. I think we've had a track record where -- whenever we've had strong years, we've always tended to reward our shareholders handsomely. We even did a distribution in species, DIS for our CDL Hospitality Trust shares okay to shareholders back in 2022. And that would have been a big [indiscernible] of free shares, okay, we distributed to our shareholders to allow them to enjoy the upside and the recovery in the hospitality sector, of which in 2023 and 2024, we saw strong recovery in hospitality. So that's 1 of them, yes. So we hope to have more news to share. Was there any further questions? Divestment policy, we have articulated it. It's not firmly and constant now. Policy per se, but we've articulated this every year, divestment. We try to maintain a 1/3 divestment policy.

Dividend policy.

Dividend policy, sorry, yes. So we've articulated this over the years, we try to maintain a 1/3 payout ratio for our dividend policy. And what's there? Another question on divestment because you said divestment is why [indiscernible]

If you're going to have slew of divestments, would you then have a dividend policy on how much you will share the case of the divestment. .

Okay. Okay. Thank you, Rachel. I mean, [indiscernible] I mean, we don't have a specific, as I said, our policy that links also our divestments to our dividends. But yes, I mean, in times when we have a nice [indiscernible] with big divestments, we will try to reward our shareholders more. But on the whole, every year, we try to stick to at least a 1/3 payout ratio. .

Okay. Thank you very much. I'm going to move to the front now. Maybe I'll start off with Dexter. Yes, the mic is on.

First, as a few technical questions. On Newport, obviously, you don't have a date yet. What's holding you back? And obviously, the single market seems to be still doing quite well, but there were some EBS -- sorry, SSD measures introduced recently. Are you guys concerned that more [ cups ] could be potentially coming this year, next year? And also 1 more question on your privatization -- sorry, 2 more questions. One is you obviously didn't succeed in your M&C privatization. Would you try again next year after the [indiscernible]? And Chairman previously mentioned about working on some U.K. deals with the [indiscernible]. Is there any updates on that?

For Newport, I think we were holding off because we were right about to launch Newport Residences. And then I think it was the week before we launched Newport Residences, they came out with a 60% [indiscernible] . So we shelved the launch and basically said we'll take a wait and see approach, especially since this is a legacy property of ours, right? It's being the whole Newport project is being developed on the former -- the side of the former [ Fuji Xerox Towers ]. So we don't have any time pressures here. So we thought we would adopt the wait and see. And because this is a luxury project, we've really designed very nice units that we -- that will be fitted out to a very high standard level at Newport, and it's really for people who want to embrace that luxury living up high, right? I mean, they're going to have magnificent views of this ocean. So we held back then because of this. But have to say that our recent results have also been in the market have also been quite encouraging. I mean, as I mentioned earlier, when I was doing my presentation, I mean, we saw that the previous weekend, there were 2 launches within town area, around [ Great World ], right? And typically, as you know, the cost [indiscernible] Central region properties tend to rely on a heavy amount of foreigners to -- who make up a large part of the buying activity where compared to, I think, properties in other segments or in more suburban locations. Those are predominantly almost all Singaporeans, less than 10% foreigners. So -- but those 2 projects actually did well, right? I mean, 1 project sold 88%, the other sold 56%. Prices are being around [ 3,000 PSF ] around their about or slightly more. So they did very well. So that's some encouragement to us. So it's something that we're factoring in to our decision when to launch Newport. But again, because there's no urgency, I think we just want to wait and see and make sure that the conditions are favorable. It's not a large amount of units. I mean, it's 246, right? Not looking at the sheet right now. So it's 246 units. So therefore, it's not a large amount of units, but these are so-called luxury units in a prime location. So I think we just want to make sure that it's going to have a successful launch. It's always very tough when you're trying to catch the market as a new launch and then you don't have a strong momentum behind you, right? Then it's always you're playing catch-up after that. So I think it's very important to have that launch momentum. So yes. So that's mainly Yiming, yes, I also do want to hog the mic too much. Maybe I'll let Mr. Chair also talk about measures, be it SSD or other measures that we have seen in the local market. And you can add your thoughts on Newport, Mr. Chia and any of you disagree, let them know too.

Thanks -- for summary as well. Because it's a freehold project, and there's hardly [ any fill ] project in the CBD. So we don't have time lines. So I think we will have to time -- carefully to evaluate and choose the right date to launch. The recent change in SSD [indiscernible] series it's actually it was the same as some years ago, then they reduced it to 3 years at 4% per year. Then recently, they see that the transaction volume of the [ subsea ] are quite high. They will reinstate the ore policy, but the impact is not much because many of the buyers nowadays are locals and they are buying for investment, long-term investment or [indiscernible] . So from the recent launches, you can see that the impacts are minimum. So we are quite encouraged by that. On the other policies, the new minister seems to be quite friendly towards the suggestion to really look at some of the policy was [indiscernible] looking at selling for EC and HDB, which is a good sign and also other things that the developers associate product to him to consider like treat an ABSD, no promise, but I say take a look -- so we are quite encouraged by the new -- I mean, this combo. Thank you.