Q2 2026 Link Real Estate Investment Trust Earnings Call

So George Holm Joy.

Operator: Duncan Owen, our Group CEO, George Hongchoy, our CFO, Ko Chung Eun, and our Group CIO, John Saunders. On the screen, you can see our agenda today. Without further ado, let me hand the floor over to Duncan. Thank you.

Our example, costume and our group C. I O John Saunders. So on the screen you can see our agenda today and without further Ado, let me hand, the floor over to Duncan. Thank you.

Thank you. Thank you good afternoon, ladies and gentlemen, and welcome to the 2025 2026 interim results presentation for link group.

Duncan Owen: Thank you. Thank you. Good afternoon, ladies and gentlemen, and welcome to the 2025-2026 Interim Results Presentation for Link Real Estate Investment Trust. As today's meeting is being webcast live, I also extend a warm welcome to those joining us online. It's my pleasure to open the proceedings, and I will provide a few brief remarks now. With regards to the interim results period, despite a range of macroeconomic and market challenges, Link has continued to deliver resilient results during the first half of this year. We saw a modest decline of 3.4% in net property income compared with the same period last year. This is mainly due to market challenges in Hong Kong and the Chinese mainland. Our distributable amounts and distribution per unit are down 5.6% and 5.9%, respectively, compared with the first half of last year.

At today's meeting is being webcast live I also extend a warm welcome to those joining us online.

It's my pleasure to open proceedings, and I will provide a few brief remarks now.

With regards to interim results periods. Despite a range of macroeconomic and market challenges link has continued to deliver resilient results. During the first half of this year.

We saw a modest decline of three 4% and that protein income compared with the same period last year. This is mainly due to market challenges in Hong Kong on the Chinese mainland.

Our distributable amounts and distribution per units are down five six and five 9% respectively.

Compared with the first half of last year.

Before inviting our management team to run through the details I want to start with an overview of how global trends are shaping our business on the execution of our strategy.

Duncan Owen: Before inviting our management team to run through the details, I want to start with an overview of how global trends are shaping our business and the execution of our strategy. While capital markets continue to rally on the back of optimism about AI, and interest rates look to be trending downwards, the global business landscape remains as complex as ever. Wars, geopolitical tensions, and shifting trade dynamics continue to create uncertainty. The recent shifts in US policy are leading to fundamental structural changes in how investors view the world, which will continue to take shape over the months and years ahead. Whilst we're starting to see some encouraging signs of stabilization in terms of the environment, our business, many of our tenants, are still suffering from a prolonged period of challenge, particularly in Hong Kong.

While capital markets continue to rally on the back of optimism about AI and interest rates look to be trending downwards.

Global business landscape remains as complex as ever.

Wars geopolitical tensions and shifting trade dynamics continue to create uncertainty.

The recent shifts in U S policy are leading to fundamental structural changes in how investors view the world, which will continue to take shape over the months and years ahead.

Whilst we're starting to see some encouraging signs of stabilization in terms of the environment.

Our business many of our tenants are still suffering from a prolonged period of challenge, particularly in Hong Kong.

Therefore, it will take time before the improvements in consumer sentiment translates into higher rental income for link.

Duncan Owen: Therefore, it will take time before the improvement in consumer sentiment translates into higher rental income for Link. In anticipation of these challenges, at the beginning of this calendar year, we launched a wide-ranging operational efficiency drive and have already made significant progress in reducing costs. On an annualized basis, we're on course to make savings of more than HKD 200 million to our ongoing people, and general and administrative costs. These efforts, together with our ongoing asset enhancement, are all part of our commitment to protect unit holder returns in future. Regarding strategy, Link's primary current strength is still owning and managing shopping centres in Hong Kong, the Greater Bay Area, and other locations in APAC, such as Australia and Singapore. We are continuing to focus on this strength.

In anticipation of these challenges ahead at the beginning of the year of this calendar year, we launched a wide ranging operational efficiency drive and have already made significant progress in reducing costs.

On an annualized basis, we're on course to make savings of more than 200 million Hong Kong dollars to our ongoing people in general and administrative costs.

These efforts together of ongoing asset enhancements are all part of our commitment to protect unitholder returns in future.

Regarding strategy linked primary current strength is still owning and managing shopping malls in Hong Kong, the greater Bay area and other locations in APAC, such as Australia and Singapore.

We're continuing to focus on this strength.

As we evolve and refine our strategy alongside the active management and optimization of the link portfolio. We're also expanding our real estate investment capabilities.

Duncan Owen: As we evolve and refine our strategy alongside the active management and optimization of the Link portfolio, we're also expanding our real estate investment capabilities. This includes some new capital partnerships, as well as advancing investment opportunities. As a consequence, we're now managing close to $1 billion in third-party capital already. This part of the Group's business will continue to focus on valued strategies and higher returns, providing diversification away from single market and sector dependency, enhancing unit holder value. We recently announced the planned retirement of our Group CEO, George Hongchoy, and this will take effect by the end of this year. Before inviting him to run through the interim results, I'd like to convey gratitude to George on behalf of the board and myself for his significant contribution and leadership.

This includes some new capital partnerships as well as advancing investment opportunities.

As a consequence, we're now managing close to 1 billion U S dollars and third party capital already.

This part of the group's business will continue to focus on vivat strategists and higher returns providing diversification away from single market sector dependency enhancing unitholder value.

We recently announced the planned retirement of our group CEO, George Holmes Joy and this will take effect by the end of this year.

Before inviting him to run through the interim results I'd like to convey gratitude to GA on behalf of the board and myself for his significant contribution and leadership.

During his tenure link has grown and transforms the benefits of unit holders tenants employees and the wider communities. It serves of course.

Duncan Owen: During his tenure, Link has grown and transformed to the benefit of unit holders, tenants, employees, and the wider communities it serves, of course. The interim leadership team is on stage today. We look forward to welcoming John Saunders, our Group Chief Investment Officer, to the board. We're excited to continue to work with Ko Chung Eun and John Saunders, alongside the newly formed Chairs Committee, which is there to provide support and provide strategic guidance to the management. We are currently running a comprehensive search for a new CEO. We're seeking a proven real estate investor with international experience who can lead the next phase of the company's strategy. Given the seniority of the role, the search will continue to take time, and it's reasonable to expect a lengthy notice period is possible for an incoming candidate.

The interim leadership team is on stage today, we look forward to welcoming John Saunders, Our group Chief investment officer to the board.

We're excited to continue to work with Coxey on N and John Saunders alongside the newly formed Chaz Committee, which is that to provide support and provides strategic guidance to the management.

We are currently running a comprehensive search for a new CEO.

We're seeking a proven real estate investor with international experience, who can lead the next phase of the company's strategy.

Given the seniority of the row. The search will continue to take time and it's reasonable to expect a lengthy notice period is possible for an incoming candidates.

Hence our decisions puts in place the robust interim management solution I was describing earlier.

Duncan Owen: Hence, our decision to put in place the robust interim management solution I was describing earlier. Thank you. I'd like to invite George now to take us through the presentation. George.

Thank you I'd like to invite George now to take us through the presentation George.

Thank you Duncan.

So while our business continues to navigate and feel the effects of various macro and local market level challenges I'm pleased to report.

George Hongchoy: Thank you, Duncan. While our business continues to navigate and feel the effects of various macro and local market-level challenges, I'm pleased to report that we have achieved a resilient set of results for the first half of 2026. I would like to express my sincere thanks and gratitude for the hard work and efforts of all our colleagues who have made this possible. As we approach the 20th anniversary of Link's IPO, I believe that this is also a moment for us to reflect with pride. Together, we have delivered strong financial results and made a positive impact on our communities, even as we face many challenges along the way. The achievements we have realized over the past 20 years give us every reason to be confident in Link's ability to successfully navigate the path ahead. Back to the results.

That we have achieved a resilient set of results for the first half of 'twenty five 'twenty six and I would like to express my sincere thanks, and gratitude for the hard work and efforts of all our colleagues who helped make this possible.

As we approach a 20th anniversary of length of the IPO.

I believe that this is also a moment for us to reflect with pride.

Together, we have delivered strong financial results and positive impact on our communities, even as we face many challenges along the way.

The achievements, we have realized over the past 20 years give us every reason to be confident that links ability to successfully navigate the path ahead.

Actual results negative rental reversion in Hong Kong and China mainland.

George Hongchoy: Negative rental reversions in Hong Kong and Mainland China have impacted our overall performance, with NPI down and DPU declining. Despite the tough conditions, we remain committed to deliver strong returns to our unit holders, and we have launched multiple efficiency initiatives aimed at reducing costs and preserving margins. On the balance sheet front, our capital position remained robust, supported by credit markets' flight to quality, and our blue-chip reputation. Net gearing stood at 22.5%, and our cost of borrowing has declined to 3.2%. We have also retained A ratings from S&P, Moody's, and Fitch. This strong foundation enables us to pursue inorganic growth and portfolio diversification. Our expansion into Australia and Singapore demonstrates this strategy, with retail assets in both markets achieving near full occupancy and strong double-digit reversion. Our Chairs and John will now give more details.

Have impacted our overall performance with N P I doubt and CPU declining.

Despite the tough conditions, we remain committed to deliver strong returns to our unitholders.

We have launched multiple efficiency initiatives aimed at reducing costs and preserving margins.

On the balance sheet front, our capital position remained robust supported by credit markets flight to quality and our blue chip reputation.

Net gearing stood at 22, 5% and our cost of borrowing has declined to three 2% and.

And we have also retained a ratings from S&P Moody's and Fitch.

This strong foundation and enable us to pursue inorganic growth and portfolio diversification.

Our expansion into Australia, and Singapore demonstrate this strategy with retail assets in both markets, achieving near full occupancy and strong double digit reversion.

Okay, and John will now give more details.

Thank you George good afternoon, everyone.

Ko Chung Eun: Thank you, George. Good afternoon to everyone. Despite the ongoing macroeconomic headwinds, we have taken the strategic decision to retain high occupancy levels at the expense of rental revenue. Our continued focus on cost restructuring will involve certain one-off charges. Meanwhile, we expect operating conditions in the second half to slightly worsen before stabilizing. We believe our non-discretionary retail and car park assets will remain resilient, nonetheless. Our international business is a highlight. As George mentioned, our retail assets in Singapore and Australia achieved near full occupancy and double-digit positive rental reversions during the period. On the financing side, we have benefited from the temporary dip in high borrow, and our borrowing cost dropped to 3.2%. We have prudently managed our interest rate exposure, with expectations of longer-term rates easing, and I'll share more details in the next few slides.

Despite the ongoing macroeconomic headwinds.

We have taken the strategic decision to retain high occupancy levels at the expense of rental revenue.

Our continued focus on cost restructuring were involved certain one off charges.

Meanwhile, we expect operating conditions in the second half to slightly worse than before stabilizing.

We believe our non discretionary retailers and copper assets will remain resilient nonetheless.

Our international business is an highlight.

As George mentioned, our retail assets in Singapore, and Australia achieved near full occupancy and double digit positive rental reversion during the period.

On the financing side, we had benefited from the temporary dip in high ball and our borrowing costs dropped to three 2%.

Okay.

We have prudently manage our interest rate exposure with expectations of longer term rates easing.

And I'll share more details in the next few slides.

Valuation of the lingering portfolio stood at 223 billion Hong Kong dollars as of end September two zero to five down about one 3% from six months ago.

Ko Chung Eun: Valuation of the Link REIT portfolio stood at HKD 223 billion as of end September 2025, down about 1.3% from six months ago. Hong Kong and the Chinese mainland still hold the majority part of our portfolio at around 88%, while international, with the majority in Australia and Singapore, took up the rest. Cap rates have been relatively stable compared to six months ago. Breaking down by geographies, ongoing weakness in rental performance across Hong Kong and the Chinese mainland has led to a decline in valuations. For our international portfolio, valuations have remained stable in local currency terms. However, the depreciation of the Hong Kong dollar gave a slight uplift in reported valuations overall. Lastly, on capital management, our strong financial position is underpinned by a healthy balance sheet, as reflected in the key metrics shown below.

Hong Kong in the Chinese mainland still hold the major majority part of our portfolio at around 88%.

Our international with the majority in Australia, and Singapore took up the rest.

Cap rates have been relatively stable compared to six months ago.

Breaking down by geographies ongoing weakness in rental performance across Hong Kong in the Chinese mainland that's led to a decline in valuations.

Our international portfolio valuations have remained stable in local currency terms. However.

However, the depreciation of Hong Kong dollar gave a slight uplift in reported valuations overall.

Lastly on capital management.

Our strong financial position is underpinned by a healthy balance sheet as reflected in the key metrics shown below.

As of September 30th net gearing remained at a healthy level.

Ko Chung Eun: As of 30 September 2024, net gearing remained at a healthy level, while the average borrowing cost declined to 3.2%, supported by the temporary dip in high borrow during the first half as discussed. Our fixed debt ratio remained within the prudent range of 50% to 70% at 66%, reflecting our continued careful management of interest rate exposure, and heightened uncertainty over future rate movements. Financial stability is further reinforced through competitive credit margins and effective risk management. Over the past six months, we successfully refinanced more than HKD 10 billion of debt at highly competitive rates, achieving a lower overall margin compared to the previous year. Total debt increased slightly from HKD 53.5 billion to HKD 55 billion, primarily due to currency translation effects. Our debt maturity profiles remain healthy, with an average tenor of 2.9 years and a well-staggered schedule extending over the next 13 years.

The average borrowing cost declined to three 2% supported by the temporary dip in high bar during the first half discussed.

Our fixed debt ratio remain within the prudent range of 50% to 70% at 66%.

Reflecting our continued careful management of interest rate exposure and heightened uncertainty over future rate movements.

Financial stability is further reinforced through competitive credit margins and effective FX risk management.

Okay.

Over the past six months, we successfully refinanced more than 10 billion Hong Kong dollars of debt at highly competitive rates, achieving a lower overall margin compared to previous year.

Total debt increased slightly from $53 5 billion to 55 billion, primarily due to currency translation effects.

Our debt maturity profile has remained healthy with an average tenure of two nine years and a well staggered schedule extending over the next 13 years.

Strong a ratings from all three agencies secure favor favorable funding terms supporting our future financing needs.

Ko Chung Eun: Strong A ratings from all three agencies secure favorable funding terms, supporting our future financing needs. We also remain well below covenant thresholds, providing ample headroom for acquisition and strategic opportunities. With that, I'll now hand over to John for the portfolio highlights. Thank you.

We also remain well below our covenant thresholds, providing ample headroom for acquisition and strategic opportunities.

With that I'll now hand over to John oily portfolio highlights. Thank you.

Thank you very much cash and a welcome to all of you. Thank you for coming.

Duncan Owen: Thank you very much, Chairs, and welcome to all of you. Thank you for coming. I'll now walk you through the Link REIT portfolio highlights, starting, of course, with the performance of our Hong Kong retail segment. Despite market challenges, occupancy remained very solid at well over 97%. Although revenue declined by 3.1% year over year, mainly due to negative 6% plus reversions, pleasingly, tenant sales showed improvement, narrowing the decline to just over 2%. I'll now break that down by category for you. Supermarkets in the foodstuffs segment actually returned to positive growth, which is both encouraging, and it marks the first increase since 2023. In that sector, we outperformed the Hong Kong market in the first half. F&B for the first half was flat, and that was broadly in line with the overall Hong Kong market trends.

I'll now walk you through the link REIT portfolio highlights starting.

Of course with the performance of our Hong Kong retail segment.

Despite market challenges occupancy remained very solid.

Sure.

Well over 97% and although revenue declined by three 1% year over year, mainly due to negative six plus percent reversion.

But pleasingly tenant sales showed improvement narrowing the decline to just over 2% and on that break that down by category for you.

Supermarkets in the foodstuffs segment actually returned to positive growth.

Which is both encouraging and it marks the first increase since 2023 and in that sector, we outperformed the Hong Kong market in the first half.

F N b for the first half was flat.

Flat and that was broadly in line with the overall Hong Kong market trends.

But the overall decline in linked tenant sales was dragged down by general the general retail segment, which includes of course, only a small proportion of our valuable goods as opposed to Amin.

Duncan Owen: The overall decline in Link tenant sales was dragged down by the general retail segment, which includes, of course, only a small proportion of valuable goods as opposed to our main tenancy focus on non-discretionary. Overall, occupancy costs stayed very healthy at around 13%. I would say that together, these metrics do suggest that while some challenges do still persist, resilience within the portfolio remains very strong and evident across our entire range of portfolio. That said, retail businesses in Hong Kong do continue to face some near-term pressure from heightened e-commerce competition, and that has weighed on some non-discretionary trades. To cope with the challenges, we continue to proactively refine our tenant mix to stay ahead of evolving market trends, and we'll share more details on these initiatives in the forthcoming slides.

Tenancy focus on non discretionary.

Overall occupancy cost stayed very healthy at around 13% and I would say that together. These metrics do suggests that while some challenges do so possessed resilience within the portfolio remains very strong and evident across <unk>.

Entire range of portfolio.

That said retail businesses in Hong Kong do continue to face some near term pressure from heightened e-commerce competition and that has weighed on some non discretionary trades, but.

But to cope with the challenges we continue to proactively refine our tenant mix to stay ahead of evolving market trends and we will share more details on these initiatives in the forthcoming slides.

Well, so as a testament to our extremely capable leasing team we've secured a little over 345, new leases during the reporting period, which is a very strong results. Indeed.

Duncan Owen: Also, as a testament to our extremely capable leasing team, we've secured a little over 345 new leases during the reporting period, which is a very strong result indeed. Leasing activity was shaped in large part by emerging trends, including specialty F&B, learning and interest classes, and also game and family entertainment. We also capitalized on growing demand from Chinese mainland brands, and that's further diversifying our tenant mix beyond specialty F&B to include new operators in fashion, services, and entertainment. Meanwhile, tenant retention remained extremely healthy at around 80%, which underscores our focus on engagement and long-term partnerships. Revenue from car parks and related business was broadly stable. Monthly income softened a little due to fewer tickets, but upward tariff adjustments helped offset much of that impact. In addition, we've rolled out smart parking systems to streamline operations and introduced dynamic pricing and diversified services.

Leasing activity was shaped in large part by emerging trends, including specialty F&B learning and interest classes and also game and family Entertainment.

We also capitalize on growing demand from Chinese mainland brands and that's further diversifying our tenant mix beyond specialty F&B to include new operators in fashion services and entertainment.

Meanwhile, tenant retention remained extremely healthy at around 80%, which underscores our focus on engagement and long term partnerships.

Revenue from car parks and related business was broadly stable monthly income softened, a little juice or fewer tickets, but upward tariff adjustments helped offset much of that impact.

In addition, we've rolled out smart parking systems to streamline operations and introduced dynamic pricing and diversified services.

Leveraging real time analytics. This approach aligns rates with demand patterns and that helps us maximize utilization and also deliver greater flexibility and value for our customers.

Duncan Owen: Leveraging real-time analytics, this approach aligns rates with demand patterns, and that helps us maximize utilization, and also deliver greater flexibility and value for our customers. Moreover, with the rising popularity of EVs, the growing demand for parking spaces equipped with charging facilities will provide additional support for our business performance. As part of our defensive strategy, we've continued with our asset enhancement projects with a current HKD 2.3 billion pipeline. During the reporting period, we invested HKD 59 million at Lei Yue Mun and HKD 21 million at TKO Plaza. These efforts reflect our vision to future-proof our assets, and those two projects are expected to respectively deliver ROIs of 14.5% and, in Q1, at just over 29%. Alongside these major upgrades, we also made smaller improvements, including reconfiguring spaces to better meet tenant needs, and to optimize product layout for better productivity.

Moreover, with the rising popularity of Evs, the growing demand for parking spaces equipped with charging facilities will provide additional support for our business performance.

As part of our defensive strategy, we've continued with our asset enhancement projects with our current $2 3 billion Hong Kong dollar pipeline.

And during the reporting period, we invested 59 million at Lehman and 21 million Tko's bonds.

These efforts reflect our vision to future proof our assets and those two projects are expected to respectfully deliver rois of 14.5% and and chunk one out at just over 29%.

Alongside these major upgrades, we also made smaller improvements, including reconfiguring spaces to better meet tenant needs and to optimize product layout for better productivity.

Now, let's shift our focus to the Chinese mainland retail portfolio.

Duncan Owen: Now let's shift our focus to the Mainland China retail portfolio. In the first half of the financial year, there were still market headwinds which were exerting pressure across that Mainland portfolio. Despite the challenges, though, the retail portfolio continues to show very strong occupancy of 95.9% amid the prolonged tough conditions. Rental reversion was soft due to subdued sales sentiment, primarily in Beijing. Actually, if you include Link Plaza, Link Plaza Zhongguancun, and the retail portion of Link Square, rental reversions, quite pleasingly, were positive at +2.5%. We continue to optimize asset quality to drive sustainable growth, and significant asset enhancements were successfully completed at Qianhe and Tongzhou, with a combined capital expenditure exceeding HKD 440 million. Both projects achieved outstanding double-digit ROIs even in the current more challenging market environment. I'll give you more details on the asset enhancement at Qianhe now.

In the first half of the financial year, the western market headwinds, which we're exerting pressure across that our mainland portfolio.

Despite the challenges, though the retail portfolio continues to show very strong occupancy of 95, 9% amid the prolonged tough conditions rent.

Rental reversion was soft due to subdued sells sentiment primarily in Beijing and indeed, if you include linked Plaza link Plaza junk on churn and the retail portion of linked square rental reversion is actually quite pleasingly, we're positive.

Plus two 5%.

We continue to optimize asset quality to drive sustainable growth and significant as were successfully completed at <unk> and changzhou with a combined capital expenditure exceeding 440 million renminbi.

Both projects achieved outstanding double digit rois, even in the current more challenging market environment and I'll give you more details on the asset enhancement at T N now.

We also completed just before I get to that several small scale projects Central walk Li one ship out and as I mentioned before John Gunn Chin with an average ROI of around 9%.

Duncan Owen: We also completed, just before I get to that, several small-scale projects: Link Central Walk, Link Plaza Liwan, Link Plaza Qibao, and, as I mentioned before, Link Plaza Zhongguancun, with an average ROI of around 9%. Combined with the strategic tenant remixing efforts, we've attracted more innovative and competitive brands. Let me walk you through an example from Link Plaza Qianhe that I think really highlights our asset enhancement capabilities. Down in the basement here, we strategically downsized an anchor supermarket tenant and introduced Foodie Plus, which is Link's own food court concept, and we applied that to the freed-up space. We also took an under-utilized area and turned it into leasable space, which further maximizes the value of the property. This approach isn't unique to Qianhe, of course. In fact, we implemented a similar concept at select assets in our Mainland China portfolio.

Combined with the strategic tenant Remixing efforts, we've attracted more innovative and competitive brands.

So let me walk you through an example from link Plaza Chan her but I think really highlights our asset enhancement capabilities.

So down in the basement here, we strategically downsize then anchors supermarket tenant and introduced 30, plus which is linked zone food Court concept when we applied that to the freed up space. We also took an underutilized area and turned it into leasable space, which further maximizes the value of the property.

This approach isn't unique to Chan here of course in fact, we implemented a similar concept at select assets in our Chinese mainland portfolio.

This included Lynx Central walk linked closely one and linked pleasure changzhou and it's proven to be really quite successful.

Duncan Owen: This included Link Central Walk, Link Plaza Liwan, and Link Plaza Tongzhou, and it's proven to be really quite successful. Now I want to move on to our international retail portfolio. In Singapore, we had near full occupancy, and very pleasingly, double-digit rental reversion. I think that demonstrates strong leasing demand from tenants, and underscores the dominant and strategic locations of our malls there. Thanks to SG60 promotions, and the rollout of government vouchers, we saw solid support for tenant sales. That said, retail sentiment is still a little cautious, and we need to monitor any signs for any slowdown in discretionary spending there. In Australia, occupancy across our retail centers remained very solid at over 98%, and the rental reversion was an extremely strong and quite impressive 16%+. Tenant sales were also up by over 15%.

Now, let me move onto our international retail portfolio.

In Singapore, we had near full occupancy and very pleasingly double digit rental reversion and I think that demonstrates strong leasing demand from tenants and underscores the dominant in strategic locations of our malls that.

Thanks to S. G 60 promotions and the Rollouts of government vouchers, we saw solid support for tenant sales that.

That said retail sentiment is still a little cautious and we need to monitor any signs for any slowdown in discretionary spending there.

In Australia occupancy across our retail centers remained very solid at over 98% and the rental reversion was an extremely strong and quite impressive 16 plus percent tenant sales are also up by over 15%.

So looking ahead, we remain optimistic about the retail sector. Thanks to rising household incomes lower interest rates and improving consumer sentiment.

Duncan Owen: Looking ahead, we remain optimistic about the retail sector thanks to rising household incomes, lower interest rates, and improving consumer sentiment. Let me just share with you now, if I may, some updates on our strategy. We've continued to actively manage and optimize the existing Link portfolio, but we're also expanding Link's real estate investment management capabilities, as you've heard, to some degree of success, as mentioned by the chairman earlier. In the first half, our focus on active management, operational efficiency, and streamlining has helped us reduce operating costs, preserve margins, and this, of course, will be a constant ongoing effort. I'm also pleased to report that we've recently completed the streamlining of our integrated facilities management, the IFM contracts, and this should yield significant savings both for now and in the long term.

Let me just share with you now if I may some updates on our strategy. We've continued to actively manage and optimize the existing link portfolio, but we're also expanding links real estate investment management capabilities and as you've heard.

To some degree of success as mentioned by the chairman earlier.

In the first half our focus on active management operational efficiency and streamlining has helped us reduced operating costs preserve margins and this of course will be a constant ongoing effort.

I'm also pleased to report that we've recently completed the streamlining of our integrated facilities management. The I F M contracts and this should yield significant savings both for now and in the long term.

We're also actively exploring new investments opportunities with a particular focus as we mentioned before in Singapore in Australia, while we continue to look for ways to divest and recycle assets, but only where appropriate.

Duncan Owen: We're also actively exploring new investment opportunities with a particular focus, as we've mentioned before, in Singapore and Australia, while we continue to look for ways to divest and recycle assets, only where appropriate. On the investment management front, as I said, you've heard from the chairman, Link Real Estate Partners is making very solid, very pleasing progress in forming partnerships with third-party capital partners. We've already received commitments from new investors, which is extremely pleasing after a cold start 18 months ago. I'll now pass back, if I may, to George for closing remarks. George.

On the investment management front as I said, you've heard from the chairman linked real estate partners is making very solid very pleasing progress in forming partnerships with third party capital partners and we've already received commitments from new investors.

She is extremely pleasing after a cold start 18 months ago.

So I'll now pass back if I may to George for closing remarks George.

Thank you John for running through the details before Q&A I wanted to take a moment to express my heartfelt. Thanks for the trust and support that I've received over the past 16 years.

George Hongchoy: Thank you, John, for running through the details before Q&A. I want to take a moment to express my heartfelt thanks for the trust and support that I've received over the past 16 years. I'm truly grateful to our many stakeholders, colleagues, and partners. Of course, I want to especially thank so many of you here in the room today, our unit holders and research analysts, for all your ongoing support, the buy recommendations from time to time, and not too often sell recommendations. It's truly a pleasure to serve as Group CEO and have played a part in this remarkable Hong Kong success story. Over the past 20 years, Link has grown and thrived through many market cycles, overcome many challenges such as financial crisis, social unrest, and even a global pandemic. All thanks to the dedication of our team.

I'm truly grateful for to our many stakeholders and colleagues and partners and of course I want to especially thank so many of you here in the room today, our unit holders and research analysts for your ongoing support.

The buy recommendations from time to time and.

And not too often several recommendations.

Over the.

It's truly a pressure too.

Surf is our group CEO and have play a part in this remarkable Hong Kong success stories.

So over the past 20 years linked has grown and fry through many market cycles.

Overcome many challenges such as financial crisis, social unrest and even a global pandemic. So all thanks to the dedication of our team.

The success that we've achieved both financially and in terms of the impact that we have made toward our communities has always been guided by a simple vision that we launch in November 2010.

George Hongchoy: The success that we've achieved, both financially and in terms of the impact that we have made to the communities, has always been guided by a simple vision that we launched in November 2010: to be a world-class real estate investor and manager, serving and improving the lives of those around us. I want to extend my best wishes to Link and all my colleagues. Together, we have built a strong and resilient platform, and one that will be well prepared to meet any challenges that lie ahead. Thank you very much. I look forward to seeing how this truly exceptional organization will continue to evolve as I start my garden leave in the first of January. Thank you.

To be a world class real estate investor manager surfing and improving the lives of those around us.

So I want to extend my best wishes to link and all my colleagues together, we have built a strong and resilient platform and one that will be well prepared to meet any challenges that lies ahead. So thank you very much I look forward to seeing how this truly exceptional organization and will continue to evolve as I start my.

God in leaf and first of January.

Thank you.

Thank you George we all hoped you have on auto.

Ko Chung Eun: Thank you, George. We all hope you have all the best and happy retirement. Now it comes to Q&A sessions. For those of you here, you can raise your hands and ask questions. For those who are joining us through the webcast, you can use the Q&A function to answer your questions. Please state your name and the company that you represent. I'll count first.

All the best and happy retirement.

So now it can stay Q&A sessions, okay, but yeah, you can raise your hands and ask questions and therefore, those who are joining us share. The webcast you can use the Q&A function to answer your questions and I'll. Please state your name and the company that you represent.

Okay, how fast.

Thank you very much shoppers of all thank you Josh awful your leadership I will Miss you and just wish you all the best.

Carl Chen: Thank you very much. First of all, thank you, George, for your leadership. We'll miss you, and just wish you all the best. This is Carl Chen from JP Morgan, and I have three questions. My first question is probably more for Duncan. As we know, we are trying to identify a new CEO, right? Just curious from your perspective, what kind of qualities or track record do you most look forward to in the new CEO? When the new CEO is on board, what kind of KPI you will give him or her? Just curious if there's any tentative timeline on when the new CEO will be on board. That's my first question on the new CEO. The second question is on the potential asset acquisition in Australia.

So this is car Chan from J P. Morgan and I have three questions. My first question is probably more for Duncan So as we know or we are trying to identify a new CEO righteousness curious from your perspective on what kind of quality is our track record of your most.

Look forward to in the new CEO and then when the new CEO is on board what kind of Kpis are you will give him or her and I was just curious if theres any tentative timeline on when the new CEO will be on board. So that's my first question on the new CEO and a second question is on the potential asset acquisition in Australia. So just curious if you can give.

As a bit more thoughts on the process behind.

Carl Chen: Just curious if you can give us a bit more thoughts on the process behind. Number one, why are we interested in those three shopping malls in Australia? How value-accretive do you think it will be? How do we plan to fund the acquisition? Will this be a pure acquisition, or will this be part of the fund management that we have been talking about? That's my second question on the Australia potential acquisition. My third question is on Hong Kong retail sales, because if we just look at the tenant sales for the last quarter, it seems like the year-on-year decline actually widened a little bit. Just curious for, let's say, October and November so far, do we see some marginal improvement? What's our later guidance on the rental reversion for the second half of the year? Thank you very much.

Number one why are we interested in those three shopping malls in Australia, how accretive do you think it will be and how do we plan to fund the acquisition and Buddhist B, a pure acquisition or it will just be part of their fund management that we have been talking about so that's my second question on the Australia potential acquisition and my third question is on Hong Kong retail sales.

Because if we just look at a tenant and cells of the last quarter or it seems like the year on year decline actually wind up a little bit. So just curious for let's say October and November so far do we see some marginal improvement and what our latest guidance on the rental reversion for the second half of the year. Thank you very much.

Thank you three questions, but three or four questions in each of the questions.

Duncan Owen: Thank you. Three questions, but three or four questions in each of the questions. Let me try and deal with point one, and I'll hand to George, but I'll give a couple of headlines on point two and three. Actually, I'll hand before I hand to John. The CEO process, there's a high degree of transparency on it. It's a comprehensive search. It's an international search, and there is a process ongoing. I won't comment in too much detail, but I'll give you a little bit of guidance. We are looking for a real estate investor with a proven track record who has worked across border and in an international environment. We are looking for someone who has done that in a public as well as a private environment.

So let me I'll try and deal with 0.1, and I'll hand to George but I'll give a couple of headlines on 0.2 and three before.

Before I hand to John.

C O process, there's a high degree of transparency on it is a comprehensive search.

It's an international search.

And there is a process ongoing so I won't comment too much detail, but I'll give you a little bit of guidance, we are looking for.

A real estate investor with a proven track record who has works across border and in an international environment.

We are looking for someone who has done that in a public as well as the private environment.

And we want someone who of course will continue to uphold the brand of and the integrity of the brand and link and bring a good degree of humility to how link and its in keeping with its brand operates I think those things are given in some ways, but I think it's very important that we focus on those.

Duncan Owen: We want someone who, of course, will continue to uphold the brand and the integrity of the brand in Link and bring a good degree of humility to how Link, and it's in keeping with its brand, operates. I think those things are a given in some ways, but I think it's very important that we focus on those as key criteria moving forwards. In terms of timing, it's a proper process that is taking some time. It's begun as a global search. It has been gone from a long list to a long medium list to a medium medium list to a medium list to a long short list. There will be a prolonged period of time probably before we can agree terms with the final candidate.

Key criteria moving forwards.

In terms of timing.

It's a proper process that is taking some time it began as a global search it has been gone from a long list to a long medium list to a medium medium lift to our medium lift to our long short list, but there will be a prolonged period of time probably before.

Sure we can agree terms with the final candidates.

And it is likely a number of the candidates have extended notice periods because of the seniority of the existing organizations and the part that you didn't have that I'll add is for that reason, it's key that we put in the interim management arrangements that we did promoting John Saunders to the board. So there were two executive directors and we have to.

Duncan Owen: It is likely a number of the candidates have extended notice periods because of the seniority in their existing organizations. The part that you didn't ask that I'll add is for that reason, it's key that we put in the interim management arrangements that we did, promoting John Saunders to the board. There were two executive directors, and we have the chair's committee for oversight and support of the strategy, with a real focus on ensuring we don't take a break or a pause in execution of the strategy going forwards during that interim period. That's the real focus. In terms of the other two, I don't think we'll comment on specific acquisitions. What I think I would say is acquisitions of retail malls in Australia would be very much in line with our publicly declared strategy.

Chaz Committee for oversight and support of our strategy with a real focus on ensuring we don't take a break or a pause in execution of the strategy going forwards during that interim period. So that's a real focus.

In terms of the other two I don't it will comment on specific acquisitions, what I think I would say is.

Acquisitions of retail mouths in Australia would be very much in line with our publicly declared strategy.

John Saunders often described this as the company's superpower and management of miles and as I said in my part of the presentation of the starts.

Duncan Owen: John Saunders often describes this as the company's superpower in management of malls. As I said in my part of the presentation at the start, our core competence is management of retail malls in Hong Kong, the Greater Bay Area, as well as other locations in APAC, such as Australia and Singapore. It should come as no surprise to analysts or investors that we might be seeking opportunities in those markets. In terms of the third question and the headline about Hong Kong retail sales, well, the reversions have gone down 6.4% this half. The only thing I'll add, I'll avoid stealing more of John's thunder, is there is an obvious lag effect. There is an average lease length, a normal lease length of three years in Hong Kong.

Our core competence is management of retail miles in Hong Kong, the greater Bay area as well as other locations in APAC, such as Australia, and Singapore. So it should come as no surprise to analysts or investors that we might be seeking opportunities in those markets.

In terms of the third question on the headline about Hong Kong retail sales.

Well the reversion has gone down six 4% this half.

The only thing I'll add.

On avoids dealing more of John's Thunder is there is an obvious lag effect. There was an average lease length of normal lease length of three years in Hong Kong.

If a property was lapped three years ago at the market rents with the best will in the world. Most of those market rents are lower today and when those leases renew that'll be at the market rent, which will be lower so although we are genuinely seeing increased footfall.

Duncan Owen: If a property was let three years ago at the market rent with the best will in the world, most of those market rents are lower today. When those leases renew, they'll be at the market rent, which will be lower. Although we are genuinely seeing increased footfall, all sorts of positive signs of recovery, the real world may be recovering positively, but the impact on our numbers and seeing it come through in the numbers will have a time lag. John.

All sorts of positive signs of recovery.

The real world may be recovering positively, but the impact on our numbers and seeing it come through the numbers, we'll have a time lag.

John.

Yeah sure so specifically on the.

John Saunders: Yeah, sure. Specifically on the Australia thing, I think we've said for quite some time that we are interested in doing more Australia. Clearly, the Australia portfolio is treating us very well. I think the retail is very much center and core to what we do. This is not at all opportunistic. It's very much strategic in nature. It's an extremely good fit, I think, with what we already have down there as a portfolio and what we're very comfortable managing and operating. There was a question about funding, etc. We have plenty of capacity on the balance sheet to fund a transaction like that. I think that allows us to bring to bear a fast liquidity solution for that particular situation. I think they're good assets. I think we can do more with them. We'll see what happens as we go from here.

Australia thing I think we've said for quite some time.

But we are interested in doing more Australia, clearly the Australia portfolio as existing portfolio is treating us very well I think.

The retail is very much central and core to what we do so this is not it's all opportunistic it's very much strategic.

In nature.

And it's extremely good fits I think with what we already have down there is a portfolio and what we're very comfortable managing and operating.

There was a question about our you know funding et cetera, we have plenty of capacity on the balance sheet.

To fund the transaction like that and I think that allows us to bring to bear a.

Fast liquidity solution.

That particular situations so I.

I think we that you know that they're good assets. So I think we can do more with them.

And and we'll we'll see what happens as we go from here.

Cindy.

Okay.

Ko Chung Eun: Thank you. This is Cindy from Citi. I also have three questions. The first one, I want to follow up on your Link Real Estate Partners. Just now we mentioned there has been some initial success and commitment. Can you walk us through the current structure of the third-party capital with you? Is there any target for AUM? How should we think about your pace, say, in three years or five years? What will it be? In terms of the potential investment target for the real estate platform, is it similarly with priority for Australia, followed by Singapore? Any difference with your own platform? This is the first question. The second question, I want to touch a little bit on your own portfolio reconstruction. Just now we heard you want to increase your Australia portfolio.

Thank you from Citi.

Oh, that's great questions. The first one.

So just now we mentioned there has been a success.

I think Tom has meant so can you walk us through the current structure of the third party capital with you.

Pockets.

Hum.

How should we think about your pace.

Yes.

And in terms of the potential.

Investment targets.

Similarly, with our priority to Australia.

Paul.

With your own platform.

Sure.

And the second question I wanted to touch a little bit on your own portfolio reconstruction. So Jeff you want to increase your Australia.

If you say a target of increasing Australia portfolio what percentage.

Ko Chung Eun: Is there, say, a target of increasing Australia portfolio to what percentage within the overall portfolio? Is it fair to say that you are thinking it's getting more confident and interested to buy in today than, say, three months or six months ago? Why are you getting a little bit more interested? In terms of, say, divestment, is there any asset within your portfolio that you think can be well interested to sell it and recycle capital? The third question is actually on your cost control initiatives. We heard a lot of good news that you just shared on cost controls, but that has yet to reflect in the financial result. If I hear correctly, I think KS mentioned that it could worsen in the second half before things getting better.

The overall portfolio and it is fair to say that you are thinking.

More conflict of interest that you're buying today than three months six months, if at all and why are you getting a little bit more.

In terms of say divestment is there any.

Can be well interested to sell it and recycle capital.

Hum.

<unk> actually on your cost control initiatives. So we hired a lot of good news that you just shared cost controls, but that have yet to reflect the financial results.

Quickly I think he has mentioned that equal Boston in the second half.

It's getting better so shall we say a little bit.

Low cost country.

Ko Chung Eun: Can you share with us a little bit on how cost control has been doing? How would it affect our overall performance? When it stabilizes, what type of margin levels are we targeting at? Thank you.

How would they affect our overall performance and when stabilized what type of margin levels.

Thank you.

Thank you.

Ill give some headline answers again, particularly around question one and.

Duncan Owen: Thank you. I'll give some headline answers again, particularly around question one. Questions two, I'll pass to John and then to KS respectively for question three. First of all, the overriding principles of the strategy for third party or for balance sheet is to buy the right assets that enhance returns and the quality of earnings for the group and the unit holders of the group. We do not have a fixed AUM target. The target is to buy the right assets on balance sheet and to buy the right assets in partnership where we're co-investing to get the right returns from the assets. There will naturally be some management enhancing, and there may well be some management fees that come with managing other partners' money alongside ours, which is aligned and is long-term.

<unk> questions too I'll pass to John and then to chaos respects of lift question three.

First of all the overriding principles of the strategy for third party of our balance sheet at the by the right assets that enhance returns on the quality of earnings for the group and the unit holders of the group.

We do not have a fixed AUM targets.

The target is to buy the right the right assets on balance sheet and to buy the right assets in partnership where we're co investing to get the right returns from the assets there will naturally be some management enhancing and they may well be some management fees that come with managing other partners money alongside.

<unk>, which is aligned on these long term.

But we're essentially a REIT that is looking first and foremost to maximize the value of its capital invested biased balance sheets.

Duncan Owen: We're essentially a REIT that is looking first and foremost to maximize the value of its capital invested by its balance sheet. In terms of the target returns, I think this is relevant. It's self-evident that the balance sheet returns have tended to be high single-digit. Where we allocate 10% or 20% of the balance sheet towards the funds business or special situations, we would reasonably expect those returns to be higher and to be more enhancing to provide diversification. You could look at a value-add style type of return that would be 15% plus. In terms of, I think, the second question, which was very much focused, I think I've got some detailed notes here on timing, and then we moved on to a degree to recycling.

In terms of the target returns I think this is relevant.

Self have is self evident that the balance sheet returns have tended to be high single digit.

Where we allocate 10 or 20% of the balance sheet towards funds business or special situations. We would reasonably expect those returns to be higher and to be more enhancing to provide diversification. So you could look at a value add style Rita.

The type of return that would be 15% plus.

In terms of I think the second question.

Which was very much focused.

Think I've got some detailed notes here on.

On timing and then we moved on to a degree to recycling, yes, we'll always look to recycle, but what we would not want to do was hold on to assets full.

Duncan Owen: Yes, we'll always look to recycle, but what we would not want to do was hold onto assets, follow the market down, and sell at the bottom of the market, especially where there are assets that we have conviction on. I think there may, however, be some non-core assets that don't fit the criteria I've said in the past that might not be retail malls and might not be in the obvious target geographies that are obviously adjacent to us, and we know and can operate in. You could pick any number of offices, as an example, in the UK or warehousing in the mainland. In terms of the cost control, before I hand to John on question two, this year has a lot of noise in the cost control because when you make cost controls with targets, there are some exceptional items that go with that.

Follow the market down and sell at the bottom of the market, especially where there are assets that we have conviction on.

So I think I think there may however, be some noncore assets that don't fit the criteria I've said in the past that might not be retail malls and might not be in the obvious target geographies that are obviously adjacent tools.

And we know them.

Operator.

So you could pick any number of offices as an example in the U K or warehousing in the mainland.

In terms of the cost control before Hunter join on question two.

This year has a lot of noise in the cost control because when you make cost controls. We've targets. There are some accent July terms that go with that so again the benefits will come through in the full annualized if you like normalized cost controls that we would be making there.

Duncan Owen: Again, the benefits will come through in the full annualized, if you like, normalized cost controls that we would be making. There are some one-offs this year, but essentially, the current annualized savings for the running and operating costs are a little bit in excess of HKD 200 million. John.

There are some one offs this year, but essentially.

The current annualized savings for the running and operating costs are a little bit in excess of 200 million Hong Kong dollars.

Sean.

Yeah, certainly so.

John Saunders: Yeah, certainly. Just adding a little to the third-party side. Obviously, it's private capital for a reason. The clue's in the name. What I can say is that the clients who've trusted us as fiduciaries to manage capital on their behalf so far are all very well-known names and are all institutional capital. I think the chairman said it very well when he said, we don't have a specific target per se, but I think our style has been to do things and then tell you that we've done them rather than perhaps tell you that we're going to do lots of things, and it takes some time. I detected a couple of slightly widened eyes that after 18 months, we do have a billion effectively under management, and I'd expect that to grow. We'll continue to give you updates as time goes by.

Just adding a little to the third party side.

And obviously, it's private capital for a reason with losing the name, but what I can say is that the clients who trusted us as fiduciaries to manage capital on their behalf. So far they are all very well known names under rule institutional capital and I think the chairman said it very well when he said we don't have a specific target per se.

But I think our style has been to do things and then tell you that we've done them rather than perhaps tell you that we're going to do lots of things.

And it takes some time, so I detected a couple of slightly widened eyes that after 18 months you know, we do have $1 billion.

Effectively under management and I'd expect that to grow and we'll continue to give you updates as time goes by.

Why Australia I think is a number of reasons why Australia and why the retail sector in more detail I mean, Australia as I said before it's it's doing very well in terms of the existing portfolio. So I think it shows that where you have a high quality center in new Mexico, our capabilities to it we can produce outsized returns.

John Saunders: Why Australia, I think, is a number of reasons why Australia and why the retail sector in more detail. I mean, Australia, as I said before, it's doing us very well in terms of the existing portfolio. I think it shows that where you have a high-quality center and you match our capabilities to it, we can produce outsized returns and accrete earnings for the DPU. It's helpful, of course, that Australia has some fantastic demographics behind it, and that affects all areas of society, including property. It's particularly powerful for retail and retail catchment. That's fundamentally, I think, a lot of what's driving it. I think it makes for very good use of the balance sheet because we are clearly able to invest at rates which significantly beat our cost of capital.

And you know accrete earnings for the GPU is helpful of course that Australia has some fantastic demographics behind it and that affects all areas of society, including our property, but it's particularly powerful for retail and retail catchment. So that's fundamentally.

I think a lot of what's driving it.

And I think it makes.

It makes it will get very good use of the balance sheet, because we are clearly able to.

Investor rates, which significantly beat our cost of capital.

Okay, Yes.

I think on the point that Chad articulated on cost savings.

Duncan Owen: Okay. I think on the point that Chair articulated on cost savings, I think if you look at the business, there's probably about, from the revenue line down, 10% of revenue that is controllable, whether it's staff cost at the property level or staff cost outside the property level at the regional centers. I think where we have come in the first round is that with some of the staff headcount optimization or restructuring, there will be one-off separation costs. No difference from a lot of companies as they go through restructuring, of course. This year, we'll see a bit more ticking in as, I guess, the senior departures or some of these departures will come in the second half of the year.

If you look at the business this.

Really about <unk>.

From the revenue line down 10% of revenue that is controllable.

Whereas whether staff costs at the property level of staff costs outside of property level at the regional centers.

And where we have come in the first round is dead.

Some of the.

Staff head count optimization or restructuring there will be one of separation costs.

No different from a lot of companies as they go through structural restructuring of course.

This year, we will see a bit more taking.

Taking in S.

I guess, a senior departures or 70 departures will come in the second half of the year.

And then like what chairman has said on a structured basis.

Duncan Owen: Like what Chairman has said, on a structured basis into the next financial year, the aim is to shoot for about HKD 200 million of savings every year. Thank you.

Into the next financial the aim is to shoot for about 200 over a million of them savings every year.

<unk>.

Okay.

Yeah.

Ko Chung Eun: Okay. Carl?

Hi, Karl Choi from Bank of America, three quick questions first on the third party capital question just want to find out if there are any limitations to the capital that you have raised in terms of for example, geographies, where you can make the investment and going forward. How should is there any guiding principle between.

[Analyst] (Citi): Hi, Carl Choi from Bank of America. Three quick questions. First, on the third-party capital question, just want to find out if there are any limitations to the capital that you have raised in terms of, for example, geographies where you can make the investment. Going forward, is there any guiding principle between acquisitions that you'll be making based on your own balance sheets and where you'll be tapping third-party capital to make those acquisitions? Second question is, any more color on Mainland China, especially Zhongguancun Mall? Looks like the negative rental reversion was quite severe in the first half because it dragged down the whole portfolio. Should we see some stabilization half and half? The third question is regarding a quick one, housekeeping, is regarding the headcount-related reduction charges.

<unk> that you've been making or based on your own balance sheet and where.

Were you be tapping third party capital to make those acquisitions and second question is there any more color on mainland China, especially trunk lines on more looks like the negative rental reversion was quite severe in the first half because it drag down the whole portfolio.

Should we see some stabilization in half and half and the third question is regarding a quick one housekeeping is a regarding the head count related.

Reduction.

Charges should I clarified that that you'd be making additional income after absorbing those charges. So you won't be isolating them out separately.

[Analyst] (Citi): Should I clarify that you'll be making your digital income after absorbing those charges, so you won't be isolating them out separately? Thanks.

Okay.

Thank you again, I'm going to hand over to my colleagues, but but in very simple terms, where we're working with third parties in partnership or in a fund structure.

Duncan Owen: Thank you. Again, I'm going to hand over to my colleagues. In very simple terms, where we're working with third parties in partnership or in a fund structure, yes, the returns are higher. There's typically value-add style returns. Yes, the strategies are relatively unencumbered, albeit they would be very focused in the region of APAC. The geographies could be wider, the sectors could be wider, as opposed to the balance sheets where there's a big focus on the particular four APAC markets I've mentioned, retail malls, and our super strength. In terms of the reversion, I'll hand to John on this point. I think the key factor for all of the reversions, whether they're upwards or downwards, whether they're Beijing malls in the mainland or elsewhere, is there's always a lag indicator.

Yes. The returns are higher there's typically valuate style returns.

And yes, the strategies are relatively unencumbered, albeit they would be very focused in the region of APAC also the geographies could be wider sectors could be wider.

As opposed to the balance sheets, where there's a big focus.

On the particular for APAC markets, I've mentioned and retail miles on our Super strength.

And in terms of the.

The reversion I'll I'll I'll hand to John on this this point, but I think the.

The key factor for all of the reversion, whether that upwards or downwards wherever that Beijing mouse and the mainland or elsewhere is there's always a lag indicator to what's happening on the ground is always ahead of what you see in the financial numbers that come through because of that lag effect and I think it.

Duncan Owen: What's happening on the ground is always ahead of what you see in the financial numbers that come through because of that lag effect. I think it's really important to note that as you do your modeling for the numbers, etc. John.

It's really important to note that as you do your modeling for the numbers et cetera.

John.

Yeah.

So on the third party capital side versus the balance sheet. So I think the balance sheets is very clear.

John Saunders: Yeah. On the third-party capital side versus the balance sheet, I think the balance sheet is very clear. It continues to be very committed to Hong Kong and the Greater China area, the Greater Bay Area, particularly. It's also very much a retail and, to some degree, an office-focused business. It's fundamentally outside of Greater China. It's focused on Australia and Singapore. That takes care of the balance sheet. In some respects, that's relatively straightforward. Again, as you can see from some of the results, when you get the right assets with the right operational management, you can produce very good returns from those. The fund, or the fund, the third-party business, the capital business, that is capable of operating on a wider scope, taking in some other jurisdictions and investment classes. It has a wider remit.

It continues to be very committed to our Hong Kong and.

You know the greater China area, and the greater Bay area, particularly.

It's also very much a retail and to some degree in office focused business and its fundamentally outside of greater China, It's focused on Australia.

Australia.

And Singapore, so that takes care of the balance sheet in some respects that's relatively straightforward.

But again as you can see from some of the results when you get the right assets with the right operational management you can produce very good returns from those the fund or the fund the third party business the capital business.

That is a.

Capable of operating on a on a wider scope taking in some other.

Jurisdictions and our investment classes.

So it has a it has a wider remit, but having said that it's still fundamentally operating.

John Saunders: Having said that, it's still fundamentally operating in the same developed Asian markets. I think that probably covers the third-party capital side. In Zhongguancun and the sort of reversions, generally speaking, in China, I think in that asset particularly, there were some challenges. There was a new mall that was down the road that came into existence. We had some weaknesses in occupancy, which is highly unusual for us because normally we pride ourselves on having very full buildings, as you can see from the results. We had to deal with that. In order to deal with that, that meant that there were steeper than normal reversions because suddenly we were competing, as I say, with a new offering. They've increased occupancy there, or we've done lettings for around 35% plus of the building overall.

In the same developed Asian markets.

So I think that probably covers the third party capital side.

In junction and the sort of reversion is generally speaking in China.

I think in in that asset, particularly there was some challenges there was a new mall that was down the road.

That that came into existence, so we had some.

Weaknesses in occupancy, which is highly unusual for us because normally we pride ourselves on having very full buildings as you can see from the results.

We had to deal with that and in order to deal with that that meant that there was steeper than normal reversion because suddenly we were competing as I say with a with a new offering but they've increased occupancy there. We've we've we've done lettings for roundabout 35 plus percent of the building overall so.

I don't want to be too confident in predicting but I do feel that that is largely shored up.

John Saunders: I don't want to be too confident in predicting, but I do feel that that is largely shored up. Could there be some more weakness that comes from the general market? Yes, potentially. I think we're now on a level playing field in terms of that asset. By the way, that asset is a perfectly good asset. It just suddenly faced some competition, and we've dealt with that. As I said earlier, when you take out the impact of that particular property from the overall results in China, what's very encouraging is that we actually saw growth in reversions in China overall. I think with some cautiousness going forward, it's not a bad picture.

And could there be some more weakness that comes from the general markets, yes, potentially but I think we're now on a level playing field in terms of that asset and by the way that asset is a very good asset. It just suddenly faced some competition and we've dealt with that and as I say when as I said earlier when you take out the impact of.

That particular property from the overall results in China.

What's very encouraging is that we actually saw growth.

In revisions in China overall, so I think it's a it's.

With some cautiousness going forward I think it's a it's not a bad picture.

On the headcount reduction I guess.

Ko Chung Eun: On the headcount reduction, I guess the way it's done is between a redundancy or retirement, there are statutory as well as contractual payments that we are obligated to fulfill. The accounting treatment is such that the expense of these payments needs to be all front-loaded to the last day of the employment. That's why I say a lot of this will then be surfacing as we cross into the end of the financial year, into the new year. I guess when the exercise was conducted in the first half and the execution of this stuff is being done within this period, quite a fair bit of this one-off will then be expensed into the second half of the financial year.

The way it's done is between a redundancy or retirement, there are statutory as far as <unk> contracture payments that we are obligated to fulfill.

And the accounting treatment is such that the.

The expense of these payments needs to be all front loaded to the last day of the employment. So that's why I say a lot of this will then be surfacing as we cross into the end of the financial year into the new year and I guess when the exercise was conducted in the first half and the execution of this stuff is being done with the dispute at all.

A fair bit of this one awkward NB.

Expense into the second half of the financial year.

Mac.

Ko Chung Eun: Mark?

Thank you management this is mark <unk> from UBS.

[Analyst] (Citi): Thank you, Management. This is Mark Leung from UBS. I got about three questions. I think the first one is regarding the retail sales on the ground. I think in the first half, our tenant sale was mainly dragged by the general retail, which significantly underperformed the overall Hong Kong market. Just want to share what kind of category we underperform. You also mentioned the e-commerce penetration. That's linked to the second question because I think last week, one of the local e-commerce operators said they want to eliminate the brick-and-mortar retails in Hong Kong. Just want to see your view and what's our strategy in defending our position for the local neighborhood mall in regard to the e-commerce threats. Number three is regarding the occupancy cost ratio. I think currently it's about 13%.

About three questions I think the first one is regarding on the retail sales on the ground I think in first half hour tenants have us mainly dragged by the general retail, which significantly underperformed. The overall Hong Kong market just wanted to share what kind of category. We underperform you also mentioned that Buster ecommerce penetration.

So that's linked to the second question because I think in last week, one of the local peak.

E Commerce, operator, they said they want to eliminate our brick and motor read housing Hong Kong. So just want to see all of you and what's our strategy in defending our position body local neighborhood more in regard on an E. Commerce spreads now Murphy is regarding on the occupancy cost ratio I think currently its pulse protein per cent.

But if you look on the right are bought across seems the attendants margin squeezing and also maybe some of the supermarket are cutting our price do you think that the.

[Analyst] (Citi): If you look on the wide-out board across, it seems the tenant margin is squeezing, and also maybe some of the supermarkets are cutting the price. Do you think that the occupancy cost ratio may need to further trend down in the future in order to retain the talent? If that's the case, what is the sustainable level? Last but not least, it's about the Hong Kong car park. We have a slight decline in the car park. Just want to check with Management what is our future growth outlook for the Hong Kong car park because it seems the number of cars continued to not rebound despite the population increase. Thank you.

Occupancy occupancy cost ratio may lead to further trend down in the future in order to in order to retain the talent. That's the case what is a sustainable level last but not least is the apples to Hong Kong car Park, we have a slight decline in a car park and I just wanted to check with management, while is our future growth outlook for the Hong Kong pocket because it seems the.

Number of cars continue to.

Did not report despite the population.

Thank you.

Thank you I think most of these are for John.

Duncan Owen: Thank you. I think most of these are for John. Just to recap, I think there's a retail drag impact is the question. The occupancy costs, of which I'll just reiterate what's been said before, in that we've focused on a strategy to maintain high levels of occupancy rather than to hold out for less dollar in rent. That's because it positions the company better for a recovery in rent out of the bottom of the cycle when there's high occupancy. I think your third question is related to that because it's about occupancy costs. I think there is a fourth question, which is about car parking, which may be a fourth that KS may want to comment on. If I can hand to John now on the retail drag.

But just to recap I think it was a retail drag impact there's no question the occupancy costs.

Of which I'll just reiterate what's been said before and that we've focused on our strategy to maintain high levels of occupancy.

Rather than to hold out for less last dollar in rents and that's because it positions the company better for a recovery in rents out of out of the bottom of the cycle when there's high occupancy.

I think you'll.

Your third question is related to that because it's about occupancy costs.

And I think there was a fourth question, which is about car parking.

Which may maybe a fourth of the chaos may want to comment on but if I can hand to Jon now.

On the retail drug.

Yeah sure. So you know.

Yes.

John Saunders: Yeah, sure. Yes, I guess when you look at the Hong Kong retail sales, the first thing to say is that it's encouraging. When we were speaking a few months ago, obviously, we had a few data points. I suppose we were all hoping that a few data points might become a few more, and that we might be okay to start calling it a trend. Obviously, those figures capture luxury. Particularly, they capture gold and jewelry. There was also the impact of the latest sort of iPhone offerings, whatever number we've got up to next. No doubt my children will tell me on their Christmas list. We don't really have much exposure to that. I think that's why our figures lag a little just in a pure number sense.

I guess when you look at the Hong Kong retail sales. The first thing to say is that its encouraging.

When we were speaking a few months ago, obviously, we had a few data points and I suppose we were all hoping that a few data points might become a few more and that we might be okay to start calling it a trend.

But obviously those figures capture.

Luxury and particularly they capture.

Golden jewelry.

And there was also the impact of the latest set of iPhone offerings whatever number we've got up to next node that my children will tell me on my Christmas list.

And we don't really have much.

Exposure to that so I think that's that's why our figures lag a little just in a pure number sense, but I think the positive to take away from this is not per se the non discretionary lag slightly but more that this trend of of retail sales data points does start to resemble the trend.

John Saunders: I think the positive to take away from this is not per se the non-discretionary lag slightly, but more that this trend of retail sales data points does start to resemble a trend as opposed to an individual set. I'm not going to make any forward predictions, but let's all hope that that continues because that will be good for us. It will be good for Hong Kong. I suppose e-commerce, yes, you get individual data points or individual announcements. I mean, e-commerce is something that's been on our radar for a very, very long time. It's not something we've suddenly started reacting to because of one particular retailer saying they're getting out of bricks and mortar.

As opposed to an individual set so I'm not going to make any forward predictions, but let's all hope that that continues because that will be good for us it will be good for Hong Kong.

I suppose ecommerce, yes, you get a individual data points or individual.

Announcements, but I mean e-commerce is something that's been on our radar for a very very long time, it's not something we've suddenly started reacting too because of one particular reseller, saying theyre getting out of bricks and mortar.

Balanced against that there have also been lots of reports out so much in Hong Kong in the near term, but there've been lots of reports of retailers, saying actually we realize we need to have a combination of physical and online.

John Saunders: I guess balanced against that, there have also been lots of reports, not so much in Hong Kong in the near term, but there have been lots of reports of retailers saying, actually, we realize we need to have a combination of physical and online. As I say, it's something we've been reacting to for quite some time, which is why you see the constant evolution of our portfolio to deal with that. Whether it be the fact that on the plus side, when people come and do collections, they may be actually coming into the mall to do collections. How do we activate those people into doing a collection plus maybe staying a little longer and frequenting some of our tenant shops? It's not all a one-way street, but it's something we're hyper-vigilant on, and we've been working on for quite some time.

But as I say, it's something we've been reacting to for quite some time, which is why you see the constant evolution.

Of our portfolio.

To deal with that whether it be the fact that on the plus side when people come into AR collections.

They may be actually coming into the mall to do collection. So how do we activate those people into doing a collection plus may be staying a little longer and frequenting some of our some of our tenants shops. So it's not all in one way streets, but its something were hypervigilant on them, we've been working on for quite some time.

On the occupancy cost stuff side, you know I think our occupancy costs are.

John Saunders: On the occupancy cost side, I think our occupancy costs are very good, around 13%. It is something that the team, Emmanuel, the team, they focus on constantly. The level of detail that they go into, and the level of partnership that they have with our tenants in respect of things like this, is phenomenal. Yes, there are still some headwinds out there in terms of minimum wage and other things. I would say, again, I think we feel fairly confident that a number around 13% is a good result. I think we feel fairly confident that we should be able to keep that number roughly where it is. In terms of car parks, I think you have seen declining or you have seen a reduction in the number of car registrations in Hong Kong.

Very very good in around about 13%, but again, it's something that the team Emmanuel.

The team they focus on constantly and the level of detail that they go into and the level of partnership that they have with our tenants in respect of things like this phenomenon.

And yes, there are still some headwinds out there in terms of minimum wage and other things, but I would say again.

I think we feel fairly confident that.

You know.

A number of around 13% is a good result, and I think we feel fairly confident that.

We should be able to.

Keep that number roughly.

Where it is.

In terms of car parks.

I think you.

You know you have seen declining we have seen a reduction in the number of car registrations in Hong Kong I think that reduction.

Has flattened out to to some degree.

John Saunders: I think that reduction has flattened out to some degree. Yes, we've seen a reduction in the number of ticket sales, but we've also seen some of that reduction added back in terms of the fact that we were able to push through some higher pricing, partly in terms of the fixed-term contracts, the monthlies, and the longer terms, but also through the dynamic pricing that we've put into the malls as well. I think if you, again, not looking to give you any sort of full forecast, but more if you look back at the history of this business, it is broadly a relatively flattish business. I don't think you expect to see there being big negatives, and I don't think you expect equally there to be big positives.

And yes, we've seen a reduction in the number of ticket sales, but we've also seen some of that reduction added back in terms of the fact that we were able to push through some higher pricing partly in terms of the fixed term.

Contracts that the month is and the longer terms, but also through the dynamic pricing that we've put into the malls as well, but I think if you again not not looking to give you any sort of whole forecast, but more if you look back at the history of this business. It is broadly a relatively flattish business. So I do.

Thank you expect to see that being a big negative.

Negatives and I don't think you expect equally there to be big positive. So it's a good.

Stabilizing income and cash flow that does an awful lot of the heavy lifting without taking much glamour when it comes to.

John Saunders: It's a good stabilizing income and cash flow that does an awful lot of the heavy lifting without taking much glamour when it comes to having a resilient DPU.

Having a resilient GPU.

Pitfall.

Yeah, Alex as less answered one question from the webcast, so and answer questions from principal am what will be the company's funding plans for a potential offset.

Ko Chung Eun: Before I take another question, maybe let's answer one question from the webcast. There's a question from Principal Asset Management. What will be the company's funding plan for the potential Australian malls acquisition? Will it be through equity, debt, or recycling some of the capital? Thank you.

Australian most acquisition web is true equity that's all thing recycling some of the capital. Thank you Kash.

So what you read in the media I think there is some element of truth that we are looking at it.

Duncan Owen: KS?

Ko Chung Eun: What you have read in the media, I think there's some element of truth that we are looking at it. From where we are in terms of gearing at 22% to 23%, I think we have the capacity to buy this and put this on balance sheet using our debt headroom. At the same time, I think there's no dual certainty at this stage, but we have already prepared pre-financing for the next financial year. We have available liquidity if we need to act fast. I think that's where we are at this stage of the game.

From where we are in terms of gearing at 22, 23% I think we have the capacity to.

By days and put it on balance sheet using our.

Headroom.

But at the same time.

I think there's no deal certainty at this stage, but we have already prepared pre financing for the next financial year with available liquidity, we need to act fast. So I think that's where we are at this stage of the game.

Okay.

Yeah.

Yeah.

Ko Chung Eun: Okay. Next one.

Simon Cheung from Goldman Sachs I, just follow up on the retail questions.

[Analyst] (Citi): Simon Chong from Goldman Sachs. Just follow up on the retail questions. John, you mentioned that you have seen some improvement or green shoots across your different malls. Is there anything that you can call out? Secondly, I think on your point about lagging, rent being lagging the retail sales performance, can you give us a sense how long the lagging typically will be? We understand that it's a three-year cycle, but if you can share with us some color, that would be helpful. Also, on the costs, this year, I think the annualized cost saving is HKD 200 million. Whether you have any maybe longer-term target for the cost saving? Thank you.

John You mentioned that you have seen some improvement or green suits are crossing with even more is that anything that you can call out and secondly, I think on your point about lagging rent being lagging the retail sales performance.

Can you give us a sense how long the lagging typically be we understand there is a three year cycle, but you know if you can share with us some color there that would be helpful. And then and also on the parts of D. C. I think the annualized cost savings $200 million, whether you have any maybe longer term target for the cost savings. Thank you.

Yeah look I'd say the the the bright spots the things that are encouraging in our supermarkets in and F&B.

Duncan Owen: Yeah. Look, I'd say the bright spots, the things that are encouraging are supermarkets and F&B, which have both been sectors that have had some challenging times over the last few years. Seeing those actually sort of flatten out and even show, in the supermarket sense, a little bit of growth, I think, is really encouraging. I mean, at the end of the day, I think the simple thing to always remember is that very roughly we work on a three-year leasing cycle. We're dealing in 1/3, or 1/3, or 1/3. That should give you good clues as to how to deal with the reversionary lag. We've been very defensive in nature during the difficult times. We will have recovery, but it takes time to wash through all of those leases.

Which have both been sectors that you know have had some challenging times.

Over the last few years, so seeing those actually sort of flatten out and even show in the supermarket sense a little bit of.

Of growth I think is really encouraging and at the end of the day I think the best the simple thing to always remember is that very roughly we work on a three year leasing cycle. So we're dealing in third a third a third and that should give you good clues as to how to deal with the reversionary lag.

You know, where we are defense, we've been very defensive in nature during the difficult times.

And you know we will have recovery, but it takes it takes.

You know time to walk through all of those leases. So again it comes back to the point about retail sales hopefully, becoming a continuing trend.

Duncan Owen: It comes back to the point about retail sales hopefully becoming a continuing trend. You can't do anything about the maths. It is a 1/3, 1/3, 1/3. What will change the trajectory, and I can't predict it, is how much growth you continue to get in the overall retail sales. Does it accelerate? Does it stay the same? Does it taper off? The bigger the growth, the quicker you get out of the tail end of your reversionary lag cycle. I think you know how to calculate that cleverer than I do.

You can't do anything about the maths. It is a third a third a third what will change the trajectory and I cant predict it is how much growth you continue to get in.

Overall retail sales does it accelerate does it stay the same does it taper off the bigger the gross the quicker you get you out of your you know the tail end of your reversion relaxed cycle.

But I think you know how to calculate that cleverer than I do.

I think just on the cost saving point, it's worth just mentioning there were two elements.

[Analyst] (Citi): I think just on the cost saving point, it's worth just mentioning there are two elements. One is cost savings, and the annualized figure that we've mentioned, which is often infrastructure headcount related. The other is working more efficiently. Whilst we don't have hard costs for further savings next year, we do have aspirations to increase productivity through use of technology, adaption of AI, etc., to increase productivity, which has a net positive impact on reducing costs as a percentage.

One is cost savings and the annualized figure that we've mentioned, which is often infrastructure head count related. The other is working more efficiently and whilst we don't have hard costs and further savings next year, we do have aspirations to increase productivity through use of technology adoption of AI et cetera to increase.

Productivity, which has a net positive impact on reducing costs as a percentage.

Yeah.

Any other questions from the phone.

Ko Chung Eun: Any other questions from the floor? Okay, I think we come to the end of the briefing today. Thanks for coming. Thank you. Bye-bye.

Okay.

I think we come to the end of that breathing today. Thanks, Scott coming Thank you bye bye.

Thank you.

John Saunders: Thank you.

Duncan Owen: Thank you.

Good afternoon, ladies and gentlemen, welcome to our lengthy wait till Q five tier two steaks interim results presentations now understates, what half hour chat. Thank Mr. Duncan Owen and Allografts C O Judge Hong Chi.

Ko Chung Eun: Good afternoon, ladies and gentlemen. Welcome to our Link Real Estate Investment Trust 2025, 2026 income results presentations. Now on the stage, we have our Chair, Duncan Owen, our Group CEO, George Hongchoy, our CFO, Ko Chung Eun, and our Group CIO, John Saunders. On the screen, you can see our agenda today. Without further ado, let me hand the floor over to Duncan. Thank you.

Seth I'll caution.

And now perhaps see I O John Sean deaths. So on the screen you can see our agenda today and without that idea, let me hand, the floor of our two Duncan. Thank you.

Thank you. Thank you good afternoon, ladies and gentlemen, and welcome to the 2025 2026 interim results presentation for link REIT.

John Saunders: Thank you. Thank you. Good afternoon, ladies and gentlemen, and welcome to the 2025-2026 interim results presentation for Link Real Estate Investment Trust. As today's meeting is being webcast live, I also extend a warm welcome to those joining us online. It's my pleasure to open the proceedings, and I will provide a few brief remarks now. With regards to the interim results period, despite a range of macroeconomic and market challenges, Link has continued to deliver resilient results during the first half of this year. We saw a modest decline of 3.4% in net property income compared with the same period last year. This is mainly due to market challenges in Hong Kong and the Chinese mainland. Our distributable amounts and distribution per unit are down 5.6% and 5.9%, respectively, compared with the first half of last year.

As today's meeting is being webcast live I also extend a warm welcome to those joining us online.

It's my pleasure to open proceedings, and I will provide a few brief remarks now.

With regards to interim results periods. Despite a range of macroeconomic and market challenges link has continued to deliver resilient results. During the first half of this year.

We saw a modest decline of three 4% and that protein income compared with the same period last year. This is mainly due to market challenges in Hong Kong in the Chinese mainland.

Our distributable amounts and distribution per units down 5.6, and five 9% respectively.

Paired with the first half of last year.

Before inviting our management team to run through the details I want to start with an overview of how global trends are shaping our business and the execution of our strategy.

John Saunders: Before inviting our management team to run through the details, I want to start with an overview of how global trends are shaping our business and the execution of our strategy. While capital markets continue to rally on the back of optimism about AI, and interest rates look to be trending downwards, the global business landscape remains as complex as ever. Wars, geopolitical tensions, and shifting trade dynamics continue to create uncertainty. The recent shifts in US policy are leading to fundamental structural changes in how investors view the world, which will continue to take shape over the months and years ahead. Whilst we're starting to see some encouraging signs of stabilization in terms of the environment, our business, many of our tenants are still suffering from a prolonged period of challenge, particularly in Hong Kong.

While capital markets continue to rally on the back of optimism about AI and interest rates look to be trending downwards. The global business landscape remains as complex as ever.

Wars geopolitical tensions and shifting trade dynamics continue to create uncertainty.

The recent shifts in U S policy are leading to fundamental structural changes in how investors view the world, which will continue to take shape over the months and years ahead.

Whilst we're starting to see some encouraging signs of stabilization in terms of the environment.

Our business <unk>.

Many of our tenants are still suffering from a prolonged period of challenge, particularly in Hong Kong.

Therefore, it will take time before the improvements in consumer sentiment translated into higher rental income for link.

John Saunders: Therefore, it will take time before the improvement in consumer sentiment translates into higher rental income for Link. In anticipation of these challenges, ahead at the beginning of this calendar year, we launched a wide-ranging operational efficiency drive and have already made significant progress in reducing costs. On an annualized basis, we're on course to make savings of more than HKD 200 million to our ongoing people, and general and administrative costs. These efforts, together with our ongoing asset enhancement, are all part of our commitment to protect unit holder returns in future. Regarding strategy, Link's primary current strength is still owning and managing shopping centres in Hong Kong, the Greater Bay Area, and other locations in APAC, such as Australia and Singapore. We are continuing to focus on this strength.

In anticipation of these challenges ahead at the beginning of the year of this calendar year, we launched a wide ranging operational efficiency drive and have already made significant progress in reducing costs.

On an annualized basis, we're on course to make savings of more than 200 million Hong Kong dollars to our ongoing people in general and administrative costs.

These efforts together of ongoing asset enhancements are all part of our commitment to protect unitholder returns in future.

Regarding strategy linked primary current strength is still owning and managing shopping malls in Hong Kong, the greater Bay area and other locations in APAC, such as Australia and Singapore.

We're continuing to focus on the strength.

As we evolve and refine our strategy alongside the active management and optimization of the link portfolio. We're also expanding our real estate investment capabilities.

John Saunders: As we evolve and refine our strategy alongside the active management and optimization of the Link portfolio, we're also expanding our real estate investment capabilities. This includes some new capital partnerships, as well as advancing investment opportunities. As a consequence, we're now managing close to $1 billion in third-party capital already. This part of the group's business will continue to focus on value-add strategies and higher returns, providing diversification away from single market and sector dependency, enhancing unit holder value. We recently announced the planned retirement of our Group CEO, George Hongchoy, and this will take effect by the end of this year. Before inviting him to run through the interim results, I'd like to convey gratitude to George on behalf of the board and myself for his significant contribution and leadership.

This includes some new capital partnerships as well as advancing investments opportunities.

As a consequence, we are now managing close to 1 billion U S dollars and third party capital already.

This part of the group's business will continue to focus on Violet strategists and higher returns providing diversification away from single market sector dependency enhancing unitholder value.

We recently announced the planned retirement of our group CEO, George Holmes Joy and this will take effect by the end of this year.

Before inviting him to run through the interim results I'd like to convey gratitude to GA on behalf of the board and myself for his significant contribution and leadership.

During his tenure link has grown and transforms the benefits of unit holders tenants employees and the wider communities. It serves of course.

John Saunders: During his tenure, Link has grown and transformed to the benefit of unit holders, tenants, employees, and the wider communities it serves, of course. The interim leadership team is on stage today. We look forward to welcoming John Saunders, our Group Chief Investment Officer, to the board. We're excited to continue to work with Ko Chung Eun and John Saunders, alongside the newly formed chairs committee, which is there to provide support and provide strategic guidance to the management. We are currently running a comprehensive search for a new CEO. We're seeking a proven real estate investor with international experience who can lead the next phase of the company's strategy. Given the seniority of the role, the search will continue to take time, and it's reasonable to expect a lengthy notice period is possible for an incoming candidate.

The interim leadership team is on stage today, we look forward to welcoming John Saunders, Our group Chief investment officer to the board.

We're excited to continue to work with Coxey on N and John Saunders alongside the newly formed Chaz Committee, which is that to provide support and provides strategic guidance to the management.

We are currently running a comprehensive search for a new CEO.

We're seeking a proven real estate investor with international experience, who can lead the next phase of the company's strategy.

Given the seniority of the row. The search will continue to take time and it's reasonable to expect a lengthy notice period is possible for an incoming candidates.

Hence our decision to put in place the robust interim management solution I was describing earlier.

John Saunders: Hence our decision to put in place the robust interim management solution I was describing earlier. Thank you. I'd like to invite George now to take us through the presentation. George.

Thank you I'd like to invite George now to take us through the presentation George.

Thank you Duncan.

So while our business continues to navigate and feel the effects of various macro and local market level challenges I'm pleased to report.

Duncan Owen: Thank you, Duncan. While our business continues to navigate and feel the effects of various macro and local market-level challenges, I'm pleased to report that we have achieved a resilient set of results for the first half of 2026. I would like to express my sincere thanks and gratitude for the hard work and efforts of all our colleagues who have made this possible. As we approach the 20th anniversary of Link's IPO, I believe that this is also a moment for us to reflect with pride. Together, we have delivered strong financial results and made a positive impact on our communities, even as we face many challenges along the way. The achievements we have realized over the past 20 years give us every reason to be confident in Link's ability to successfully navigate the path ahead. Back to the results.

That we have achieved a resilient set of results for the first half of 'twenty five 'twenty six and I would like to express my sincere thanks, and gratitude for the hard work and efforts of all our colleagues who helped make this possible.

As we approach the 20th anniversary of links the IPO.

I believe that this is also a moment for us to reflect with pride.

Together, we have delivered strong financial results and a positive impact on our communities, even as we face many challenges along the way.

The achievements, we have realized over the past 20 years give us every reason to be confident that links ability to successfully navigate the path ahead.

That's a result negative rental reversion in Hong Kong and China mainland.

Duncan Owen: Negative rental reversions in Hong Kong and Mainland China have impacted our overall performance, with NPI down and DPU declining. Despite the tough conditions, we remain committed to deliver strong returns to our unit holders. We have launched multiple efficiency initiatives aimed at reducing costs and preserving margins. On the balance sheet front, our capital position remained robust, supported by credit markets' flight to quality and our blue chip reputation. Net gearing stood at 22.5%, and our cost of borrowing has declined to 3.2%. We have also retained A ratings from S&P, Moody's, and Fitch. This strong foundation enables us to pursue inorganic growth and portfolio diversification. Our expansion into Australia and Singapore demonstrates this strategy, with retail assets in both markets achieving near full occupancy and strong double-digit reversion. Our KS and John will now give more details.

It has impacted our overall performance with N P I, Dow and <unk> declining.

Despite the tough conditions, we remain committed to deliver strong returns to our unit holders and.

And we have launched multiple efficiency initiatives aimed at reducing costs and preserving margins.

On the balance sheet front, our capital position remained robust supported by credit markets flight to quality and our blue chip reputation net.

Net gearing stood at 22, 5% and our cost of borrowing has declined to three 2% and we have also retained a ratings from S&P Moody's and Fitch.

This strong foundation and enable us to pursue inorganic growth and portfolio diversification.

Our expansion into Australia, and Singapore demonstrate this strategy with retail assets in both markets, achieving near full occupancy and strong double digit reversion.

Okay, and John will now give more details.

Thank you George good afternoon to everyone.

[Analyst] (Citi): Thank you, George. Good afternoon to everyone. Despite the ongoing macroeconomic headwinds, we have taken the strategic decision to retain high occupancy levels at the expense of rental revenue. Our continued focus on cost restructuring will involve certain one-off charges. Meanwhile, we expect operating conditions in the second half to slightly worsen before stabilizing. We believe our non-discretionary retail and car park assets will remain resilient, nonetheless. Our international business is at a highlight. As George mentioned, our retail assets in Singapore and Australia achieved near full occupancy and double-digit positive rental reversions during the period. On the financing side, we have benefited from the temporary dip in HIBOR, and our borrowing costs dropped to 3.2%. We have prudently managed our interest rate exposure, with expectations of longer-term rates easing, and I'll share more details in the next few slides.

Despite the ongoing macroeconomic headwinds.

We have taken the strategic decision to retain high occupancy levels at the expense of rental revenue.

Our continued focus on cost restructuring were involved certain one off charges.

Meanwhile, we expect operating conditions in the second half to slightly worsen before stabilizing.

We believe our non discretionary retailers and copper assets will remain resilient nonetheless.

Our international business is an highlight.

As George mentioned, our retail assets in Singapore, and Australia achieved near full occupancy and double digit positive rental reversion during the period.

On the financing side, we had benefited from the temporary dip in high ball and our borrowing costs dropped to three 2%.

Okay.

We have prudently managed our interest rate exposure with expectations of longer term rates easing.

And I'll share more details in the next few slides.

Valuation of the lingering portfolio stood at 223 billion Hong Kong dollars as of end September two zero to five down about one 3% from six months ago.

[Analyst] (Citi): Valuation of the Link Real Estate Investment Trust portfolio stood at HKD 223 billion as of end September 2025, down about 1.3% from six months ago. Hong Kong and the Chinese mainland still hold the majority part of our portfolio at around 88%, while international, with the majority in Australia and Singapore, took up the rest. Cap rates have been relatively stable compared to six months ago. Breaking down by geographies, ongoing weakness in rental performance across Hong Kong and the Chinese mainland has led to a decline in valuations. For our international portfolio, valuations have remained stable in local currency terms. However, the depreciation of Hong Kong dollar gave a slight uplift in reported valuations overall. Lastly, on capital management, our strong financial position is underpinned by a healthy balance sheet, as reflected in the key metrics shown below.

Hong Kong in the Chinese mainland still hold the major majority part of our portfolio at around 88%.

Our international with the majority in Australia, and Singapore took up the rest.

Cap rates have been relatively stable compared to six months ago.

Breaking down by geographies ongoing weakness in rental performance across Hong Kong in the Chinese mainland that's led to a decline in valuations.

Our international portfolio valuations have remained stable in local currency terms. However.

However, the depreciation of Hong Kong dollar gave a slight uplift and report that valuations overall.

Yeah.

Lastly on capital management.

Our strong financial position is underpinned by a healthy balance sheet as reflected in the key metrics shown below.

As of September 30th net gearing remained at a healthy level.

[Analyst] (Citi): As of 30 September, net gearing remained at a healthy level, while the average borrowing cost declined to 3.2%, supported by the temporary dip in HIBOR during the first half, as discussed. Our fixed debt ratio remained within the prudent range of 50% to 70% at 66%, reflecting our continued careful management of interest rate exposure, and heightened uncertainty over future rate movements. Financial stability is further reinforced through competitive credit margins and effective risk management. Over the past six months, we successfully refinanced more than HKD 10 billion of debt at highly competitive rates, achieving a lower overall margin compared to the previous year. Total debt increased slightly from HKD 53.5 billion to 55 billion, primarily due to currency translation effects. Our debt maturity profiles remain healthy, with an average tenor of 2.9 years and a well-staggered schedule extending over the next 13 years.

The average borrowing cost declined to three 2% supported by the temporary dip in high bar during the first half discussed.

Our fixed debt ratio remain within the prudent range of 50% to 70% at 66%.

Reflecting our continued careful management of interest rate exposure and heightened uncertainty over future rate movements.

Financial stability is further reinforced two competitive credit margins and effective FX risk management.

Over the past six months, we successfully refinanced more than 10 billion Hong Kong dollars of debt.

At highly competitive rates, achieving a lower overall margin compared to previous year.

Total debt increased slightly from $53 5 billion to 55 billion, primarily due to currency translation effects.

Our debt maturity profiles remained healthy with an average tenure of two nine years and a well staggered schedule extending over the next 13 years.

Strong a ratings from all three agencies secure favor favorable funding terms supporting our future financing needs.

[Analyst] (Citi): Strong A ratings from all three agencies secure favorable funding terms, supporting our future financing needs. We also remain well below covenant thresholds, providing ample headroom for acquisition and strategic opportunities. With that, I'll now hand over to John for his portfolio highlights. Thank you.

We also remain well below covenant thresholds.

<unk> ample headroom for acquisition and strategic opportunities.

With that I'll now hand over to John portfolio.

Portfolio highlights thank you.

Thank you very much cash and a welcome to all of you. Thank you for coming.

John Saunders: Thank you very much, KS, and welcome to all of you. Thank you for coming. I'll now walk you through the Link REIT portfolio highlights, starting, of course, with the performance of our Hong Kong retail segment. Despite market challenges, occupancy remained very solid at well over 97%. Although revenue declined by 3.1% year over year, mainly due to negative 6% plus reversions, pleasingly, tenant sales showed improvement, narrowing the decline to just over 2%. I'll now break that down by category for you. Supermarkets in the foodstuffs segment actually returned to positive growth, which is both encouraging, and it marks the first increase since 2023. In that sector, we outperformed the Hong Kong market in the first half. F&B for the first half was flat, and that was broadly in line with the overall Hong Kong market trends.

I'll now walk you through the link REIT portfolio highlights starting of course with the performance of our Hong Kong retail segment.

Despite market challenges occupancy remained very solid.

Ah well over 97% and although revenue declined by three 1% year over year.

Mainly due to negative six plus percent reversion.

But pleasingly tenant sales showed improvement narrowing the decline to just over 2% and on that break that down by category for you.

Supermarkets in the foodstuffs segment actually returned to positive growth.

Which is both encouraging and it marks the first increase since 2023 and in that sector, we outperformed the Hong Kong market in the first half.

[noise] F&B for the first half was a flat and that was broadly in line with the overall Hong Kong market trends.

But the overall decline in linked tenant sales was dragged down by general the general retail segment, which includes of course, only a small proportion of our valuable goods as opposed to our main.

John Saunders: The overall decline in Link tenant sales was dragged down by the general retail segment, which includes, of course, only a small proportion of valuable goods as opposed to our main tenancy focus on non-discretionary. Overall, occupancy costs stayed very healthy at around 13%. I would say that together, these metrics do suggest that while some challenges do still persist, resilience within the portfolio remains very strong and evident across our entire range of portfolio. That said, retail businesses in Hong Kong do continue to face some near-term pressure from heightened e-commerce competition, and that has weighed on some non-discretionary trades. To cope with the challenges, we continue to proactively refine our tenant mix to stay ahead of evolving market trends, and we'll share more details on these initiatives in the forthcoming slides.

Tenancy focus on non discretionary.

Overall occupancy cost stayed very healthy at around 13% and I would say that together. These metrics do suggests that while some challenges do so possessed resilience within the portfolio remains very strong and evident across our entire range of portfolio.

That said retail businesses in Hong Kong do continue to face some near term pressure from heightened e-commerce competition and that has weighed on some non discretionary trades.

But to cope with the challenges we continue to proactively refine our tenant mix to stay ahead of evolving market trends and we will share more details on these initiatives in the forthcoming slides.

Well, so as a testament to our extremely capable leasing team we've secured a little over 345, new leases during the reporting period, which is a very strong results. Indeed.

John Saunders: Also, as a testament to our extremely capable leasing team, we've secured a little over 345 new leases during the reporting period, which is a very strong result indeed. Leasing activity was shaped in large part by emerging trends, including specialty F&B, learning and interest classes, and also game and family entertainment. We also capitalized on growing demand from Chinese mainland brands, and that's further diversifying our tenant mix beyond specialty F&B to include new operators in fashion, services, and entertainment. Meanwhile, tenant retention remained extremely healthy at around 80%, which underscores our focus on engagement and long-term partnerships. Revenue from car parks and related business was broadly stable. Monthly income softened a little due to fewer tickets, but upward tariff adjustments helped offset much of that impact. In addition, we've rolled out smart parking systems to streamline operations, and introduced dynamic pricing and diversified services.

Leasing activity was shaped in large part by emerging trends, including specialty F&B learning and interests classes and also game and family Entertainment.

We also capitalize on growing demand from Chinese mainland brands and that's further diversifying our tenant mix beyond specialty F&B to include new operators in fashion services and entertainment.

Meanwhile, tenant retention remained extremely healthy at around 80%, which underscores our focus on engagement and long term partnerships.

Revenue from car parks and related business was broadly stable monthly income softened a little juice to fewer tickets, but upward tariff adjustments helped offset much of that impact.

In addition, we've rolled out smart parking systems to streamline operations and introduced dynamic pricing and diversified services.

Leveraging real time analytics. This approach aligns rates with demand patterns and that helps us maximize utilization and also deliver greater flexibility and value for our customers.

John Saunders: Leveraging real-time analytics, this approach aligns rates with demand patterns, and that helps us maximize utilization and also deliver greater flexibility and value for our customers. Moreover, with the rising popularity of EVs, the growing demand for parking spaces equipped with charging facilities will provide additional support for our business performance. As part of our defensive strategy, we have continued with our asset enhancement projects with a current HKD 2.3 billion pipeline. During the reporting period, we invested HKD 59 million at Lei Yue Mun Plaza and HKD 21 million at TKO Plaza. These efforts reflect our vision to future-proof our assets, and those two projects are expected to respectively deliver ROIs of 14.5% and in Q1 at just over 29%. Alongside these major upgrades, we also made smaller improvements, including reconfiguring spaces to better meet tenant needs, and to optimize product layout for better productivity.

Moreover, with the rising popularity of Evs, the growing demand for parking spaces equipped with charging facilities will provide additional support for our business performance.

As part of our defensive strategy, we've continued with our asset enhancement projects with our current $2 3 billion Hong Kong dollar pipeline.

And during the reporting period, we invested 59 million at Lehman and 21 million Tko's bonds.

These efforts reflect our vision to future proof our assets and those two projects are expected to respectfully deliver rois of 14.5% and ensure quanta at just over 29%.

Alongside these major upgrades, we also made smaller improvements, including reconfiguring spaces to better meet tenant needs and to optimize product layout for better productivity.

Now, let's shift our focus to the Chinese mainland retail portfolio.

John Saunders: Now let's shift our focus to the Mainland China retail portfolio. In the first half of the financial year, there were still market headwinds, which were exerting pressure across that Mainland portfolio. Despite the challenges, though, the retail portfolio continues to show very strong occupancy of 95.9% amid the prolonged tough conditions. Rental reversion was soft due to subdued sales sentiment, primarily in Beijing. If you include Link Plaza, Link Plaza Zhongguancun, and the retail portion of Link Square, rental reversions actually, quite pleasingly, were positive at +2.5%. We continue to optimize asset quality to drive sustainable growth, and significant asset enhancements were successfully completed at Qianhe and Tongzhou, with a combined capital expenditure exceeding RMB 440 million. Both projects achieved outstanding double-digit ROIs, even in the current more challenging market environment. I'll give you more details on the asset enhancement at Qianhe now.

In the first half of the financial year, the west still market headwinds, which we're exerting pressure across that our mainland portfolio.

Despite the challenges, though the retail portfolio continues to show very strong occupancy of 95, 9% amid the prolonged tough conditions.

Until reversion was soft due to subdued sells sentiment primarily in Beijing and indeed, if you include linked Plaza link Plaza junk on churn and the retail portion of linked square rental reversion is actually quite pleasingly were positive at <unk>.

Two 5%.

We continue to optimize asset quality to drive sustainable growth and significance. A eyes were successfully completed at Jan her and changzhou with a combined capital expenditure exceeding 440 million renminbi.

If projects achieved outstanding double digit rois, even in the current more challenging market environment and I'll give you more details on the asset enhancement at she and her now.

We also completed just before I get to that several small scale projects Central walk Li one chip out and as I mentioned before junk luncheon with an average ROI of around 9%.

John Saunders: We also completed, just before I get to that, several small-scale projects: Link Central Walk, Link Plaza Liwan, Link Plaza Qibao, and, as I mentioned before, Link Plaza Zhongguancun, with an average ROI of around 9%. Combined with the strategic tenant remixing efforts, we've attracted more innovative and competitive brands. Let me walk you through an example from Link Plaza Qianhe that I think really highlights our asset enhancement capabilities. Down in the basement here, we strategically downsized an anchor supermarket tenant and introduced Foodie Plus, which is Link's own food court concept, and we applied that to the freed-up space. We also took an under-utilized area and turned it into leasable space, which further maximizes the value of the property. This approach isn't unique to Qianhe, of course. In fact, we implemented a similar concept at select assets in our Mainland China portfolio.

Combined with the strategic tenant Remixing efforts, we've attracted more innovative and competitive brands.

So let me walk you through an example from La Plaza Chan her but I think really highlights our asset enhancement capabilities.

So down in the basement here, we strategically downsize then anchors supermarket tenant and introduced Foodie, plus which is linked zone food Court concept and we applied that to the freed up space. We also took an underutilized area and turned it into leasable space, which further maximizes the value of the property.

This approach isn't unique to churn her of course in fact, we implemented a similar concept at select assets in our Chinese mainland portfolio.

This included Lynx Central walk linked closely one and linked pleasure changzhou and it's proven to be really quite successful.

John Saunders: This included Link Central Walk, Link Plaza Liwan, and Link Plaza Tongzhou, and it's proven to be really quite successful. Now I want to move on to our international retail portfolio. In Singapore, we had near full occupancy, and very pleasingly, double-digit rental reversion. I think that demonstrates strong leasing demand from tenants, and underscores the dominant and strategic locations of our malls there. Thanks to SG60 promotions and the rollout of government vouchers, we saw solid support for tenant sales. That said, retail sentiment is still a little cautious, and we need to monitor any signs for any slowdown in discretionary spending there. In Australia, occupancy across our retail centers remained very solid at over 98%, and the rental reversion was an extremely strong and quite impressive 16%+. Tenant sales were also up by over 15%.

Now, let me move onto our international retail portfolio.

In Singapore, we had near full occupancy and very pleasingly double digit rental reversion and I think that demonstrates strong leasing demand from tenants and underscores the dominant in strategic locations of our malls that.

Thanks to S. G 60 promotions and the Rollouts of government vouchers, we saw solid support for tenant sales.

That said retail sentiment is still a little cautious and we need to monitor any signs for any slowdown in discretionary spending that.

In Australia occupancy across our retail centers remained very solid at over 98% and the rental reversion was an extremely strong and quite impressive 16 plus percent tenant sales are also up by over 15%.

So looking ahead, we remain optimistic about the retail sector. Thanks to rising household incomes lower interest rates and improving consumer sentiment.

John Saunders: Looking ahead, we remain optimistic about the retail sector, thanks to rising household incomes, lower interest rates, and improving consumer sentiment. Let me just share with you now, if I may, some updates on our strategy. We've continued to actively manage and optimize the existing Link portfolio, but we're also expanding Link's real estate investment management capabilities, as you've heard, to some degree of success, as mentioned by the chairman earlier. In the first half, our focus on active management, operational efficiency, and streamlining has helped us reduce operating costs, preserve margins, and this, of course, will be a constant ongoing effort. I'm also pleased to report that we've recently completed the streamlining of our integrated facilities management, the IFM contracts, and this should yield significant savings, both for now and in the long term.

Let me just share with you now if I may some updates on our strategy. We have continued to actively manage and optimize the existing link portfolio, but we're also expanding links real estate investment management capabilities and as you've heard and to some degree of success as mentioned by the chairman earlier.

In the first half our focus on active management operational efficiency and streamlining has helped us reduced operating costs preserve margins and this of course will be a constant ongoing effort.

I'm also pleased to report that we've recently completed the streamlining of our integrated facilities management. The I F M contracts and this should yield significant savings both for now and in the long term.

We're also actively exploring new investments opportunities with a particular focus as we mentioned before in Singapore in Australia, while we continue to look for ways to divest and recycle assets, but only where appropriate.

John Saunders: We're also actively exploring new investment opportunities, with a particular focus, as we've mentioned before, in Singapore and Australia, while we continue to look for ways to divest and recycle assets, only where appropriate. On the investment management front, as I said, you've heard from the chairman, Link Real Estate Partners is making very solid, very pleasing progress in forming partnerships with third-party capital partners. We've already received commitments from new investors, which is extremely pleasing after a cold start 18 months ago. I'll now pass back, if I may, to George for closing remarks. George.

On the investment management front as I said, you've heard from the chairman linked real estate partners is making very solid very pleasing progress in forming partnerships with third party capital partners and we've already received commitments from new investors, which is extremely pleasing after a cold start 18 months.

Ago.

So I'll now pass back if I may to George for closing remarks George.

Thank you John who are running through the details before Q&A I wanted to take a moment to express my heartfelt. Thanks for the trust and support that I've received over the past 16 years.

[Analyst] (Citi): Thank you, John, for running through the details before Q&A. I want to take a moment to express my heartfelt thanks for the trust and support that I've received over the past 16 years. I'm truly grateful to our many stakeholders, colleagues, and partners. Of course, I want to especially thank so many of you here in the room today, our unit holders and research analysts, for all your ongoing support, the buy recommendations from time to time, and not too often sell recommendations. It's truly a pleasure to serve as Group CEO and have played a part in this remarkable Hong Kong success story. Over the past 20 years, Link has grown and thrived through many market cycles, overcome many challenges such as financial crisis, social unrest, and even a global pandemic. All thanks to the dedication of our team.

I'm truly grateful for to our many stakeholders and colleagues and partners and of course I want to especially thank so many of you here in the room today, our unit holders and research analysts.

For your ongoing support.

The buy recommendations from time to time and.

And not too often several recommendations.

Over the.

It's truly a pressure hum too.

Surface Air group's CEO and have play a part in this remarkable Hong Kong success stories.

So over the past 20 years linked has grown and fry through many market cycles.

Overcome many challenges such as financial crisis, social unrest and even global penta epidemic. So all thanks to the dedication of our team.

The success that we've achieved both financially and in terms of the impact that we have made toward our communities has always been guided by a simple vision that we launch in November 2010.

[Analyst] (Citi): The success that we've achieved, both financially and in terms of the impact that we have made to the communities, has always been guided by a simple vision that we launched in November 2010: to be a world-class real estate investor and manager, serving and improving the lives of those around us. I want to extend my best wishes to Link and all my colleagues. Together, we have built a strong and resilient platform, and one that will be well prepared to meet any challenges that lie ahead. Thank you very much. I look forward to seeing how this truly exceptional organization will continue to evolve as I start my garden leave on 1 January 2024. Thank you.

To be a world class real estate investor manager surfing and improving the lives of those around us.

So I want to extend my best wishes to link and all my colleagues together, we have built a strong and resilient platform and one that will be well prepared to meet any challenges that lie ahead. So thank you very much I look forward to seeing how this truly exceptional organization and will continue to evolve as I start Mike.

To leave in the first of January.

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Thank you George we all have tier has.

Ko Chung Eun: Thank you, George. We all hope you have all the best and happy retirement. Now it comes to Q&A sessions. For those of you here, you can raise your hands and ask questions. For those who are joining us through the webcast, you can use the Q&A function to answer your questions. Please state your name and the company that you represent. I'll call first.

All the best and happy retirement, and so now it can stay Q&A sessions. Okay for desktop Yeah, you can raise your hands and ask questions and then for those who are joining us via the webcast you can use the Q&A function to answer your questions and please state your name and the company that you represent.

Okay, how fast.

Thank you very much shoppers of all thank you Josh awful your leadership I will Miss you and just wish you all the best and so this is a car Chan from JP Morgan and I have three questions. My first question is probably more for Duncan.

Carl Choi: Thank you very much. First of all, thank you, George, for your leadership. We'll miss you, and just wish you all the best. This is Carl Chen from JP Morgan, and I have three questions. My first question is probably more for Duncan. As we know, we are trying to identify a new CEO, right? Just curious from your perspective, what kind of qualities or track record do you most look forward to in the new CEO? When the new CEO is on board, what kind of KPI you will give him or her? Just curious if there's any tentative timeline on when the new CEO will be on board. That's my first question on the new CEO. The second question is on the potential asset acquisition in Australia.

As we know are we are trying to identify a new CEO righteousness curious from your perspective on what kind of qualities our track record of your most Ah.

Look forward to in a new CEO and then when the new CEO is on board what kind of Kpis are you will give him or her and are just curious if theres any tentative timeline on when the new CEO will be on board. So that's my first question on the new CEO and a second question is on the potential asset acquisition in Australia. So I'm just curious if you can give.

A bit more thoughts on the.

Carl Choi: Just curious if you can give us a bit more thoughts on the process behind. Number one, why are we interested in those three shopping malls in Australia? How value equitative do you think it will be? How do we plan to fund the acquisition? Will this be a pure acquisition, or will this be part of the fund management that we have been talking about? That's my second question on the Australia potential acquisition. My third question is on Hong Kong retail sales, because if we just look at the tenant sales of the last quarter, it seems like the year-on-year decline actually widened a little bit. Just curious for, let's say, October and November so far, do we see some marginal improvement? What's our later guidance on the rental reversion for the second half of the year? Thank you very much.

Process behind.

Number one why are we interested in those three shopping malls in Australia, how accretive do you think it will be and how do we plan to fund the acquisition and Buddhist B, a pure acquisition or it will just be part of the fund management that we have been talking about so that's my second question on the Australia potential acquisition and my third question is on Hong Kong retail sales.

Because if we just looked at the tenant sales for the last quarter or it seems like the year on year decline actually wind up a little bit. So just curious for let's say October and November so far do we see some marginal improvement and I was our latest guidance on the rental reversion for the second half of the year. Thank you very much.

Thank you three questions, but three or four questions in each of the questions.

Duncan Owen: Thank you. Three questions, but three or four questions in each of the questions. Let me try and deal with point one, and I'll hand to George, but I'll give a couple of headlines on point two and three. Actually, before I hand to John, the CEO process, there's a high degree of transparency on it. It's a comprehensive search, it's an international search, and there is a process ongoing. I won't comment in too much detail, but I'll give you a little bit of guidance. We are looking for a real estate investor with a proven track record who has worked across border and in an international environment. We are looking for someone who has done that in a public as well as a private environment.

So let me I'll try and deal with 0.1, and I'll hand to George but I'll give a couple of headlines on 0.2 and three actually.

Before I hand to John.

The C O process, there's a high degree of transparency on it is a comprehensive search.

It's an international search.

And there is a process ongoing so I won't comment too much detail, but I'll give you a little bit of guidance.

We are looking for.

A real estate investor with a proven track record who has works across border and in an international environment.

We are looking for someone who has done that in a public as well as the private environment.

And we want someone who of course will continue to uphold the brand of and the integrity of the brand and link and bring a good degree of humility to how link and its in keeping with its brand operates I think those things are given in some ways, but I think it's very important that we focus on those is key.

Duncan Owen: We want someone who, of course, will continue to uphold the brand and the integrity of the brand in Link and bring a good degree of humility to how Link and its—in keeping with its brand—operates. I think those things are a given in some ways, but I think it's very important that we focus on those as key criteria moving forwards. In terms of timing, it's a proper process that is taking some time. It's begun as a global search. It has been gone from a long list to a long medium list to a medium medium list to a medium list to a long short list. There will be a prolonged period of time probably before we can agree terms with the final candidate. It is likely a number of the candidates have extended notice periods because of the seniority in their existing organizations.

Key criteria moving forwards.

In terms of timing.

It's a proper process that is taking some time it began as a global search it has been gone from a long list. So a long medium list to a medium medium lift to our medium list to a long shortlist.

But there will be a prolonged period of time, probably before we can agree terms with the final candidates.

And it is likely a number of the candidates have extended notice periods because of the seniority of the existing organizations and the part that you didn't ask that I'll add is for that reason, it's key that we put in the interim management.

Duncan Owen: The part that you didn't ask that I'll add is for that reason, it's key that we put in the interim management arrangements that we did, promoting John Saunders to the board. There were two executive directors, and we have the chair's committee for oversight and support of the strategy, with a real focus on ensuring we don't take a break or a pause in execution of the strategy going forwards during that interim period. That's the real focus. In terms of the other two, I don't think we'll comment on specific acquisitions. What I think I would say is acquisitions of retail malls in Australia would be very much in line with our publicly declared strategy. John Saunders often describes this as the company's superpower in management of malls.

Arrangements that we did promoting John Saunders to the board. So there were two executive directors and we have the chess committee for oversight and support of our strategy with a real focus on ensuring we don't take a break or a pause in execution of the strategy going forwards during that interim period. So that's the real phone.

Yes.

In terms of the other two I don't it will comment on specific acquisitions, what I think I would say.

Is.

Acquisitions of retail miles in Australia would be very much in line with our publicly declared strategy.

John Saunders often describe this as the company superpower and management of mouse and as I said in my part of the presentation at the start.

Duncan Owen: As I said in my part of the presentation at the start, our core competence is management of retail malls in Hong Kong, the Greater Bay Area, as well as other locations in APAC such as Australia and Singapore. It should come as no surprise to analysts or investors that we might be seeking opportunities in those markets. In terms of the third question and the headline about Hong Kong retail sales, well, the reversions have gone down 6.4% this half. The only thing I'll add, and I'll avoid stealing more of John's thunder, is there is an obvious lag effect. There is an average lease length, a normal lease length of three years in Hong Kong. If a property was let three years ago at the market rent with the best will in the world, most of those market rents are lower today.

Our core competence is management of retail miles in Hong Kong, the greater Bay area as well as other locations in APAC, such as Australia, and Singapore. So it should come as no surprise to analysts or investors that we might be seeking opportunities in those markets.

In terms of the third question on the headline about Hong Kong retail sales.

Well, the revisions or gone down six 4% this half.

The only thing I'll add.

On a void stealing more of John's Thunder is there is an obvious lag effect. There was an average lease length of normal lease length of three years in Hong Kong.

If a property was let three years ago at the market rent with the basketball and the world most of those market rents are lower today and when those leases renew there will be at the market rent, which will be lower so although we are genuinely seeing increased footfall.

Duncan Owen: When those leases renew, they'll be at the market rent, which will be lower. Although we are genuinely seeing increased footfall, all sorts of positive signs of recovery, the real world may be recovering positively, but the impact on our numbers and seeing it come through in the numbers will have a time lag. John.

All sorts of positive signs of recovery.

The real world, maybe recovering positively, but the impact on our numbers and seeing it come through the numbers, we'll have a time lag.

John.

Yeah sure so specifically on the.

John Saunders: Yeah, sure. Specifically on the Australia thing, I think we've said for quite some time that we are interested in doing more Australia. Clearly, the Australia portfolio is—existing portfolio is treating us very well. I think the retail is very much center and core to what we do. This is not at all opportunistic. It's very much strategic in nature. It's an extremely good fit, I think, with what we already have down there as a portfolio and what we're very comfortable managing and operating. There was a question about funding, etc. We have plenty of capacity on the balance sheet to fund a transaction like that. I think that allows us to bring to bear a fast liquidity solution for that particular situation. I think they're good assets. I think we can do more with them.

Australia thing I think we've said for quite some time.

But we are interested in doing more Australia, clearly the Australia portfolio as existing portfolio is teaching us very well I think the retail is very much central and core to what we do so this is not it's all opportunistic it's very much strategic.

In nature.

And it's extremely good fish I think with what we already have down there is a portfolio and what we're very comfortable managing and operating.

There was a question about our you know funding et cetera, we have plenty of capacity on the balance sheet.

To fund the transaction like that.

And I think that allows us to bring to bear a fast liquidity solution.

For that particular situation so.

I think we that you know that they're good assets. So I think we can do more with them.

And and we'll we'll see what happens as we go from here.

John Saunders: We'll see what happens as we go from here.

Cindy.

Okay.

Ko Chung Eun: Thank you. This is Cindy from Citi. I also have three questions. The first one, I want to follow up on your Link real estate partners. Just now we mentioned there has been some initial success and commitment. Can you walk us through the current structure of the third-party capital with you? Is there any target for AUM? How should we think about your pace, say, in three years or five years? What will it be? In terms of the potential investment target for the real estate platform, is it similarly with priority for Australia, followed by Singapore? Any difference with your own platform? This is the first question. The second question, I want to touch a little bit on your own portfolio reconstruction. Just now we heard you want to increase your Australia portfolio.

Thank you this is <unk> from.

From Citi.

Oh, that's great questions. So first of all I want to follow up.

So just now we mentioned some initial success.

Success and commitment.

Can you walk us through the current structure.

Patti capital with you and if you unpack it.

How should we think about your pay.

Yes.

Yes.

And then.

Sure.

Pockets.

Similarly, with our priority to Australia, Singapore.

The defense platform. This is the first question.

And the second question I wanted to touch a little bit on your own portfolio reconstruction. So just now you want to increase your Australia.

Say, a target of increasing Australia portfolio what percentage.

Ko Chung Eun: Is there, say, a target of increasing Australia portfolio to what percentage within the overall portfolio? Is it fair to say that you are thinking it's getting more confident and interested to buy in today than, say, three months or six months ago? Why are you getting a little bit more interested? In terms of, say, divestment, is there any asset within your portfolio that you think can be well interested to sell it and recycle capital? The third question is actually on your cost control initiatives. We heard a lot of good news that you just shared on cost controls, but that has yet to reflect in the financial result. If I hear correctly, I think KS mentioned that it could worsen in the second half because things are getting better.

The overall portfolio and it is fair to say that you are thinking.

It's getting more conflict of interest that you're buying today than three months or six months. If at all and why are you getting a little bit more intricate and in himself.

Last month is there any in your portfolio that you think can be well interested to sell it and recycle capital.

Just a question actually on your cost control initiatives.

You heard a lot of good news that you just shared on cost controls.

That have yet to reflect the financial results.

Quickly I think cancellation that equal Boston.

Second half.

It's getting better.

She always a little bit how cabo come true.

Ko Chung Eun: Can you share with us a little bit on how cost control has been doing? How would it affect our overall performance? When it stabilizes, what type of margin levels are we targeting at? Thank you.

How would it affect our overall performance and when things stabilize what type of margin levels.

Thank you.

Thank you.

Ill give some headline answers again, particularly around question, one and questions to I'll pass to John and then to chaos respective lift question three.

Duncan Owen: Thank you. I'll give some headline answers again, particularly around question one. Questions two, I'll pass to John and then to KS respectively for question three. First of all, the overriding principles of the strategy for third party or for balance sheet are to buy the right assets that enhance returns, and the quality of earnings for the group and the unit holders of the group. We do not have a fixed AUM target. The target is to buy the right assets on balance sheet, and to buy the right assets in partnership where we're co-investing to get the right returns from the assets. There will naturally be some management enhancing, and there may well be some management fees that come with managing other partners' money alongside ours, which is aligned and is long-term.

First of all the overriding principles of the strategy for third party of our balance sheet to buy the right assets that enhance returns on our quality of earnings for the group and the unit holders of the group.

We do not have a fixed AUM targets.

The target is to buy the right the right assets on balance sheet and to buy the right assets in partnership where we're co investing to get the right returns from the assets there will naturally be some management enhancing and they may well be some management fees that come with managing other partners money alongside ours.

<unk>, which is aligned and these long term.

But we're essentially a REIT that is looking first and foremost to maximize the value of its capital invested by its balance sheet.

Duncan Owen: We're essentially a REIT that is looking first and foremost to maximize the value of its capital invested by its balance sheet. In terms of the target returns, I think this is relevant. It's self-evident that the balance sheet returns have tended to be high single-digit. Where we allocate 10% or 20% of the balance sheet towards the funds business or special situations, we would reasonably expect those returns to be higher and to be more enhancing to provide diversification. You could look at a value-add style type of return that would be 15% plus. In terms of, I think, the second question, which was very much focused, I think I've got some detailed notes here on timing, and then we moved on to a degree to recycling.

In terms of the target returns I think this is relevant.

Self have is self evident that the balance sheet returns have tended to be high single digit.

Where we allocate 10 or 20% of the balance sheet towards funds business or special situations. We would reasonably expect those returns to be higher and to be more enhancing to provide diversification. So you could look at a value add style reads.

The type of return that would be 15% plus.

In terms of I think the second question.

Which was very much focused I think I've got some detailed notes here on.

On timing and then we moved on to a degree to recycling and yes, we will always look to recycle, but what we would not want to do was hold onto assets full.

Duncan Owen: Yes, we'll always look to recycle, but what we would not want to do was hold onto assets, follow the market down, and sell at the bottom of the market, especially where there are assets that we have conviction on. I think there may, however, be some non-core assets that do not fit the criteria I've said in the past that might not be retail malls and might not be in the obvious target geographies that are obviously adjacent to us, and we know and can operate in. You could pick any number of offices, as an example, in the UK or warehousing in the mainland. In terms of the cost control, before I hand to John on question two, this year has a lot of noise in the cost control because when you make cost controls with targets, there are some exceptional items that go with that.

Follow the market down and sell at the bottom of the market, especially where the assets that we have conviction on.

So I think I think there may however, be some noncore assets that don't fit the criteria I've said in the past that might not be retail mouse and might not be in the obvious target geographies that are obviously adjacent to us and we know them.

Operator.

So you could pick any number of offices as an example in the U K or warehousing in the mainland.

In terms of the cost control before Hunter join on question two.

This year has a lot of noise and the cost control because when you make cost controls. We've targets. There was some exceptional items that go with that so again the benefits will come through in the full annualized if you like normalized cost controls that we would be making there.

Duncan Owen: Again, the benefits will come through in the full annualized, if you like, normalized cost controls that we would be making. There are some one-offs this year, but essentially, the current annualized savings for the running and operating costs are a little bit in excess of HKD 200 million. John.

Or are some one off this year, but essentially.

The current annualized savings for the running and operating costs are a little bit in excess of 200 million Hong Kong dollars.

Sean.

Yeah, certainly so.

John Saunders: Yeah, certainly. Just adding a little to the third-party side. Obviously, it's private capital for a reason. The clue's in the name. What I can say is that the clients who've trusted us as fiduciaries to manage capital on their behalf so far are all very well-known names and are all institutional capital. I think the chairman said it very well when he said, we don't have a specific target per se, but I think our style has been to do things and then tell you that we've done them rather than perhaps tell you that we're going to do lots of things, and it takes some time. I detected a couple of slightly widened eyes that after 18 months, we do have a billion effectively under management, and I'd expect that to grow, and we'll continue to give you updates as time goes by.

Just adding a little to the third party side.

And obviously, it's private capital for a reason with losing the name, but what I can say is that the clients who trusted us as fiduciaries to manage capital on their behalf. So far they are all very well known names and are all institutional capital.

And I think the chairman said it very well when he said we don't have a specific target per se, but I think our style has been to do things and then tell you that we've done them rather than perhaps tell you that we're going to do lots of things.

And it takes some time, so I detected a couple of slightly widened eyes that after 18 months you know, we do have $1 billion.

Effectively under management and I'd expect that to grow and we'll continue to give you updates as time goes by.

Why Australia I think is a number of reasons why Australia and why the retail sector in more detail I mean, Australia as I said before it is doing is very well in terms of the existing portfolio. So I think it shows that where you have a high quality center in new Mexico capabilities to it we can produce outsized returns.

John Saunders: Why Australia, I think, is a number of reasons why Australia and why the retail sector in more detail. I mean, Australia, as I said before, it's doing us very well in terms of the existing portfolio. I think it shows that where you have a high-quality center and you match our capabilities to it, we can produce outsized returns and accrete earnings for the DPU. It's helpful, of course, that Australia has some fantastic demographics behind it, and that affects all areas of society, including property, but it's particularly powerful for retail and retail catchment. That's fundamentally, I think, a lot of what's driving it. I think it makes very good use of the balance sheet because we are clearly able to invest at rates which significantly beat our cost of capital.

And you know accrete earnings for the D. P. U. It's helpful of course that Australia has some fantastic demographics behind it and that affects all areas of society, including our property, but it's particularly powerful for retail and retail catchment. So that's fundamentally.

I think a lot of what's driving it.

And I think it makes.

It makes it will get very good use of the balance sheet, because we are clearly able to invest.

Investor rates, which significantly beat our cost of capital.

Okay, Yes.

I think on the point that Chad articulated on cost savings.

Duncan Owen: I think on the point that Chair articulated on cost savings, I think if you look at the business, there's probably about, from the revenue line down, 10% of revenue that is controllable. Whether it's staff cost at the property level or staff cost outside the property level at the regional centers, I think where we have come in the first round is that with some of the staff headcount optimization or restructuring, there will be one-off separation costs. No difference from a lot of companies as they go through restructuring, of course. This year, we'll see a bit more digging in as the, I guess, the senior departures or some of these departures will come in the second half of the year.

I think if you look at the business, there's probably about from.

From the revenue line down 10% of revenue that is controllable.

Whereas whether staff cost at the property level of staff costs outside of property level at the regional centers.

Where we have come in the first round is that.

With some of the.

Staff head count optimization or restructuring there will be one of separation costs.

Different from a lot of companies as they go through structural restructuring of course.

And this year, we'll see a bit more.

In the.

I guess, a senior departures all sounded departures will come in the second half of the year.

And then like what chairman has said on a structured basis.

Duncan Owen: Like what Chairman has said, on a structured basis into the next financial year, the aim is to shoot for about HKD 200 million of savings every year. Thank you.

Into the next financial that Amy to shoot for about 200 over million of savings every year.

Thank you.

Okay.

Yeah.

Ko Chung Eun: Okay. Carl.

Hi, Karl Choi from Bank of America, three quick questions first on the third party capital question, just want to find out if there any.

George Hongchoy: Hi, Carl Choi from Bank of America. Three quick questions. First, on the third-party capital question, just want to find out if there are any limitations to the capital that you have raised in terms of, for example, geographies where you can make the investment. Going forward, is there any guiding principle between acquisitions that you'll be making based on your own balance sheets and where you'll be tapping third-party capital to make those acquisitions? Second question is, any more color on Mainland China, especially Zhongguancun Mall? Looks like the negative rental reversion was quite severe in the first half because it dragged down the whole portfolio. Should we see some stabilization half and half? The third question is regarding a quick one, housekeeping, is regarding the headcount-related reduction charges. Should I clarify that you'll be making your digital income after absorbing those charges?

Any limitations to the capital that you have raised in terms of for example, geographies, where you can make the investment and going forward. How should is there any guiding principle between acquisitions that you've been making or based on your own balance sheet and where.

Were you be tapping third party capital to make those acquisitions and second question is there any more color on mainland China, especially trunk lines on more looks like the negative rental reversion was quite severe in the first half because it drag down the whole portfolio.

Should we see some stabilization in half and half and the third question is regarding a quick one housekeeping is a regarding the head count related.

Reduction.

I, just said I clarified that that you'd be making additional income after absorbing those charges. So you won't be isolating them out separately.

George Hongchoy: You won't be isolating them out separately. Thanks.

Okay.

Thank you again I'm going to hand over to my colleagues, but in very simple terms, where we're working with third parties in partnership or in a fund structure.

Duncan Owen: Thank you. I'm going to hand over to my colleagues. In very simple terms, where we're working with third parties in partnership or in a fund structure, yes, the returns are higher. There's typically value-add style returns, and yes, the strategies are relatively unencumbered, albeit they would be very focused in the region of APAC. The geographies could be wider, the sectors could be wider, as opposed to the balance sheets where there's a big focus on the particular four APAC markets I've mentioned, retail malls, and our super strength. In terms of the reversion, I'll hand to John on this point. I think the key factor for all of the reversions, whether they're upwards or downwards, whether they're Beijing malls in the mainland or elsewhere, is there's always a lag indicator.

Yes, the returns are higher there's typically value out style returns.

And yes, the strategies are relatively unencumbered, albeit they would be very focused in the region of APAC also the geographies could be wider sectors could be wider.

As opposed to balance sheets, where there's a big focus.

On the particular for APAC markets, I've mentioned and retail miles on our Super strength.

And in terms of.

The reversion I'll I'll I'll hand to John on this this point, but I think the.

The key.

Factor for all of the reversion, whether theyre upwards or downwards wherever that Beijing mouse and the mainland or elsewhere is there's always a lagging indicator to what's happening on the ground is always ahead of what you see in the financial numbers that come through because of that lag effect and I think it's really important to note that as you do your <unk>.

Duncan Owen: What's happening on the ground is always ahead of what you see in the financial numbers that come through because of that lag effect. I think it's really important to note that as you do your modeling for the numbers, etc. John.

The link for the numbers et cetera.

John.

Yeah and.

So on the third party capital side versus the balance sheets I think the balance sheets is very clear.

John Saunders: Yeah. On the third-party capital side versus the balance sheet, I think the balance sheet is very clear. It continues to be very committed to Hong Kong and the Greater China area, the Greater Bay Area particularly. It's also very much a retail and, to some degree, an office-focused business. It's fundamentally outside of Greater China. It's focused on Australia and Singapore. That takes care of the balance sheet. In some respects, that's relatively straightforward. Again, as you can see from some of the results, when you get the right assets with the right operational management, you can produce very good returns from those. The fund, or the fund, the third-party business, the capital business, that is capable of operating on a wider scope, taking in some other jurisdictions and investment classes. It has a wider remit.

It continues to be very committed to our Hong Kong and.

Yeah.

Greater China area of the greater Bay area, particularly.

It's also a very much a retail and to some degree in office focused business and its fundamentally outside of the.

Greater China is focused on.

Australia.

And Singapore, so that takes care of the balance sheet in some respects that's relatively straightforward.

But again as you can see from some of the results when you get the right assets with the right operational management you can produce very good returns from those the fund or the fund the third party business the capital business.

That is a.

Capable of operating on a on a wider scope taking in some other.

Jurisdictions and.

Investment classes.

So it has a it has a wider remit, but having said that it's still fundamentally operating.

John Saunders: Having said that, it's still fundamentally operating in the same developed Asian markets. I think that probably covers the third-party capital side. In Zhongguancun and the sort of reversions, generally speaking, in China, I think in that asset particularly, there were some challenges. There was a new mall that was down the road that came into existence. We had some weaknesses in occupancy, which is highly unusual for us because normally we pride ourselves on having very full buildings, as you can see from the results. We had to deal with that. In order to deal with that, that meant that there were steeper than normal reversions because suddenly we were competing, as I say, with a new offering. They've increased occupancy there, or we've done lettings for around 35% plus of the building overall.

In the same developed Asian markets.

So I think that probably covers the third party capital side.

In junction and the sort of reversion is generally speaking in China.

I think in in that asset, particularly there were some challenges there was a new mall that was down the road.

That came into existence so we.

Had some.

You know weaknesses in occupancy, which is highly unusual for.

For us because normally we pride ourselves on having very full buildings as you can see from the results.

We had to deal with that and in order to deal with that that meant that there was steeper than normal reversion because suddenly we were competing as I say with a with a new offering but they've increased occupancy there. We've we've done lettings for roundabout 35 plus percent of the building overall so.

I don't want to be too confident in predicting but I do feel that that is largely shored up.

John Saunders: I don't want to be too confident in predicting, but I do feel that that is largely shored up. Could there be some more weakness that comes from the general market? Yes, potentially. I think we're now on a level playing field in terms of that asset. By the way, that asset is a perfectly good asset. It just suddenly faced some competition, and we've dealt with that. As I said earlier, when you take out the impact of that particular property from the overall results in China, what's very encouraging is that we actually saw growth in reversions in China overall. I think with some cautiousness going forward, it's not a bad picture.

And could there be some more weakness that comes from the general markets, yes, potentially but I think we're now on a level playing field in terms of that asset and by the way that asset is a very good asset. It just suddenly faced some competition and we've dealt with that and as I say when as I said earlier when you take out the impact of.

That particular property from the overall results in China.

What's very encouraging is that we actually saw growth.

In revisions in China overall, so I think it's a it's with some cautiousness going forward I think it's a it's not a bad picture.

On the headcount reduction I guess.

Duncan Owen: On the headcount reduction, I guess the way it's done is between a redundancy or retirement, there are statutory as well as contractual payments that we are obligated to fulfill. The accounting treatment is such that the expense of these payments needs to be all front-loaded to the last day of the employment. That's why I say a lot of this will then be surfacing as we cross into the end of the financial year, into the new year. I guess when the exercise was conducted in the first half and the execution of this stuff is being done within this period, quite a fair bit of this one-off will then be expensed into the second half of the financial year.

The way it's done is between a redundancy or retirement there are statutory <unk> contracture payments that we are obligated to fulfill.

Ended accounting treatment is such that the expense of these payments needs to be all front loaded to the last deal. The employment. So that's why I say a lot of this will then be surfacing as we cross into the end of the financial you into the new year and I guess when the exercise was conducted in the first half and execute.

None of this stuff is being done with this purion all quite a fair bit of this one awkward NB.

Expense into the second half of the financial year.

Mac.

Ko Chung Eun: Mark.

Thank you management. This is mark <unk> from UBS I got about three questions. I think the first one is regarding on the retail sales on the ground I think in first half hour tenants have us mainly dragged by the general retail.

George Hongchoy: Thank you, management. This is Mark Leung from UBS. I got about three questions. I think the first one is regarding on the retail sales on the ground. I think in the first half, our attendance sale was mainly dragged by the general retail, which significantly underperformed the overall Hong Kong market. Just want to share what kind of category we underperformed. You also mentioned about the e-commerce penetration. That's linked to the second question because I think in last week, one of the local e-commerce operators said they want to eliminate the brick-and-mortar retails in Hong Kong. Just want to see your view and what's our strategy in defending our position for the local neighborhood mall in regard on the e-commerce threat. Number three is regarding on the occupancy cost ratio. I think currently it's about 13%.

Mentally underperformed the overall Hong Kong market, just wanted to share what kind of category. We underperform and you also mentioned a buster ecommerce penetration. So that's linked to the second question because I think in last week, one of the low coal.

Commerce, operator, they said they want to eliminate our brick and motor retailers in Hong Kong. So we just want to see all of you and what's our strategy in defending our position for the local neighborhood more in regard on an ecommerce fret number fees regarding on the occupancy cost ratio I think currency is about 10%.

But if you look on the right are bought across teamster attendance margin squeezing and also maybe some of the supermarkets are cutting our price do you think that the occupancy occupancy cost ratio may lead to further trend down in the future in order to in order to retain that talent.

George Hongchoy: If you look on the wide-out board across, it seems the attendance margin is squeezing, and also maybe some of the supermarkets are cutting the price. Do you think that the occupancy cost ratio may need to further trend down in the future in order to retain the talent? If that's the case, what is the sustainable level? Last but not least, it's about the Hong Kong car park. We have a slight decline in the car park. Just want to check with management what is our future growth outlook for the Hong Kong car park because it seems the number of cars continue to not rebound despite the population increase. Thank you.

That's the case, what is a sustainable level last but not least is our pasta Hong Kong car Park, we have a slight decline in a car park just wanted to check with management, while this our future growth outlook for the Hong Kong pocket because since the number of cars continue to.

Did not report despite the population.

Thank you.

Thank you I think most of these are for John.

Duncan Owen: Thank you. I think most of these are for John. Just to recap, I think there's a retail drag impact is the question. The occupancy costs, of which I'll just reiterate what's been said before, in that we've focused on a strategy to maintain high levels of occupancy rather than to hold out for less dollar in rent. That's because it positions the company better for a recovery in rent out of the bottom of the cycle when there's high occupancy. I think your third question is related to that because it's about occupancy costs. I think there is a fourth question, which is about car parking, which may be a fourth that KS may want to comment on. If I can hand to John now on the retail drag.

<unk>.

But just to recap I think it was a retail drag impact.

<unk> the occupancy costs.

Of which I'll just reiterate what's been said before and that we've focused on our strategy to maintain high levels of occupancy.

Rob them to hold out for last last dollar in rents and that's because it positions the company better for a recovery in rents out of out of the bottom of the cycle when this high occupancy.

I think.

Your third question is related to that because it's about occupancy costs.

And I think there was a fourth question, which is about car parking.

Which may maybe a fourth of the chaos may want to comment on but if I can hand to Jon now.

On the retail drug.

Yeah sure so.

Yes.

John Saunders: Yeah, sure. Yes, I guess when you look at the Hong Kong retail sales, the first thing to say is that it's encouraging. When we were speaking a few months ago, obviously, we had a few data points. I suppose we were all hoping that a few data points might become a few more, and that we might be okay to start calling it a trend. Obviously, those figures capture luxury. Particularly, they capture gold and jewelry. There was also the impact of the latest sort of iPhone offerings, whatever number we've got up to next. No doubt my children will tell me on their Christmas list. We don't really have much exposure to that. I think that's why our figures lag a little just in a pure number sense.

I guess when you look at the Hong Kong retail sales. The first thing to say is that its encouraging.

When we were speaking a few months ago, obviously, we had a few data points and I suppose we were all hoping that a few data points might become a few more and that we might be okay to start calling it a trend.

But obviously those figures capture Luxor.

Luxury and particularly they capture.

Golden jewelry.

And there was also the impact of the latest set of iPhone offerings, whatever number we got up to next node that my children will tell me on my Christmas list.

And we don't really have much.

Exposure to that so I think that's that's why our figures lag a little just in a pure number sense, but I think the positive to take away from this is not per se the non discretionary lag slightly but more that this trend of of retail sales data points does start to resemble a trend.

John Saunders: I think the positive to take away from this is not per se that non-discretionary lags slightly, but more that this trend of retail sales data points does start to resemble a trend as opposed to an individual set. I'm not going to make any forward predictions, but let's all hope that that continues because that will be good for us. It will be good for Hong Kong. I suppose e-commerce, yes, you get individual data points or individual announcements. I mean, e-commerce is something that's been on our radar for a very, very long time. It's not something we've suddenly started reacting to because of one particular retailer saying they're getting out of bricks and mortar.

As opposed to an individual set so I'm not going to make any forward predictions, but let's all hope that that continues because that will be good for us it will be good for Hong Kong.

Ah I suppose ecommerce, yes, you get a individual data points or individual.

Announcements, but I mean e-commerce is something that's been on our radar for a very very long time, it's not something we've suddenly started reacting to.

Because of one particular reseller, saying theyre getting out of bricks and mortar and I guess balanced against that there have also been lots of reports out so much in Hong Kong in the near term, but there've been lots of reports of retailers, saying actually we realize we need to have a combination of physical and online.

John Saunders: I guess balanced against that, there have also been lots of reports, not so much in Hong Kong in the near term, but there have been lots of reports of retailers saying, actually, we realize we need to have a combination of physical and online. As I say, it's something we've been reacting to for quite some time, which is why you see the constant evolution of our portfolio to deal with that, whether it be the fact that on the plus side, when people come and do collections, they may be actually coming into the mall to do collections. How do we activate those people into doing a collection plus maybe staying a little longer and frequenting some of our tenant shops? It's not all a one-way street, but it's something we're hyper-vigilant on and we've been working on for quite some time.

But as I say, it's something we've been reacting to for quite some time, which is why you see the constant evolution.

Of our portfolio.

To deal with that whether it be the fact that on the plus side when people come and do.

Collections.

They may be actually coming into the mall to do collection. So how do we activate those people into doing a collection plus may be staying a little longer and frequenting some of our some of our tenants shop. So it's not all in one way streets, but its something were hypervigilant on them, we've been working on for quite some time.

On the occupancy cost stuff side, you know I think our occupancy costs are.

John Saunders: On the occupancy cost side, I think our occupancy costs are very good, around 13%. It is something that the team, Emmanuel, the team, they focus on constantly. The level of detail that they go into, and the level of partnership that they have with our tenants in respect of things like this, is phenomenal. Yes, there are still some headwinds out there in terms of minimum wage and other things. I would say, again, I think we feel fairly confident that a number around 13% is a good result. I think we feel fairly confident that we should be able to keep that number roughly where it is. In terms of car parks, I think you have seen declining or you have seen a reduction in the number of car registrations in Hong Kong.

Very very good and I ran about 13%.

But again, it's something that the team Emmanuel.

The team they focus on constantly and the level of detail that they go into and the level of partnership that they have with our tenants in respect of things like this phenomenon.

And yes, there are still some headwinds out there in terms of minimum wage and other things, but I would say again.

I think we feel fairly confident that are you know.

Uh huh.

A number of around 13% is a good result, and I think we feel fairly confident that.

We should be able to.

Keep that number roughly.

Where it is.

In terms of car parks.

I think.

You have seen declining we have seen a reduction in the number of car registrations in Hong Kong I think that reduction.

It has flattened out.

John Saunders: I think that reduction has flattened out to some degree. Yes, we've seen a reduction in the number of ticket sales, but we've also seen some of that reduction added back in terms of the fact that we were able to push through some higher pricing, partly in terms of the fixed-term contracts, the monthlies, and the longer terms, but also through the dynamic pricing that we've put into the malls as well. I think if you, again, not looking to give you any sort of full forecast, but more if you look back at the history of this business, it is broadly a relatively flattish business. I don't think you expect to see there being big negatives, and I don't think you expect equally there to be big positives.

To to some degree.

And yes, we've seen a reduction in the number of ticket sales, but we've also seen some of that reduction added back in terms of the fact that we were able to push through some higher pricing partly in terms of the fixed term.

Contracts that the month is and the longer terms, but also through the dynamic pricing that we've put into the malls as well, but I think if you again not not looking to give you any sort of forecast, but more if you look back at the history of this business. It is broadly a relatively flattish business. So I don't think.

Do you expect to see that being a big.

Negatives and I don't think you expect equally there to be big positive. So it's a good.

Stabilizing income and cash flow that doesn't awful lot of the heavy lifting without taking much glamour when it comes to.

John Saunders: It's a good stabilizing income and cash flow that does an awful lot of the heavy lifting without taking much glamour when it comes to having a resilient DPU.

Having a resilient D P.

Oh, it will I forget the other questions maybe I'll, let's ask less answered. One question is from from the webcast. So and asked the question is from personal a M. What will be the company's funding plan for the potential offset.

Operator: Before I take another question, maybe let's answer one question from the webcast. There's a question from Principal Asset Management. What will be the company's funding plan for the potential Australian malls acquisition? Will it be through equity, debt, or recycling some of the capital? Thank you.

Australian malls acquisition, where it is true equity that's odd thing recycling some of the capital. Thank you Kash.

Duncan Owen: What you have read in the media, I think there's some element of truth that we are looking at it. From where we are in terms of gearing at 22% to 23%, I think we have the capacity to buy this and put this on balance sheet using our debt headroom. At the same time, I think there's no dual certainty at this stage, but we have already prepared pre-financing for the next financial year. We have available liquidity if we need to act fast. I think that's where we are at this stage of the game.

So what you read in the media I think there is some element of truth that we are looking at it.

From where we are in terms of gearing at 22, 23% I think we have the capacity to.

By days and put it on balance sheet using our <unk>.

Headroom.

But at the same time.

I think there's no deal certainty at this stage, but we'd have already prepared refinancing for the next financial year with available liquidity, we need to act fast. So I think that's where we are at this stage of the game.

Oh, okay.

Ko Chung Eun: Next one.

Simon Cheung from Goldman Sachs I, just follow up on the retail questions.

George Hongchoy: Hi, I'm John from Goldman Sachs. Just follow up on the retail questions. John, you mentioned that you have seen some improvement or green shoots across your different malls. Is there anything that you can call out? Secondly, I think on your point about lagging, rent being lagging the retail sales performance, can you give us a sense how long the lagging typically will be? We understand that it's a three-year cycle, but if you can share with us some color, that would be helpful. Also on the costs, this year, I think the annualized cost saving is HKD 200 million. Whether you have any maybe longer-term target for the cost saving. Thank you.

John You mentioned that you have seen some improvement or green suits across you with even more.

Anything that you can call out and secondly, I think on your point about lagging.

Rand being lagging the retail sales performance.

Can you give us a sense how long the lagging typical rupee, we understand there is a three year cycle, but you know if you can share with us some color there that would be helpful. And then and also on the parts.

See I think the annualized cost savings $200 million, whether you have any maybe longer term target for the cost savings. Thank you.

Yeah look I'd say the the.

Duncan Owen: Yeah, look, I'd say the bright spots, the things that are encouraging, supermarkets and F&B, which have both been sectors that have had some challenging times over the last few years. Seeing those actually sort of flatten out and even show in the supermarket sense a little bit of growth, I think, is really encouraging. I mean, at the end of the day, I think the simple thing to always remember is that very roughly, we work on a three-year leasing cycle. We're dealing in 1/3 or 1/3 or 1/3. That should give you good clues as to how to deal with the reversionary lag. We are defensive, we've been very defensive in nature during the difficult times. We will have recovery, but it takes time to wash through all of those leases.

The bright spots the things that are encouraging in our supermarkets in and F&B.

Which have both been sectors that you now have.

Have had some challenging times.

Over the last few years, so seeing those actually sort of flatten out and even show in the supermarket sense a little bit of.

Of growth I think is really encouraging and at the end of the day I think the best the simple thing to always remember is that very roughly we work on a three year leasing cycles. So we're dealing in third a third a third and that should give you good clues as to how to deal with the reversion we lag.

You know, where we are defense, we've been very defensive in nature during the difficult times.

And you know we will have recovery, but it takes it takes.

You know time to walk through all of those leases. So again it comes back to the point about retail sales hopefully, becoming a continuing trend.

Duncan Owen: It comes back to the point about retail sales hopefully becoming a continuing trend. You can't do anything about the maths. It is a 1/3, 1/3, 1/3. What will change the trajectory, and I can't predict it, is how much growth you continue to get in the overall retail sales. Does it accelerate? Does it stay the same? Does it taper off? The bigger the growth, the quicker you get out of the tail end of your reversionary lag cycle. I think you know how to calculate that cleverer than I do. I think just on the cost saving point, it's worth just mentioning there are two elements. One is cost savings and the annualized figure that we've mentioned, which is often infrastructure, headcount related. The other is working more efficiently.

You can't do anything about the maths. It is a third a third a third what will change the trajectory and I cant predict it is how much growth you continue to get in the <unk>.

<unk> retail sales does it accelerate does it stay the same does it taper off the bigger the gross the quicker you get you out of your you know the tail end of your reversion relax cycle.

But I think you know how to calculate that cleverer than I do.

I think just on the cost saving points, it's worth just mentioning there were two elements.

One is cost savings and the annualized figure that we've mentioned, which is often infrastructure head count related. The other is working more efficiently and whilst we don't have hard costs and further savings next year, we do have aspirations to increase productivity through use of technology adoption of AI et cetera to increase.

Duncan Owen: Whilst we don't have hard costs and further savings next year, we do have aspirations to increase productivity through use of technology, adaption of AI, etc., to increase productivity, which has a net positive impact on reducing costs as a percentage.

Productivity, which has a net positive impact on reducing costs as a percentage.

Yeah.

Any other questions from the floor.

Operator: Any other questions from the floor? Okay, I think we come to the end of the briefing today. Thanks for coming. Thank you. Bye-bye.

Okay. So I think we come to the end of the breathing today. Thanks again for coming thank you.

Thank you.

John Saunders: Thank you.

Duncan Owen: Thank you.

Good afternoon, ladies and gentlemen, welcome to our lengthy wait till Q five TRT sake interim results presentations now under stage, we'll have our chat. Thank Mr. Duncan O N and Allografts C O Judge Hong Chi.

Operator: Good afternoon, ladies and gentlemen. Welcome to our Link Real Estate Investment Trust 2025-2026 interim results presentations. Now on the stage, we have our Chair, Mr. Duncan Owen, our Group CEO, George Hongchoy, our CFO, Ko Chung Eun, and our Group CIO, John Saunders. On the screen, you can see our agenda today. Without further ado, let me hand the floor over to Duncan. Thank you.

Seth I'll caution O.

And our Pepsi I owe John Sean deaths. So on the screen you can see our agenda today and without that idea, let me hand, the floor of our two Duncan. Thank you.

Thank you. Thank you good afternoon, ladies and gentlemen, and welcome to the 2025 2026 interim results presentation for <unk>.

Duncan Owen: Thank you. Thank you. Good afternoon, ladies and gentlemen, and welcome to the 2025-2026 interim results presentation for Link Real Estate Investment Trust. As today's meeting is being webcast live, I also extend a warm welcome to those joining us online. It's my pleasure to open the proceedings, and I will provide a few brief remarks now. With regards to the interim results period, despite a range of macroeconomic and market challenges, Link has continued to deliver resilient results during the first half of this year. We saw a modest decline of 3.4% in net property income compared with the same period last year. This is mainly due to market challenges in Hong Kong and the Chinese mainland. Our distributable amounts and distribution per unit are down 5.6% and 5.9%, respectively, compared with the first half of last year.

As today's meeting is being webcast live I also extend a warm welcome to those joining us online.

It's my pleasure to open proceedings, and I will provide a few brief remarks now.

With regards to interim results period, despite a range of macroeconomic and market challenges link has continued to deliver resilient results. During the first half of this year.

We saw a modest decline of three 4% and that protein income compared with the same period last year. This is mainly due to market challenges in Hong Kong in the Chinese mainland.

Our distributable amounts and distribution per units down 5.6, and five 9%, respectively compared with the first half of last year.

Before inviting our management team to run through the details I want to start with an overview of how global trends are shaping our business and the execution of our strategy.

Duncan Owen: Before inviting our management team to run through the details, I want to start with an overview of how global trends are shaping our business and the execution of our strategy. While capital markets continue to rally on the back of optimism about AI, and interest rates look to be trending downwards, the global business landscape remains as complex as ever. Wars, geopolitical tensions, and shifting trade dynamics continue to create uncertainty. The recent shifts in US policy are leading to fundamental structural changes in how investors view the world, which will continue to take shape over the months and years ahead. Whilst we're starting to see some encouraging signs of stabilization in terms of the environment, our business, many of our tenants are still suffering from a prolonged period of challenge, particularly in Hong Kong.

While capital markets continue to rally on the back of optimism about AI and interest rates look to be trending downwards. The global business landscape remains as complex as ever.

Wars geopolitical tensions and shifting trade dynamics continue to create uncertainty.

The recent shifts in U S policy are leading to fundamental structural changes in how investors view the world, which will continue to take shape over the months and years ahead.

Whilst we're starting to see some encouraging signs of stabilization in terms of the environment.

Our business <unk>.

Many of our tenants are still suffering from a prolonged period of challenge, particularly in Hong Kong.

Therefore, it will take time before the improvements in consumer sentiment translated into higher rental income for link.

Duncan Owen: Therefore, it will take time before the improvement in consumer sentiment translates into higher rental income for Link. In anticipation of these challenges, at the beginning of this calendar year, we launched a wide-ranging operational efficiency drive and have already made significant progress in reducing costs. On an annualized basis, we're on course to make savings of more than HKD 200 million to our ongoing people and general and administrative costs. These efforts together with our ongoing asset enhancement are all part of our commitment to protect unit holder returns in future. Regarding strategy, Link's primary current strength is still owning and managing shopping centres in Hong Kong, the Greater Bay Area, and other locations in APAC, such as Australia and Singapore. We are continuing to focus on this strength.

In anticipation of these challenges ahead at the beginning of the year of this calendar year, we launched a wide ranging operational efficiency drive and have already made significant progress in reducing costs.

On an annualized basis, we're on course to make savings of more than 200 million Hong Kong dollars to our ongoing people in general and administrative costs.

These efforts together of ongoing asset enhancements are all part of our commitment to protect unitholder returns in future.

Regarding strategy linked primary current strength is still owning and managing shopping malls in Hong Kong, the greater Bay area and other locations in APAC, such as Australia and Singapore.

We're continuing to focus on the strength.

As we evolve and refine our strategy alongside the active management and optimization of the link portfolio. We're also expanding our real estate investment capabilities.

Duncan Owen: As we evolve and refine our strategy alongside the active management and optimization of the Link portfolio, we're also expanding our real estate investment capabilities. This includes some new capital partnerships, as well as advancing investment opportunities. As a consequence, we're now managing close to $1 billion in third-party capital already. This part of the group's business will continue to focus on value-add strategies and higher returns, providing diversification away from single market and sector dependency, enhancing unit holder value. We recently announced the planned retirement of our Group CEO, George Hongchoy, and this will take effect by the end of this year. Before inviting him to run through the interim results, I'd like to convey gratitude to George on behalf of the board and myself for his significant contribution and leadership.

This includes some new capital partnerships as well as advancing investments opportunities.

As a consequence, we are now managing close to 1 billion U S dollars and third party capital already.

This part of the group's business will continue to focus on vivat strategists and higher returns providing diversification away from single market sector dependency enhancing unitholder value.

We recently announced the planned retirement of our group CEO, George Holmes Joy and this will take effect by the end of this year.

Before inviting him to run through the interim results I'd like to convey gratitude to GA on behalf of the board and myself for his significant contribution and leadership.

During his tenure link has grown and transforms the benefits of unit holders tenants employees and the wider communities. It serves of course.

Duncan Owen: During his tenure, Link has grown and transformed to the benefit of unit holders, tenants, employees, and the wider communities it serves, of course. The interim leadership team is on stage today. We look forward to welcoming John Saunders, our Group Chief Investment Officer, to the board. We're excited to continue to work with Ko Chung Eun and John Saunders alongside the newly formed chairs committee, which is there to provide support and provide strategic guidance to the management. We are currently running a comprehensive search for a new CEO. We're seeking a proven real estate investor with international experience who can lead the next phase of the company's strategy. Given the seniority of the role, the search will continue to take time, and it's reasonable to expect a lengthy notice period is possible for an incoming candidate.

The interim leadership team is on stage today, we look forward to welcoming John Saunders, Our group Chief investment officer to the board.

We're excited to continue to work with Coxey on N and John Saunders alongside the newly formed Chaz Committee, which is that to provide support and provides strategic guidance to the management.

We are currently running a comprehensive search for a new CEO.

We're seeking a proven real estate investor with international experience, who can lead the next phase of the company's strategy.

Given the seniority of the row. The search will continue to take time and it's reasonable to expect a lengthy notice period is possible for an incoming candidates.

Hence our decision to put in place the robust interim management solution I was describing earlier.

Duncan Owen: Hence our decision to put in place the robust interim management solution I was describing earlier. Thank you. I'd like to invite George now to take us through the presentation. George.

Thank you I'd like to invite George now to take us through the presentation George.

Thank you Duncan.

So while our business continues to navigate and feel the effects of various macro and local market level challenges I'm pleased to report.

Duncan Owen: Thank you, Duncan. While our business continues to navigate and feel the effects of various macro and local market-level challenges, I'm pleased to report that we have achieved a resilient set of results for the first half of 2025-2026. I would like to express my sincere thanks and gratitude for the hard work and efforts of all our colleagues who have made this possible. As we approach the 20th anniversary of Link's IPO, I believe that this is also a moment for us to reflect with pride. Together, we have delivered strong financial results and made a positive impact on our communities, even as we face many challenges along the way. The achievements we have realized over the past 20 years give us every reason to be confident in Link's ability to successfully navigate the path ahead. Back to the results.

That we have achieved a resilient set of results for the first half of 'twenty five 'twenty six and I would like to express my sincere thanks, and gratitude for the hard work and efforts of all our colleagues who helped make this possible.

As we approach the 20th anniversary of links the IPO.

I believe that this is also a moment for us to reflect with pride.

Together, we have delivered strong financial results and we have positive impact on our communities, even as we face many challenges along the way.

The achievements, we have realized over the past 20 years give us every reason to be confident that links ability to successfully navigate the path ahead.

That's a result negative rental reversion in Hong Kong and China mainland.

Duncan Owen: Negative rental reversions in Hong Kong and Mainland China have impacted our overall performance, with NPI down and DPU declining. Despite the tough conditions, we remain committed to deliver strong returns to our unit holders, and we have launched multiple efficiency initiatives aimed at reducing costs and preserving margins. On the balance sheet front, our capital position remained robust, supported by credit markets' flight to quality and our blue-chip reputation. Net gearing stood at 22.5%, and our cost of borrowing has declined to 3.2%. We have also retained A ratings from S&P, Moody's, and Fitch. This strong foundation enables us to pursue inorganic growth and portfolio diversification. Our expansion into Australia and Singapore demonstrates this strategy, with retail assets in both markets achieving near full occupancy and strong double-digit reversion. Okay, as John will now give more details.

It has impacted our overall performance with NPI, Dow and <unk> declining.

Despite the tough conditions, we remain committed to deliver strong returns to our unit holders and.

And we have launched multiple efficiency initiatives aimed at reducing costs and preserving margins.

On the balance sheet front, our capital position remained robust supported by credit markets flight to quality and a blue chip reputation net.

Net gearing stood at 22, 5% and our cost of borrowing has declined to three 2% and.

And we have also retained a ratings from S&P Moody's and Fitch.

This strong foundation and enable us to pursue inorganic growth and portfolio diversification.

Our expansion into Australia, and Singapore demonstrate this strategy with retail assets in both markets, achieving near full occupancy and strong double digit reversion.

Okay, and John will now give more details.

Thank you George good afternoon to everyone.

George Hongchoy: Thank you, George. Good afternoon to everyone. Despite the ongoing macroeconomic headwinds, we have taken the strategic decision to retain high occupancy levels at the expense of rental revenue. Our continued focus on cost restructuring will involve certain one-off charges. Meanwhile, we expect operating conditions in the second half to slightly worsen before stabilizing. We believe our non-discretionary retail and car park assets will remain resilient, nonetheless. Our international business is a highlight. As George mentioned, our retail assets in Singapore and Australia achieved near full occupancy and double-digit positive rental reversions during the period. On the financing side, we have benefited from the temporary dip in high borrow, and our borrowing costs dropped to 3.2%. We have prudently managed our interest rate exposure, with expectations of longer-term rates easing, and I'll share more details in the next few slides.

Despite the ongoing macroeconomic headwinds we.

We have taken the strategic decision to retain high occupancy levels at the expense of rental revenue.

Our continued focus on cost restructuring were involved certain one off charges.

Meanwhile, we expect operating conditions in the second half to slightly worsen before stabilizing.

We believe our non discretionary retailers and copper assets will remain resilient nonetheless.

Our international business is an highlight.

As George mentioned, our retail assets in Singapore, and Australia achieved near full occupancy and double digit positive rental reversion during the period.

On the financing side, we had benefited from the temporary dip in high ball and our borrowing costs dropped to three 2%.

We have prudently manage our interest rate exposure with expectations of longer term rates easing.

And I'll share more details in the next few slides.

Valuation of the lingering portfolio stood at 223 billion Hong Kong dollars as of end September two zero to five down about one 3% from six months ago.

George Hongchoy: Valuation of the Link REIT portfolio stood at HKD 223 billion as of end September 2025, down about 1.3% from six months ago. Hong Kong and the Chinese mainland still hold the majority part of our portfolio at around 88%. Our international, with the majority in Australia and Singapore, took up the rest. Cap rates have been relatively stable compared to six months ago. Breaking down by geographies, ongoing weakness in rental performance across Hong Kong and the Chinese mainland has led to a decline in valuations. For our international portfolio, valuations have remained stable in local currency terms. However, the depreciation of the Hong Kong dollar gave a slight uplift in reported valuations overall. Lastly, on capital management, our strong financial position is underpinned by a healthy balance sheet, as reflected in the key metrics shown below.

Hong Kong in the Chinese mainland and still hold the major majority part of our portfolio at around 88%.

Our international with the majority in Australia, and Singapore took up the rest.

Cap rates have been relatively stable compared to six months ago.

Breaking down by geographies ongoing weakness in rental performance across Hong Kong in the Chinese mainland that's led to a decline in valuations.

For our international portfolio valuations have remained stable in local currency terms. However.

However, the depreciation of Hong Kong dollar gave a slight uplift and report that valuations overall.

Lastly on capital management.

Our strong financial position is underpinned by a healthy balance sheet as reflected in the key metrics shown below.

As of September 30th net gearing remained at a healthy level.

George Hongchoy: As of 30 September, net gearing remained at a healthy level, while the average borrowing cost declined to 3.2%, supported by the temporary dip in high borrow during the first half as discussed. Our fixed debt ratio remained within the prudent range of 50% to 70% at 66%, reflecting our continued careful management of interest rate exposure, and heightened uncertainty over future rate movements. Financial stability is further reinforced through competitive credit margins and effective risk management. Over the past six months, we successfully refinanced more than HKD 10 billion of debt at highly competitive rates, achieving a lower overall margin compared to the previous year. Total debt increased slightly from HKD 53.5 billion to HKD 55 billion, primarily due to currency translation effects. Our debt maturity profiles remain healthy, with an average tenure of 2.9 years and a well-staggered schedule extending over the next 13 years.

The average borrowing cost declined to 3.2% supported by the temporary dip in high bar during the first half discussed.

Our fixed debt ratio remain within the prudent range of 50% to 70% at 66%.

Reflecting our continued careful management of interest rate exposure and heightened uncertainty over future rate movements.

Financial stability is further reinforced through competitive credit margins and effective FX risk management.

Over the past six months, we successfully refinanced more than 10 billion Hong Kong dollars of debt at highly competitive rates, achieving a lower overall margin compared to previous year.

Total debt increased slightly from $53 5 billion to 55 billion, primarily due to currency translation effects.

Our debt maturity profiles remained healthy with an average tenure of two nine years and a well staggered schedule extending over the next 13 years.

Strong a ratings from all three agencies secure favor favorable funding terms supporting our future financing needs.

George Hongchoy: Strong A ratings from all three agencies secure favorable funding terms, supporting our future financing needs. We also remain well below covenant thresholds, providing ample headroom for acquisition and strategic opportunities. With that, I'll now hand over to John for his portfolio highlights. Thank you.

We also remain well below covenant thresholds.

Writing ample headroom for acquisition and strategic opportunities.

With that I'll now hand over to John portfolio.

Portfolio highlights thank you.

Thank you very much cash and a welcome to all of you. Thank you for coming.

Duncan Owen: Thank you very much, KS, and welcome to all of you. Thank you for coming. I'll now walk you through the Link REIT portfolio highlights, starting, of course, with the performance of our Hong Kong retail segment. Despite market challenges, occupancy remained very solid at well over 97%. Although revenue declined by 3.1% year over year, mainly due to negative 6% plus reversions, pleasingly, tenant sales showed improvement, narrowing the decline to just over 2%. I'll now break that down by category for you. Supermarkets in the foodstuff segment actually returned to positive growth, which is both encouraging, and it marks the first increase since 2023. In that sector, we outperformed the Hong Kong market in the first half. F&B for the first half was flat, and that was broadly in line with the overall Hong Kong market trends.

I'll now walk you through the link REIT portfolio highlights starting.

Of course with the performance of our Hong Kong retail segment.

Despite market challenges occupancy remained very solid.

Sure.

While over 97% and although revenue declined by three 1% year over year, mainly due to negative six plus percent reversion.

But pleasingly tenant sales showed improvement narrowing the decline to just over 2% and on that break that down by category for you.

Supermarkets in the foodstuffs segment actually returned to positive growth.

Which is both encouraging and it marks the first increase since 2023 and in that sector, we outperformed the Hong Kong market in the first half.

[noise] F&B for the first half was a flat and that was broadly in line with the overall Hong Kong market trends.

But the overall decline in linked tenant sales was dragged down by general the general retail segment, which includes of course, only a small proportion of our valuable goods as opposed to our main.

Duncan Owen: The overall decline in Link tenant sales was dragged down by the general retail segment, which includes, of course, only a small proportion of valuable goods as opposed to our main tenancy focus on non-discretionary. Overall occupancy costs stayed very healthy at around 13%. I would say that together, these metrics do suggest that while some challenges do still persist, resilience within the portfolio remains very strong and evident across our entire range of portfolio. That said, retail businesses in Hong Kong do continue to face some near-term pressure from heightened e-commerce competition, and that has weighed on some non-discretionary trades. To cope with the challenges, we continue to proactively refine our tenant mix to stay ahead of evolving market trends, and we'll share more details on these initiatives in the forthcoming slides.

Tenancy focus on non discretionary.

Overall occupancy cost stayed very healthy at around 13% and I would say that together. These metrics do suggests that while some challenges do so possessed resilience within the portfolio remains very strong and evident across our entire range of portfolio.

That said retail businesses in Hong Kong do continue to face some near term pressure from heightened e-commerce competition and that has weighed on some non discretionary trades.

But to cope with the challenges we continue to proactively refine our tenant mix to stay ahead of evolving market trends and we will share more details on these initiatives in the forthcoming slides.

Well, so it's a testament to our extremely capable leasing team we've secured a little over 345, new leases during the reporting period, which is a very strong results. Indeed.

Duncan Owen: Also, as a testament to our extremely capable leasing team, we've secured a little over 345 new leases during the reporting period, which is a very strong result indeed. Leasing activity was shaped in large part by emerging trends, including specialty F&B, learning and interest classes, and also game and family entertainment. We also capitalized on growing demand from Chinese mainland brands, and that's further diversifying our tenant mix beyond specialty F&B to include new operators in fashion, services, and entertainment. Meanwhile, tenant retention remained extremely healthy at around 80%, which underscores our focus on engagement and long-term partnerships. Revenue from car parks and related business was broadly stable. Monthly income softened a little due to fewer tickets, but upward tariff adjustments helped offset much of that impact. In addition, we've rolled out smart parking systems to streamline operations and introduced dynamic pricing and diversified services.

Leasing activity was shaped in large part by emerging trends, including specialty F&B learning and interests classes and also game and family Entertainment.

We also capitalize on growing demand from Chinese mainland brands and that's further diversifying our tenant mix beyond specialty F&B to include new operators in fashion services and entertainment.

Meanwhile, tenant retention remained extremely healthy at around 80%, which underscores our focus on engagement and long term partnerships.

Revenue from car parks and related business was broadly stable monthly income softened, a little juice or fewer tickets, but upward tariff adjustments helped offset much of that impact.

In addition, we've rolled out our smart parking systems to streamline operations and introduced dynamic pricing and diversified services.

Leveraging real time analytics. This approach aligns rates with demand patterns and that helps us maximize utilization and also deliver greater flexibility and value for our customers.

Duncan Owen: Leveraging real-time analytics, this approach aligns rates with demand patterns, and that helps us maximize utilization and also deliver greater flexibility and value for our customers. Moreover, with the rising popularity of EVs, the growing demand for parking spaces equipped with charging facilities will provide additional support for our business performance. As part of our defensive strategy, we have continued with our asset enhancement projects with a current HKD 2.3 billion pipeline. During the reporting period, we invested HKD 59 million at Lei Yue Mun and HKD 21 million at TKO Plaza. These efforts reflect our vision to future-proof our assets, and those two projects are expected to respectively deliver ROIs of 14.5% and in Q1 at just over 29%. Alongside these major upgrades, we also made smaller improvements, including reconfiguring spaces to better meet tenant needs, and to optimize product layout for better productivity.

Moreover, with the rising popularity of Evs, the growing demand for parking spaces equipped with charging facilities will provide additional support for our business performance.

As part of our defensive strategy, we've continued with our asset enhancement projects with our current $2 3 billion Hong Kong dollar pipeline.

And during the reporting period, we invested $59 million at Lehman and 21 million Teekay <unk> spot.

These efforts reflect our vision to future proof our assets and those two projects are expected to respectfully deliver rois of 14.5% and ensure quanta at just over 29%.

Alongside these major upgrades, we also made smaller improvements, including reconfiguring spaces to better meet tenant needs and to optimize product layout for better productivity.

Now, let's shift our focus to the Chinese mainland retail portfolio.

Duncan Owen: Now let's shift our focus to the Mainland China retail portfolio. In the first half of the financial year, there were still market headwinds, which were exerting pressure across that Mainland portfolio. Despite the challenges, though, the retail portfolio continues to show very strong occupancy of 95.9% amid the prolonged tough conditions. Rental reversion was soft due to subdued sales sentiment, primarily in Beijing. Actually, if you include Link Plaza, Link Plaza Zhongguancun, and the retail portion of Link Square, rental reversions, quite pleasingly, were positive at +2.5%. We continue to optimize asset quality to drive sustainable growth, and significant AIs were successfully completed at Tianhe and Tongzhou, with a combined capital expenditure exceeding HKD 440 million. Both projects achieved outstanding double-digit ROIs, even in the current more challenging market environment. I'll give you more details on the asset enhancement at Tianhe now.

In the first half of the financial year, the west still market headwinds, which we're exerting pressure across that mainland portfolio.

Despite the challenges, though the retail portfolio continues to show very strong occupancy of 95, 9% amid the prolonged tough conditions Ren.

Rental reversion was soft due to subdued sells sentiment primarily in Beijing and indeed, if you include linked Plaza link Plaza junk on churn and the retail portion of linked square rental reversion is actually quite pleasingly, we're positive.

Plus two 5%.

We continue to optimize asset quality to drive sustainable growth and significance. A eyes were successfully completed at Jan her and changzhou with a combined capital expenditure exceeding 440 million renminbi.

Both projects achieved outstanding double digit rois, even in the current more challenging market environment and I'll give you more details on the asset enhancement at T N now.

We also completed just before I get to that several small scale projects Central walk Li one chip out and as I mentioned before John Gunn Chin with an average ROI of around 9%.

Duncan Owen: We also completed, just before I get to that, several small-scale projects: Central Walk, Liwan, Qibao, and, as I mentioned before, Zhongguancun, with an average ROI of around 9%. Combined with the strategic tenant remixing efforts, we've attracted more innovative and competitive brands. Let me walk you through an example from Link Plaza Tianhe that I think really highlights our asset enhancement capabilities. Down in the basement here, we strategically downsized an anchor supermarket tenant and introduced Foodie Plus, which is Link's own food court concept, and we applied that to the freed-up space. We also took an under-utilized area and turned it into leasable space, which further maximizes the value of the property. This approach isn't unique to Tianhe, of course. In fact, we implemented a similar concept at select assets in our Mainland China portfolio.

Combined with the strategic tenant Remixing efforts, we've attracted more innovative and competitive brands.

So let me walk you through an example from link Plaza Chan her but I think really highlights our asset enhancement capabilities.

So down in the basement here, we strategically downsize then anchor supermarket tenant and introduced Foodie, plus which is linked zone food Court concept and we applied that to the freed up space. We also took an underutilized area and turned it into leasable space, which further maximizes the value of the property.

This approach isn't unique to churn her of course in fact, we implemented a similar concept at select assets in our Chinese mainland portfolio.

This included Lynx Central walk linked closely one and link pleasure Changzhou and it's proven to be really quite successful.

Duncan Owen: This included Link Central Walk, Link Plaza Liwan, and Link Plaza Tongzhou, and it's proven to be really quite successful. Now I want to move on to our international retail portfolio. In Singapore, we had near full occupancy, and very pleasingly, double-digit rental reversion. I think that demonstrates strong leasing demand from tenants, and underscores the dominant and strategic locations of our malls there. Thanks to SG60 promotions, and the rollout of government vouchers, we saw solid support for tenant sales. That said, retail sentiment is still a little cautious, and we need to monitor any signs for any slowdown in discretionary spending there. In Australia, occupancy across our retail centers remained very solid at over 98%, and the rental reversion was an extremely strong and quite impressive 16%+. Tenant sales were also up by over 15%.

Now, let me move onto our international retail portfolio.

In Singapore, we had near full occupancy and very pleasingly double digit rental reversion and I think that demonstrates strong leasing demand from tenants and underscores the dominant in strategic locations of our malls that.

Thanks to S. G 60 promotions and the Rollouts of government vouchers, we saw solid support for tenant sales.

That said retail sentiment is still a little cautious and we need to monitor any signs or any slowdown in discretionary spending that.

In Australia occupancy across our retail centers remained very solid at over 98% and the rental reversion was an extremely strong and quite impressive 16 plus percent tenant sales are also up by over 15%.

So looking ahead, we remain optimistic about the retail sector. Thanks to rising household incomes lower interest rates and improving consumer sentiment.

Duncan Owen: Looking ahead, we remain optimistic about the retail sector, thanks to rising household incomes, lower interest rates, and improving consumer sentiment. Let me just share with you now, if I may, some updates on our strategy. We've continued to actively manage and optimize the existing Link portfolio, but we're also expanding Link's real estate investment management capabilities, as you've heard, to some degree of success, as mentioned by the chairman earlier. In the first half, our focus on active management, operational efficiency, and streamlining has helped us reduce operating costs, preserve margins, and this, of course, will be a constant ongoing effort. I'm also pleased to report that we've recently completed the streamlining of our integrated facilities management, the IFM contracts, and this should yield significant savings both for now and in the long term.

Let me just share with you now if I may some updates on our strategy. We have continued to actively manage and optimize the existing link portfolio, but we're also expanding links real estate investment management capabilities and as you've heard.

To some degree of success as mentioned by the chairman earlier.

In the first half our focus on active management operational efficiency and streamlining has helped us reduce operating costs preserve margins and this of course will be a constant ongoing effort.

I'm also pleased to report that we've recently completed the streamlining of our integrated facilities management. The I F M contracts and this should yield significant savings both for now and in the long term.

We're also actively exploring new investments opportunities with a particular focus as we've mentioned before in Singapore in Australia, while we continue to look for ways to divest and recycle assets, but only where appropriate.

Duncan Owen: We're also actively exploring new investment opportunities with a particular focus, as we've mentioned before, in Singapore and Australia, where we continue to look for ways to divest and recycle assets, but only where appropriate. On the investment management front, as I said, you've heard from the chairman, Link Real Estate Investment Trust is making very solid, very pleasing progress in forming partnerships with third-party capital partners. We've already received commitments from new investors, which is extremely pleasing after a cold start 18 months ago. I'll now pass back, if I may, to George for closing remarks. George.

On the investment management front as I said, you've heard from the chairman linked real estate partners is making very solid very pleasing progress in forming partnerships with third party capital partners and we've already received commitments from new investors.

She is extremely pleasing after a cold start 18 months ago.

So I'll now pass back if I may to George for closing remarks George.

Thank you John for running through the details before Q&A I wanted to take a moment to express my heartfelt. Thanks for the trust and support that I've received over the past 16 years.

George Hongchoy: Thank you, John, for running through the details before Q&A. I want to take a moment to express my heartfelt thanks for the trust and support that I've received over the past 16 years. I'm truly grateful to our many stakeholders, colleagues, and partners. Of course, I want to especially thank so many of you here in the room today, our unit holders and research analysts, for all your ongoing support, the buy recommendations from time to time, and not too often sell recommendations. It's truly a pleasure to serve as Group CEO and have played a part in this remarkable Hong Kong success story. Over the past 20 years, Link has grown and thrived through many market cycles, overcome many challenges such as financial crisis, social unrest, and even a global pandemic. All thanks to the dedication of our team.

I'm truly grateful for to our many stakeholders and colleagues and partners and of course, I want to especially if things. So many of you here in the room today, our unit holders and research analysts.

For all your ongoing support.

The buy recommendations from time to time.

And not too often sell recommendation.

Over the.

It's truly a pressure too.

Surface Air Group CEO and have play a part in this remarkable Hong Kong success stories.

Over the past 20 years link has grown and Fry Fu many market cycles.

Overcome many challenges such as financial crisis, social unrest and even a global pandemic. So all thanks to the dedication of our team.

The success that we've achieved both financially and in terms of the impact that we have made toward our communities has always been guided by a simple vision that we launch in November 2010.

George Hongchoy: The success that we've achieved, both financially and in terms of the impact that we have made to the communities, has always been guided by a simple vision that we launched in November 2010: to be a world-class real estate investor and manager, serving and improving the lives of those around us. I want to extend my best wishes to Link and all my colleagues. Together, we have built a strong and resilient platform, and one that will be well prepared to meet any challenges that lie ahead. Thank you very much. I look forward to seeing how this truly exceptional organization will continue to evolve as I start my garden leave on 1 January 2024. Thank you.

To be a world class real estate investor manager surfing and improving the lives of those around us.

So I want to extend my best wishes to link and all my colleagues together, we have built a strong and resilient platform and one that will be well prepared to meet any challenges that lies ahead. So thank you very much I look forward to seeing how this truly exceptional organization will continue to evolve as I start my.

God in leaf and first of January.

Thank you.

Thank you George we all hoped you have on auto.

Ko Chung Eun: Thank you, George. We all hope you have all the best and happy retirement. Now it comes to Q&A sessions. For those of you here, you can raise your hands and ask questions. For those who are joining us through the webcast, you can use the Q&A function to answer your questions. Please state your name and the company that you represent. I'll count first.

All the best and happy retirement.

So now it can stay Q&A sessions for desktop Yeah, you can raise your hands and ask questions and then for those who are joining us via the webcast you can use the Q&A function to answer your questions and our please state your name and the company that you represent.

Okay, how fast.

Thank you very much shoppers of all thank you Josh awful your leadership I will Miss you and just wish you all the best.

Carl Chen: Thank you very much. First of all, thank you, George, for your leadership. We'll miss you, and just wish you all the best. This is Carl Chen from JP Morgan, and I have three questions. My first question is probably more for Duncan. As we know, we are trying to identify a new CEO, right? Just curious from your perspective, what kind of qualities or track record do you most look forward to in the new CEO? When the new CEO is on board, what kind of KPI you will give him or her? Just curious if there is any tentative timeline on when the new CEO will be on board. That's my first question on the new CEO. The second question is on the potential asset acquisition in Australia.

So this is car Chan from J P. Morgan and I have three questions. My first question is probably more for Duncan So as we know or we are trying to identify a new CEO righteousness curious from your perspective on what kind of quality is our track record of your most Ah.

Look forward to in a new CEO and then when the new CEO is on board what kind of Kpis are you will give him or her and I was just curious if theres any tentative timeline on when the new CEO will be on board. So that's my first question on the new CEO and a second question is on a potential acquisition in Australia. So just curious if you can give.

As a bit more thoughts on the process behind.

Carl Chen: Just curious if you can give us a bit more thoughts on the process behind. Number one, why are we interested in those three shopping malls in Australia? How value-accretive do you think it will be? How do we plan to fund the acquisition? Will this be a pure acquisition, or will this be part of the fund management that we have been talking about? That's my second question on the Australia potential acquisition. My third question is on Hong Kong retail sales, because if we just look at the tenant sales of the last quarter, it seems like the year-on-year decline actually widened a little bit. Just curious for, let's say, October and November so far, do we see some marginal improvement? What's our later guidance on the rental reversion for the second half of the year? Thank you very much.

Number one why are we interested in those three shopping malls in Australia, how accretive do you think it will be and how do we plan to fund the acquisition and Buddhists B, a pure acquisition or it will just be part of the fund management that we have been talking about so that's my second question on the Australia potential acquisition and my third question is on Hong Kong retail sales.

Because if we just look at the tenant sales for the last quarter or it seems like the year on year decline actually wind up a little bit. So just curious for let's say October and November so far do we see some marginal improvement and what our latest guidance on the rental reversion for the second half of the year. Thank you very much.

Thank you three questions, but three or four questions in each of the questions.

Duncan Owen: Thank you. Three questions, but three or four questions in each of the questions. Let me, I'll try and deal with point one, and I'll hand to George, but I'll give a couple of headlines on point two and three. Actually, before I hand to John, the CEO process, there's a high degree of transparency on it. It's a comprehensive search, it's an international search, and there is a process ongoing. I won't comment in too much detail, but I'll give you a little bit of guidance. We are looking for a real estate investor with a proven track record who has worked across border and in an international environment. We are looking for someone who has done that in a public as well as a private environment.

So let me I'll try and deal with 0.1, and I'll hand to George but I'll give a couple of headlines on 0.2 and three.

Before I hand to John.

C O process, there's a high degree of transparency on it is a comprehensive search.

It's an international search.

And there is a process ongoing so I won't comment too much detail, but I'll give you a little bit of guidance, we are looking for.

A real estate investor with a proven track record who has worked across border and in an international environment.

We are looking for someone who has done that in a public as well as a private environment.

And we want someone who of course will continue to uphold the brand of and the integrity of the brand and link and bring a good degree of humility to how link and its in keeping with its brand operates I think those things are given in some ways, but I think it's very important that we focus on those.

Duncan Owen: We want someone who, of course, will continue to uphold the brand and the integrity of the brand in Link and bring a good degree of humility to how Link and its, in keeping with its brand, operates. I think those things are a given in some ways, but I think it's very important that we focus on those as key criteria moving forwards. In terms of timing, it's a proper process that is taking some time. It's begun as a global search. It has gone from a long list to a long medium list to a medium medium list to a medium list to a long short list. There will be a prolonged period of time probably before we can agree terms with the final candidate.

Key criteria moving forwards.

And in terms of timing.

It's a proper process that is taking some time it began as a global search it has been gone from a long list to a long medium list to a medium medium lift to our medium lift to our long shortlist.

But there will be a prolonged period of time, probably before we can agree terms with the final candidates.

And it is likely a number of the candidates have extended notice periods because of the seniority of the existing organizations.

Duncan Owen: It is likely a number of the candidates have extended notice periods because of the seniority in their existing organizations. The part that you didn't ask that I'll add is for that reason, it's key that we put in the interim management arrangements that we did, promoting John Saunders to the board. There were two executive directors, and we have the chair's committee for oversight and support of the strategy, with a real focus on ensuring we don't take a break or a pause in execution of the strategy going forwards during that interim period. That's the real focus. In terms of the other two, I don't think we'll comment on specific acquisitions. What I think I would say is acquisitions of retail malls in Australia would be very much in line with our publicly declared strategy.

And the part that you didn't have that I'll add is for that reason, it's key that we put in the interim management arrangements that we did promoting John Saunders to the board. So there were two executive directors and we have the chess committee for oversight and support of the strategy with a real focus on ensuring we don't take.

Break or a pause in execution of the strategy going forwards during that interim period. So that's a real focus.

In terms of the other two I don't think we'll comment on specific acquisitions, but what I think I would say is.

Acquisitions of retail mouths in Australia would be very much in line with our publicly declared strategy.

John Saunders often describe this as the company's superpower and management of mouse and as I said in my part of the presentation of the starts.

Duncan Owen: John Saunders often describes this as the company's superpower in management of malls. As I said in my part of the presentation at the start, our core competence is management of retail malls in Hong Kong, the Greater Bay Area, as well as other locations in APAC, such as Australia and Singapore. It should come as no surprise to analysts or investors that we might be seeking opportunities in those markets. In terms of the third question and the headline about Hong Kong retail sales, well, the reversions have gone down 6.4% this half. The only thing I'll add, and I'll avoid stealing more of John's thunder, is there is an obvious lag effect. There is an average lease length, a normal lease length of three years in Hong Kong.

Our core competence is management of retail miles in Hong Kong, the greater Bay area as well as other locations in APAC, such as Australia, and Singapore. So it should come as no surprise to analysts or investors that we might be seeking opportunities in those markets.

In terms of the third question on the headline about Hong Kong retail sales.

Well the reversion has gone down six 4% this half.

The only thing I'll add.

On avoid stealing more of John's Thunder is there is an obvious lag effect. There was an average lease length of normal lease length of three years in Hong Kong.

If a property was less three years ago at the market rent with the basketball and the world most of those market rents are lower today and when those leases renew there will be at the market rent, which will be lower so although we are genuinely seeing increased footfall.

Duncan Owen: If a property was let three years ago at the market rent with the best will in the world, most of those market rents are lower today. When those leases renew, they'll be at the market rent, which will be lower. Although we are genuinely seeing increased footfall, all sorts of positive signs of recovery, the real world may be recovering positively, but the impact on our numbers and seeing it come through in the numbers will have a time lag. John.

All sorts of positive signs of recovery.

The real world may be recovering positively, but the impact on our numbers and seeing it come through the numbers, we'll have a time lag.

John.

Yeah sure. So specifically on the Australia thing I think we've said for quite some time.

John Saunders: Yeah, sure. Specifically on the Australia thing, I think we've said for quite some time that we are interested in doing more Australia. Clearly, the Australia portfolio, the existing portfolio, is treating us very well. I think the retail is very much center and core to what we do. This is not at all opportunistic. It's very much strategic in nature, and it's an extremely good fit, I think, with what we already have down there as a portfolio and what we're very comfortable managing and operating. There was a question about funding, etc. We have plenty of capacity on the balance sheet to fund a transaction like that. I think that allows us to bring to bear a fast liquidity solution for that particular situation. I think they're good assets. I think we can do more with them.

But we are interested in doing more Australia, clearly the Australia portfolio as existing portfolio is treating us very well.

The retail is very much central and core to what we do so this is not it's all opportunistic it's very much strategic.

In nature.

And it's extremely good fits I think with what we already have done there is a portfolio and what we're very comfortable managing and operating.

There was a question about our you know funding et cetera, we have plenty of capacity on the balance sheet too.

To fund the transaction like that and I think that allows us to bring to bear a.

Fast liquidity solution for.

So that particular situation so I.

I think we that you know that that they're good assets. So I think we can do more with them.

And and we'll we'll see what happens as we go from here.

John Saunders: We'll see what happens as we go from here.

Cindy.

Ko Chung Eun: Thank you. This is Cindy from Citi. I also have three questions. The first one, I want to follow up on your Link real estate partners. Just now we mentioned there has been some initial success and commitment. Can you walk us through the current structure of the third-party capital with you? Is there any target for AUM? How should we think about your pace, say, in three years or five years? What will it be? In terms of the potential investment target for the real estate platform, is it similarly with priority for Australia, followed by Singapore? Any difference with your own platform? This is the first question. The second question, I want to touch a little bit on your own portfolio reconstruction. Just now we heard you want to increase your Australia portfolio.

Thank you this is simply from Citi.

Oh, that's great questions. The first one.

No.

So just now we mentioned.

Your success and commitment so can you walk us through the current structure of the third party capital with you and pocket.

And how should we think about your pay.

Yes, yes.

Will there be any potential.

Investment targets.

Similarly, with our priority Australia, Singapore.

The difference with your own.

This is my first question.

And the second question I want to.

You touched a little bit on your own portfolio reconstruction. So just now you want to increase your Australia pathetic.

Say, a target of increasing Australia portfolio, what percentage I would think the overall portfolio and it is fair to say that you are thinking and it's getting.

Ko Chung Eun: Is there, say, a target of increasing Australia portfolio to what percentage within the overall portfolio? Is it fair to say that you are thinking it's getting more confident and interested to buy in today than, say, three months or six months ago? Why are you getting a little bit more interested? In terms of, say, divestment, is there any asset within your portfolio that you think can be well interested to sell it and recycle capital? The third question is actually on your cost control initiatives. We heard a lot of good news that you just shared on cost controls, but that has yet to reflect in the financial result. If I hear correctly, I think KS mentioned that it could worsen in the second half before things getting better.

We're confident that interesting to buy them.

Than say three months six months, if at all and why are you getting a little bit more infill sites and in himself.

Last month is there.

Yeah.

It can be well interested to sell it and recycle capital.

Hum.

Actually on your cost control initiatives. So we hired a lot of good news that you just shared on cost controls, but that have yet to reflect the financial results.

Quickly I think he has mentioned that equal Boston in the second half.

Things getting better therapies.

How coast country.

Ko Chung Eun: Can you share with us a little bit on how cost control has been doing? How would it affect our overall performance? When it stabilizes, what type of margin levels are we targeting at? Thank you.

How would it affect our overall performance and when it's stabilized what type of margin levels.

Thank you.

Thank you.

Ill give some headline answers again, particularly around question one and.

Duncan Owen: Thank you. I'll give some headline answers again, particularly around question one. Questions two, I'll pass to John and then to KS respectively for question three. First of all, the overriding principles of the strategy for third party or for balance sheet is to buy the right assets that enhance returns and the quality of earnings for the group, and the unit holders of the group. We do not have a fixed AUM target. The target is to buy the right assets on balance sheet, and to buy the right assets in partnership where we're co-investing to get the right returns from the assets. There will naturally be some management enhancing, and there may well be some management fees that come with managing other partners' money alongside ours, which is aligned and is long-term.

Questions two I'll pass to John and then to chaos respects of lift question three.

First of all the overriding principles of the strategy for third party of our balance sheet at the by the right assets. The enhanced returns on the quality of earnings for the group and the unit holders of the group.

We do not have a fixed AUM targets.

The target is to buy the right and the right assets on balance sheet and to buy the right assets in partnership where we're co investing to get the right returns from the assets there will naturally be some management enhancing and they may well be some management fees that come with managing other partners money alongside <unk>.

Ours, which is aligned and these long term.

But we're essentially a REIT that is looking first and foremost to maximize the value of its capital invested by its balance sheet.

Duncan Owen: We're essentially a REIT that is looking first and foremost to maximize the value of its capital invested by its balance sheet. In terms of the target returns, I think this is relevant. It's self-evident that the balance sheet returns have tended to be high single-digit. Where we allocate 10% or 20% of the balance sheet towards the funds business or special situations, we would reasonably expect those returns to be higher and to be more enhancing to provide diversification. You could look at a value-add style type of return that would be 15% plus. In terms of, I think the second question, which was very much focused, I think I've got some detailed notes here on timing, and then we moved on to a degree to recycling.

In terms of the target returns I think this is relevant.

It self have is self evident that the balance sheet returns have tended to be high single digit.

Where we allocate 10 or 20% of the balance sheet towards funds business or special situations. We would reasonably expect those returns to be higher and to be more enhancing to provide diversification. So you could look at a value add style Rita.

Type of return that would be 15% plus.

In terms of I think the second question.

Which was very much focused I think I've got some detailed notes here.

On timing and then we moved on to a degree to recycling, yes, we'll always look to recycle, but what we would not want to do was hold onto assets.

Duncan Owen: Yes, we'll always look to recycle, but what we would not want to do was hold on to assets, follow the market down, and sell at the bottom of the market, especially where there are assets that we have conviction on. I think there may, however, be some non-core assets that do not fit the criteria I have said in the past that might not be retail malls and might not be in the obvious target geographies that are obviously adjacent to us, and we know and can operate in. You could pick any number of offices, as an example, in the UK or warehousing in the mainland. In terms of the cost control, before I hand to John on question two, this year has a lot of noise in the cost control because when you make cost controls with targets, there are some exceptional items that go with that.

Follow the market down and sell at the bottom of the market, especially where they're assets that we have conviction on.

So I think I think there may however, be some noncore assets that don't fit the criteria I've said in the past that might not be retail mouse and might not be in the obvious target geographies that are obviously adjacent to us and we know and can operate in so you could pick any number of offices.

An example in the U K or warehousing in the mainland.

In terms of the cost control before Hunter, John one question too.

This year has a lot of noise and the cost control because when you make cost controls. We've targets. There are some exceptional items that go with that.

So again the benefits will come through in the full annualized if you like normalized cost controls that we would be making there are some one offs. This year, but essentially the current annualized savings for the running and operating costs are a little bit in excess of 200 million Hong Kong dollars.

Duncan Owen: Again, the benefits will come through in the full annualized, if you like, normalized cost controls that we would be making. There are some one-offs this year, but essentially the current annualized savings for the running and operating costs are a little bit in excess of HKD 200 million. John.

Sean.

Yeah, certainly so I'm, just adding a little to the third party side and oversee its private capital for a reason with losing the name, but what I can say is that the clients who trusted us as fiduciaries to manage capital on their behalf. So far they are all very well known.

John Saunders: Yeah, certainly. Just adding a little to the third-party side. Obviously, it's private capital for a reason. The clue's in the name. What I can say is that the clients who've trusted us as fiduciaries to manage capital on their behalf so far are all very well-known names and are all institutional capital. I think the chairman said it very well when he said we don't have a specific target per se, but I think our style has been to do things and then tell you that we've done them rather than perhaps tell you that we're going to do lots of things, and it takes some time. I detected a couple of slightly widened eyes that after 18 months, we do have a billion effectively under management, and I'd expect that to grow. We'll continue to give you updates as time goes by.

Names and are all institutional capital and I think the chairman said it very well when he said we don't have a specific target per se, but I think our style has been to do things and then tell you that we've done them rather than perhaps tell you that we're going to do lots of things and it takes some time so I detected.

Couple of slightly widened eyes that after 18 months you know, we do have 1 billion effectively under management and I'd expect that to grow and we'll continue to give you updates as.

Time goes by.

Why Australia I think is a number of reasons why Australia or more of the retail sector in more detail I mean, Australia as I said before it's it's doing very well in terms of the existing portfolio. So I think it shows that where you have a high quality center and new match our capabilities to it we can produce outsized returns.

John Saunders: Why Australia, I think, is a number of reasons why Australia and why the retail sector in more detail. I mean, Australia, as I said before, it's doing us very well in terms of the existing portfolio. I think it shows that where you have a high-quality center and you match our capabilities to it, we can produce outsized returns and accrete earnings for the DPU. It's helpful, of course, that Australia has some fantastic demographics behind it, and that affects all areas of society, including property. It's particularly powerful for retail and retail catchment. That's fundamentally, I think, a lot of what's driving it. I think it makes for very good use of the balance sheet because we are clearly able to invest at rates which significantly beat our cost of capital.

And you know accrete.

Earnings for the GPU.

It is helpful of course that Australia has some fantastic demographics behind it and that affects all areas of society, including our property, but it's particularly powerful for retail and retail catchment. So that's fundamentally I think a lot of what's driving it.

And I think it makes.

It makes it will get very good use of the balance sheet, because we are clearly able to.

Investor rates, which significantly beat our cost of capital.

Okay, Yes.

I think on the point that Chad articulated on cost savings.

Duncan Owen: Go ahead, KS.

[Analyst] (Citi): I think on the point that Chair articulated on cost savings, I think if you look at the business, there's probably about, from the revenue line down, 10% of revenue that is controllable. Whether it's staff cost at the property level or staff cost outside the property level at the regional centers, I think where we have come in the first round is that with some of the staff headcount optimization or restructuring, there will be one-off separation costs. No different from a lot of companies as they go through restructuring, of course. This year, we will see a bit more digging in as, I guess, the senior departures or some of these departures will come in the second half of the year.

I think if you look at the business, there's probably about.

From the revenue line down 10% of revenue that is controllable.

Whether its staff cost at the property level, our staff costs outside of property level at the regional centers.

And I think where we have come in the first round is dead.

With some of the.

Staff head count optimization or restructuring there will be one of separation costs.

No different from a lot of companies as they go through structural restructuring of course.

And this year, we'll see a bit more.

Kicking in as well.

I guess, a senior departures all sounded departures will come in the second half of the year.

And then like what chairman has said on a structured basis.

[Analyst] (Citi): Like what Chairman has said, on a structured basis into the next financial year, the aim is to shoot for about HKD 200 million of savings every year. Thank you.

Into the next financial the aim is to shoot for about 200 over a million of them savings every year.

Thank you.

Okay.

Okay.

Ko Chung Eun: Okay. Carl?

Hi, Karl Choi from Bank of America, three quick questions first on the third party capital question just want to find out if they are.

Duncan Owen: Hi, Carl Choi from Bank of America. Three quick questions. First, on the third-party capital question, just want to find out if there are any limitations to the capital that you have raised in terms of, for example, geographies where you can make the investment. Going forward, is there any guiding principle between acquisitions that you've been making based on your own balance sheets and where you would be tapping third-party capital to make those acquisitions? Second question is, any more color on Mainland China, especially Zhongguancun Mall? Looks like the negative rental reversion was quite severe in the first half because it dragged down the whole portfolio. Should we see some stabilization, half and half? The third question is regarding a quick one, housekeeping, is regarding the headcount-related reduction charges. Should I clarify that you'll be making your digital income after absorbing those charges?

Any limitations to the capital that you have raised in terms of for example, geographies, where you can make the investment and going forward. How should is there any guiding principle between acquisitions that you've been making or based on your own balance sheet in a.

Were you be tapping third party capital to make those acquisitions and second question is there any more color on mainland China, especially quantifying more looks like the negative rental reversion was quite severe in the first half because it drag down the whole portfolio.

Should we see some stabilization in half and half and the third question is regarding a quick one housekeeping is a regarding the head count related.

Reduction.

Charges should I clarified that that you'd be making additional income after absorbing those charges. So you won't be isolating them out separately.

Duncan Owen: You won't be isolating them out separately. Thanks. Thank you. Again, I'm going to hand over to my colleagues. In very simple terms, where we're working with third parties in partnership or in a fund structure, yes, the returns are higher. There's typically value-add style returns, and yes, the strategies are relatively unencumbered, albeit they would be very focused in the region of APAC. The geographies could be wider, the sectors could be wider, as opposed to the balance sheets where there's a big focus on the particular four APAC markets I've mentioned, retail malls, and our super strength. In terms of the reversion, I'll hand to John on this point. I think the key factor for all of the reversions, whether they're upwards or downwards, whether they're Beijing malls in the mainland or elsewhere, is there's always a lag indicator.

Thank you again I'm going to hand over to my colleagues, but in very simple terms, where we're working with third parties in partnership or in a fund structure.

Yes. The returns are higher there's typically valuate style returns.

And yes, the strategies are relatively unencumbered, albeit they would be very focused in the region of APAC also the geographies could be wider sectors could be wider.

As opposed to balance sheets, where there's a big focus.

On the particular for APAC markets, I've mentioned and retail miles on our Super strength.

And in terms of.

The reversion I'll I'll I'll hand to John on this this point, but I think the.

The key for.

Factor for all of the reversion, whether theyre upwards or downwards wherever that Beijing mouse and the mainland or elsewhere is there's always a lag indicator to what's happening on the ground is always ahead of what you see in the financial numbers that come through because of that lag effect and I think it's really important to note that as you do your <unk>.

Duncan Owen: What's happening on the ground is always ahead of what you see in the financial numbers that come through because of that lag effect. I think it's really important to note that as you do your modeling for the numbers, etc. John.

Modeling for the numbers et cetera.

John.

Yeah and.

So on the third party capital side versus the balance sheets I think the balance sheets is very clear.

John Saunders: Yeah. On the third-party capital side versus the balance sheet, I think the balance sheet is very clear. It continues to be very committed to Hong Kong and the Greater China area, the Greater Bay Area particularly. It's also very much a retail and, to some degree, an office-focused business. It's fundamentally outside of Greater China. It's focused on Australia and Singapore. That takes care of the balance sheet. In some respects, that's relatively straightforward. Again, as you can see from some of the results, when you get the right assets with the right operational management, you can produce very good returns from those. The fund, or the fund, the third-party business, the capital business, that is capable of operating on a wider scope, taking in some other jurisdictions and investment classes. It has a wider remit.

It continues to be very committed to our Hong Kong and.

You know the.

Greater China area, the greater Bay area, particularly.

It's also a very much a retail and to some degree in office focused business and its fundamentally outside of the.

Greater China is focused on Australia.

Australia.

And Singapore, so that takes care of the balance sheet in some respects that's relatively straightforward.

But again as you can see from some of the results when you get the right assets with the right operational management you can produce very good returns from those the fund or the fund the third party business the capital business.

That is.

Capable of operating on a on a wider scope taking in some other.

Jurisdictions and investment classes.

So it has a it has a wider remit, but having said that it's still fundamentally operating.

John Saunders: Having said that, it's still fundamentally operating in the same developed Asian markets. I think that probably covers the third-party capital side. In Zhongguancun and the sort of reversions, generally speaking, in China, I think in that asset particularly, there were some challenges. There was a new mall that was down the road that came into existence. We had some weaknesses in occupancy, which is highly unusual for us because normally we pride ourselves on having very full buildings, as you can see from the results. We had to deal with that. In order to deal with that, that meant that there were steeper than normal reversions because suddenly we were competing, as I say, with a new offering. They've increased occupancy there, or we've done lettings for around 35% plus of the building overall.

In the same developed Asian markets.

So I think that probably covers the third party capital side.

In junction and the sort of reversion is generally speaking in China.

I think in in that asset, particularly there were some challenges there was a new mall that was down the road.

That that came into existence. So we.

Had some.

You know weaknesses in occupancy, which is highly unusual for.

For us because normally we pride ourselves on having very full buildings as you can see from the results.

We had to deal with that and in order to deal with that that meant that there was steeper than normal reversion because suddenly we were competing as I say with a with a new offering but they've increased occupancy there. We've we've done lettings for around about 35 plus percent of the building overall so.

I I don't want to be too confident in predicting but I do feel that.

John Saunders: I don't want to be too confident in predicting, but I do feel that that is largely shored up. Could there be some more weakness that comes from the general market? Yes, potentially. I think we're now on a level playing field in terms of that asset. By the way, that asset is a perfectly good asset. It just suddenly faced some competition, and we've dealt with that. As I said earlier, when you take out the impact of that particular property from the overall results in China, what's very encouraging is that we actually saw growth in reversions in China overall. I think with some cautiousness going forward, I think it's not a bad picture.

That that is largely shored up and could there be some more weakness that comes from the general markets, yes, potentially but I think we're now on a level playing field in terms of that asset and by the way that asset is a very good asset. It just suddenly faced some competition and we dealt with that and.

As I say when as I said earlier when you take out the impact of that particular property from the overall results in China.

What's very encouraging is that we actually saw growth.

In revisions in China overall, so I think it's a it's we.

With some cautiousness going forward I think it's a it's not a bad picture.

On the headcount reduction I guess.

[Analyst] (Citi): On the headcount reduction, I guess the way it's done is between a redundancy or retirement, there are statutory as well as contractual payments that we are obligated to fulfill. The accounting treatment is such that the expense of these payments needs to be all front-loaded to the last day of the employment. That's why I say a lot of this will then be surfacing as we cross into the end of the financial year, into the new year. I guess when the exercise was conducted in the first half and the execution of this stuff is being done within this period, quite a fair bit of this one-off will then be expensed into the second half of the financial year.

The way it's done is between a redundancy or retirement there are statutory as far as contracture payments that we are obligated to fulfill.

Ended accounting treatment is such that the expense of these payments needs to be all front loaded to the last day of the employment. So that's why I say a lot of this will then be surfacing as we cross into the end of the financial year into the new year and I guess when the exercise was conducted in the first half and to execute.

None of this stuff is being done with not dispute at all quite a fair bit of this one awkward NB expense.

Expense into the second half of the financial year.

Mac.

Ko Chung Eun: Mark?

Yeah.

Thank you management. This is Mac lung from UBS I got about three questions. I think the first one is regarding on the retail sales on the ground I think in first half hour tenants have us mainly dragged by the general retail, which Nick immensely underperformed the overall Hong Kong market, just wanted to share what kind of category.

George Hongchoy: Thank you, management. This is Mark Leung from UBS. I got about three questions. I think the first one is regarding the retail sales on the ground. I think in the first half, our attendance was mainly dragged by the general retail, which significantly underperformed the overall Hong Kong market. Just want to share what kind of category we underperform. You also mentioned about the e-commerce penetration. That's linked to the second question. I think in last week, one of the local e-commerce operators said they want to eliminate the brick-and-mortar retails in Hong Kong. Just want to see your view and what's our strategy in defending our position for the local neighborhood mall in regard to the e-commerce threat. Number three is regarding the occupancy cost ratio. I think currently it's about 13%.

We underperformed and you also mentioned a buster ecommerce penetration. So that's linked to the second question because I think in last week, one of the low coal.

Commerce, operator, they said they want to eliminate their brick and mortar retails in Hong Kong. So we just want to see all of you and what's our strategy in defending our position for the local neighborhood more in regard on an ecommerce fret number fees regarding on the occupancy cost ratio I think currency is about 10%.

But if you look on the right are bought across teamster attendance margin squeezing and also maybe some of the supermarkets are cutting our price do you think that the occupancy occupancy cost ratio mainly to further trend down in the future in order to in order to retain that talent.

George Hongchoy: If you look on the wide-out board across, it seems the attendance margin is squeezing, and also maybe some of the supermarkets are cutting the price. Do you think that the occupancy cost ratio may need to further trend down in the future in order to retain the talent? If that's the case, what is the sustainable level? Last but not least, it's about the Hong Kong car park. We have a slight decline in the car park. Just want to check with management what is our future growth outlook for the Hong Kong car park, because since the number of cars continued to not rebound despite the population increase. Thank you.

Is the case what is the sustainable level last but not least is our pasta Hong Kong car Park, we have a slight decline in a car park just wanted to check with management. All this our future growth outlook for the Hong Kong pocket because since the number of cars continue to.

Did not report despite the population.

Thank you.

Thank you I think most of these are for John.

Duncan Owen: Thank you. I think most of these are for John. Just to recap, I think there's a retail drag impact is the question. The occupancy costs, of which I'll just reiterate what's been said before, in that we've focused on a strategy to maintain high levels of occupancy rather than to hold out for less dollar in rent. That's because it positions the company better for a recovery in rent out of the bottom of the cycle when there's high occupancy. I think your third question is related to that because it's about occupancy costs. I think there is a fourth question, which is about car parking, which may be a fourth that KS may want to comment on. If I can hand to John now on the retail drag.

But just to recap I think it was a retail drag impact there's no question the occupancy costs.

Of which I'll just reiterate what's been said before and that we've focused on our strategy to maintain high levels of occupancy.

Rather than to hold out for last last dollar in rents and that's because it positions the company better for a recovery in rents out of out of the bottom of the cycle when there's high occupancy.

I think.

Your third question is related to that because it's about occupancy costs.

And I think there was a fourth question, which is about car parking.

Which may maybe a fourth the chaos may want to comment on but if I can hand to Jon now.

On the retail drug.

Yeah sure. So you know.

Yes.

John Saunders: Yeah, sure. Yes, I guess when you look at the Hong Kong retail sales, the first thing to say is that it's encouraging. When we were speaking a few months ago, obviously, we had a few data points. I suppose we were all hoping that a few data points might become a few more, and that we might be okay to start calling it a trend. Obviously, those figures capture luxury. Particularly, they capture gold and jewelry. There was also the impact of the latest sort of iPhone offerings, whatever number we've got up to next. No doubt my children will tell me on their Christmas list. We don't really have much exposure to that. I think that's why our figures lag a little just in a pure number sense.

I guess when you look at the Hong Kong retail sales. The first thing to say is that its encouraging.

When we were speaking a few months ago, obviously, we had a few data points and I suppose we were all hoping that a few data points might become a few more and that we might be okay to start calling it a trend.

But obviously those figures capture.

Luxury and particularly they capture.

Golden jewelry.

And there was also the impact of the latest set of iPhone offerings, whatever number we got up to next node that my children will tell me on my Christmas list.

And we don't really have much.

Exposure to that so I think that's that's why our figures lag a little just in a pure number sense, but I think the positive to take away from this is not per se the non discretionary lag slightly but more that this trend of of retail sales data points does start to resemble a trend.

John Saunders: I think the positive to take away from this is not per se the non-discretionary lag slightly, but more that this trend of retail sales data points does start to resemble a trend as opposed to an individual set. I'm not going to make any forward predictions, but let's all hope that that continues because that will be good for us. It will be good for Hong Kong. I suppose e-commerce, yes, you get individual data points or individual announcements. I mean, e-commerce is something that's been on our radar for a very, very long time. It's not something we've suddenly started reacting to because of one particular retailer saying they're getting out of bricks and mortar.

And as opposed to an individual set so I'm not going to make any forward predictions, but let's all hope that that continues because that will be good for us it will be good for Hong Kong.

Ah I suppose ecommerce, yes, you get a individual data points or individual.

Announcements, but I mean e-commerce is something that's been on our radar for a very very long time, it's not something we suddenly started reacting to.

Because of one particular reseller, saying theyre getting out of bricks and mortar and I guess balanced against that there have also been lots of reports out so much in Hong Kong in the near term, but there've been lots of reports of retailers, saying actually we realize we need to have a combination of physical and online.

John Saunders: I guess balanced against that, there have also been lots of reports, not so much in Hong Kong in the near term, but there've been lots of reports of retailers saying, actually, we realize we need to have a combination of physical and online. As I say, it's something we've been reacting to for quite some time, which is why you see the constant evolution of our portfolio to deal with that. Whether it be the fact that on the plus side, when people come and do collections, they may be actually coming into the mall to do collections. How do we activate those people into doing a collection plus maybe staying a little longer and frequenting some of our tenant shops? It's not all a one-way street, but it's something we're hyper-vigilant on, and we've been working on for quite some time.

But as I say, it's something we've been reacting to for quite some time, which is why you see the constant evolution.

Of our portfolio.

To deal with that whether it be the fact that on the plus side when people come in to.

Collections.

They may be actually coming into the mall to do collection. So how do we activate those people into doing a collection plus may be staying a little longer and frequenting some of our some of our tenants shop. So it's not all one way streets, but its something were hypervigilant on them, we've been working on for quite some time.

On the occupancy cost stuff side, you know I think our occupancy costs are.

John Saunders: On the occupancy cost side, I think our occupancy costs are very good, around 13%. It is something that the team, Emmanuel, the team, they focus on constantly. The level of detail that they go into, and the level of partnership that they have with our tenants in respect of things like this, is phenomenal. Yes, there are still some headwinds out there in terms of minimum wage and other things. I would say, again, I think we feel fairly confident that a number around 13% is a good result. I think we feel fairly confident that we should be able to keep that number roughly where it is. In terms of car parks, I think you have seen declining or you have seen a reduction in the number of car registrations in Hong Kong.

Very very good and I ran about 13%.

But again, it's something that the team Emmanuel.

The team they focus on constantly and the level of detail that they go into and the level of partnership that they have with our tenants in respect of things like this phenomenon.

And yes, there are still some headwinds out there in terms of minimum wage and other things, but I would say again I.

I think we feel fairly confident that are you.

You know a number of around 13% is a good result, and I think we feel fairly confident that.

We should be able to.

Keep that number roughly.

Where it is.

In terms of car parks.

I think you.

You have seen declining we have seen a reduction in the number of car registrations in Hong Kong I think that reduction.

It has flattened out.

John Saunders: I think that reduction has flattened out to some degree. Yes, we've seen a reduction in the number of ticket sales, but we've also seen some of that reduction added back in terms of the fact that we were able to push through some higher pricing, partly in terms of the fixed-term contracts, the monthlies, and the longer terms, but also through the dynamic pricing that we've put into the malls as well. I think if you, again, not looking to give you any sort of full forecast, but more if you look back at the history of this business, it is broadly a relatively flattish business. I don't think you expect to see there being big negatives, and I don't think you expect equally there to be big positives.

To some degree.

And yes, we've seen a reduction in the number of ticket sales, but we've also seen some of that reduction added back in terms of the fact that we were able to push through some higher pricing partly in terms of the fixed term.

Contracts that the month is and the longer terms, but also through the dynamic pricing that we've put into the malls as well, but I think if you again not not looking to give you any sort of full forecast, but more if you look back at the history of this business. It is broadly a relatively flattish business.

I don't think you expect to see that being a big.

Negatives and I don't think you expect equally there to be big positive. So it's a good.

Stabilizing income and cash flow that doesn't awful lot of the heavy lifting without taking much glamour when it comes to.

John Saunders: It's a good stabilizing income and cash flow that does an awful lot of the heavy lifting without taking much glamour when it comes to having a resilient DPU.

Having a resilient D P.

Oh, it will I forget the other questions maybe I'll, let's ask less answered one question from the webcast. So and asked the question is from personal a M. What will be the company's funding plan for the potential upsell.

Ko Chung Eun: Before I take another question, maybe let's answer one question from the webcast. There's a question from Principal Asset Management. What will be the company's funding plan for the potential Australian malls acquisition? Will it be through equity, debt, or recycling some of the capital? Thank you.

Australian malls acquisition web Israel equity that are thing recycling some of that capital. Thank you Kash.

Duncan Owen: KS?

So what you have read in the media I think there is some element of truth that we are looking at it.

[Analyst] (Citi): What you have read in the media, I think there's some element of truth that we are looking at it. From where we are in terms of gearing at 22% to 23%, I think we have the capacity to buy this and put this on balance sheet using our debt headroom. At the same time, I think there's no deal certainty at this stage, but we have already prepared pre-financing for the next financial year. We have available liquidity if we need to act fast. I think that's where we are at this stage of the game.

From where we are in terms of gearing at 22, 23% I think we have the capacity to.

Biodiesel and put it on balance sheet using our <unk>.

Debt headroom.

But at the same time.

I think there's no deal certainty at this stage, but we have already prepared refinancing for the next financial year with available liquidity, we need to act fast. So I think that's where we are at this stage of the game.

Okay.

Yeah.

Ko Chung Eun: Can this one?

Simon Cheung from Goldman Sachs I, just follow up on the retail questions.

George Hongchoy: Simon Chong from Goldman Sachs. Just follow up on the retail questions. John, you mentioned that you have seen some improvement of green shoots across your different malls. Is there anything that you can call out? Secondly, I think on your point about lagging, rent being lagging the retail sales performance, can you give us a sense how long the lagging typically will be? We understand that it's a three-year cycle, but if you can share with us some color, that would be helpful. Also on the costs, this year, I think the annualized cost saving is HKD 200 million. Whether you have any maybe longer-term target for the cost saving? Thank you.

John You mentioned that you have seen some improvement or green suits across yield even more is there anything that you can call out and secondly, I think on your point about lagging rent being lagging the retail sales perform in.

Can you give us a sense how long the lagging typical rupee, we understand there is a three year cycle, but you know if you can share with us some color there that would be helpful. And then and also on the part D. C. I think the annualized cost savings to $100 million, whether you have any maybe longer term target for the cost savings. Thank you.

Yeah look I'd say the the the bright spots the things that are encouraging in our supermarkets in and F&B.

Duncan Owen: Yeah, look, I'd say the bright spots, the things that are encouraging are supermarkets and F&B, which have both been sectors that have had some challenging times over the last few years. Seeing those actually sort of flatten out and even show, in the supermarket sense, a little bit of growth, I think, is really encouraging. At the end of the day, I think the simple thing to always remember is that, very roughly, we work on a three-year leasing cycle. We're dealing in 1/3, or 1/3, or 1/3. That should give you good clues as to how to deal with the reversionary lag. We've been very defensive in nature during the difficult times. We will have recovery, but it takes time to wash through all of those leases. Again, it comes back to the point about retail sales hopefully becoming a continuing trend.

Which have both been sectors that you now have.

<unk> has had some challenging times.

Over the last few years, so seeing those actually sort of flatten out and even show in the supermarket sense, a little bit of growth I think is really encouraging and at the end of the day I think the best the simple thing to always remember is that very roughly we work on a three year leasing cycle. So we.

Dealing in third a third a third and that should give you good clues as to how to deal with the reversion we lag.

You know, where we are defense, we've been very defensive in nature during the difficult times and you know we will have recovery, but it takes it takes.

You know time to wash through all of those leases. So again it comes back to the point about retail sales hopefully, becoming a continuing trend.

You can't do anything about the maths. It is a third a third a third what will change the trajectory and I cant predict it is how much growth you continue to get in the overall retail sales does it accelerate does it stay the same does it taper off the bigger the gross the quicker you get out of your you know the tail end of your reversion relax.

Duncan Owen: You can't do anything about the maths. It is a 1/3 or 1/3 or 1/3. What will change the trajectory, and I can't predict it, is how much growth you continue to get in the overall retail sales. Does it accelerate? Does it stay the same? Does it taper off? The bigger the growth, the quicker you get out of the tail end of your reversionary lag cycle. I think you know how to calculate that cleverer than I do.

Cycle.

But I think you know how to calculate that clever on an idea.

I think just on the cost saving point, it's worth just mentioning there were two elements.

George Hongchoy: I think just on the cost saving point, it's worth just mentioning there are two elements. One is cost savings, and the annualized figure that we've mentioned, which is often infrastructure headcount related. The other is working more efficiently. Whilst we don't have hard costs for further savings next year, we do have aspirations to increase productivity through use of technology, adaption of AI, etc., to increase productivity, which has a net positive impact on reducing costs as a percentage.

One is cost savings and the annualized figure that we've mentioned, which is often infrastructure head count related.

The other is working more efficiently and whilst we don't have hard costs and further savings next year, we do have aspirations to increase productivity through use of technology adoption of AI et cetera to increase productivity, which has a net positive impact on reducing costs as a percentage.

Any other questions from the phone.

Ko Chung Eun: Any other questions from the floor? I think we come to the end of the briefing today. Thanks for coming. Thank you. Bye-bye.

Okay.

Well I think we come to the end of the breathing today, Thanks, Scott coming thank you.

Thank you. Thank you.

Yeah.

John Saunders: Thank you.

Duncan Owen: Thank you.

Good afternoon, ladies and gentlemen, welcome to our lengthy wait till Q five clarity sake interim results presentations now understates, what half hour chat. Thank Mr. Duncan O N and Allografts C O Judge Hong Chi.

Ko Chung Eun: Good afternoon, ladies and gentlemen. Welcome to our Link Real Estate Investment Trust 2025-2026 Interim Results Presentations. Now on the stage, we have our Chair, Duncan Owen, our Group CEO, George Hongchoy, our CFO, Ko Chung Eun, and our Group CIO, John Saunders. On the screen, you can see our agenda today. Without further ado, let me hand the floor over to Duncan. Thank you.

Our Seth I'll caution.

And our website I owe John Sean deaths. So on the screen you can see our agenda today and without that idea, let me hand, the floor to Duncan. Thank you.

Thank you. Thank you good afternoon, ladies and gentlemen, and welcome to the 2025 2026 interim results presentation for link REIT.

Duncan Owen: Thank you. Thank you. Good afternoon, ladies and gentlemen, and welcome to the 2025-2026 Interim Results Presentation for Link Real Estate Investment Trust. As today's meeting is being webcast live, I also extend a warm welcome to those joining us online. It's my pleasure to open the proceedings, and I will provide a few brief remarks now. With regards to the interim results period, despite a range of macroeconomic and market challenges, Link has continued to deliver resilient results during the first half of this year. We saw a modest decline of 3.4% in net property income compared with the same period last year. This is mainly due to market challenges in Hong Kong and the Chinese mainland. Our distributable amounts and distribution per unit are down 5.6% and 5.9%, respectively, compared with the first half of last year.

As today's meeting is being webcast live I also extend a warm welcome to those joining us online.

It's my pleasure to open proceedings, and I will provide a few brief remarks now.

With regards to interim results period, despite a range of macroeconomic and market challenges link has continued to deliver resilient results. During the first half of this year.

We saw a modest decline of three 4% and that protein income compared with the same period last year. This is mainly due to market challenges in Hong Kong in the Chinese mainland.

Our distributable amounts and distribution per units are down 5.6, and five 9%, respectively compared with the first half of last year.

Before inviting our management team to run through the details I want to start with an overview of how global trends are shaping our business and the execution of our strategy.

Duncan Owen: Before inviting our management team to run through the details, I want to start with an overview of how global trends are shaping our business and the execution of our strategy. While capital markets continue to rally on the back of optimism about AI, and interest rates look to be trending downwards, the global business landscape remains as complex as ever. Wars, geopolitical tensions, and shifting trade dynamics continue to create uncertainty. The recent shifts in US policy are leading to fundamental structural changes in how investors view the world, which will continue to take shape over the months and years ahead. Whilst we're starting to see some encouraging signs of stabilization in terms of the environment, our business, many of our tenants are still suffering from a prolonged period of challenge, particularly in Hong Kong.

While capital markets continue to rally on the back of optimism about AI and interest rates look to be trending downwards. The global business landscape remains as complex as ever.

Wars geopolitical tensions and shifting trade dynamics continue to create uncertainty.

The recent shifts in U S policy are leading to fundamental structural changes in how investors view the world, which will continue to take shape over the months and years ahead.

Whilst we're starting to see some encouraging signs of stabilization in terms of the environment.

Our business <unk>.

Many of our tenants are still suffering from a prolonged period of challenge, particularly in Hong Kong.

Therefore, it will take time before the improvement in consumer sentiment translate into higher rental income for link.

Duncan Owen: Therefore, it will take time before the improvement in consumer sentiment translates into higher rental income for Link. In anticipation of these challenges, at the beginning of this calendar year, we launched a wide-ranging operational efficiency drive and have already made significant progress in reducing costs. On an annualized basis, we're on course to make savings of more than HKD 200 million to our ongoing people, and general and administrative costs. These efforts, together with our ongoing asset enhancement, are all part of our commitment to protect unit holder returns in future. Regarding strategy, Link's primary current strength is still owning and managing shopping centres in Hong Kong, the Greater Bay Area, and other locations in APAC, such as Australia and Singapore. We are continuing to focus on this strength.

In anticipation of these challenges ahead at the beginning of the year of this calendar year, we launched a wide ranging operational efficiency drive and have already made significant progress in reducing costs.

On an annualized basis, we're on course to make savings of more than $200 million Hong Kong dollars to our ongoing people in general and administrative costs.

These efforts together of ongoing asset enhancements are all part of our commitment to protect unitholder returns in future.

Regarding strategy linked primary current strength is still owning and managing shopping malls in Hong Kong, the greater Bay area and other locations in APAC, such as Australia and Singapore.

We are continuing to focus on the strength.

As we evolve and refine our strategy alongside the active management and optimization of the link portfolio. We're also expanding our real estate investment capabilities.

Duncan Owen: As we evolve and refine our strategy alongside the active management and optimization of the Link portfolio, we're also expanding our real estate investment capabilities. This includes some new capital partnerships, as well as advancing investment opportunities. As a consequence, we're now managing close to $1 billion in third-party capital already. This part of the group's business will continue to focus on value-add strategies and higher returns, providing diversification away from single market and sector dependency, enhancing unit holder value. We recently announced the planned retirement of our Group CEO, George Hongchoy, and this will take effect by the end of this year. Before inviting him to run through the interim results, I'd like to convey gratitude to George on behalf of the board and myself for his significant contribution and leadership.

This includes some new capital partnerships as well as advancing investments opportunities.

As a consequence, we are now managing close to 1 billion U S dollars and third party capital already.

This part of the group's business will continue to focus on vivat strategies and higher returns, providing diversification away from single markets and sector dependency enhancing unitholder value.

We recently announced the planned retirement of our group CEO, George Holmes Joy and this will take effect by the end of this year.

Before inviting him to run through the interim results I'd like to convey gratitude to GA on behalf of the board and myself for his significant contribution and leadership.

During his tenure link has grown and transforms the benefits of unit holders tenants employees and the wider communities. It serves of course.

Duncan Owen: During his tenure, Link has grown and transformed to the benefit of unit holders, tenants, employees, and the wider communities it serves, of course. The interim leadership team is on stage today. We look forward to welcoming John Saunders, our Group Chief Investment Officer, to the board. We're excited to continue to work with Ko Chung Eun and John Saunders, alongside the newly formed chairs committee, which is there to provide support and provide strategic guidance to the management. We are currently running a comprehensive search for a new CEO. We're seeking a proven real estate investor with international experience who can lead the next phase of the company's strategy. Given the seniority of the role, the search will continue to take time, and it's reasonable to expect a lengthy notice period is possible for an incoming candidate.

The interim leadership team is on stage today, we look forward to welcoming John Saunders, Our group Chief investment officer to the board.

We're excited to continue to work with proxy on N and John Saunders alongside the newly formed Chaz Committee, which is that to provide support and provides strategic guidance to the management.

We are currently running a comprehensive search for a new CEO.

We're seeking a proven real estate invest with international experience, who can lead the next phase of the company's strategy.

Given the seniority of the row. The search will continue to take time and it's reasonable to expect a lengthy notice period is possible for an incoming candidates.

Hence our decision to put in place the robust interim management solution I was describing earlier.

Duncan Owen: Hence our decision to put in place the robust interim management solution I was describing earlier. Thank you. I'd like to invite George now to take us through the presentation. George.

Thank you I'd like to invite George now to take us through the presentation George Thank.

Thank you Duncan.

So while our business continues to navigate and feel the effects of various macro and local market level challenges I'm pleased to report.

[Analyst] (Citi): Thank you, Duncan. While our business continues to navigate and feel the effects of various macro and local market-level challenges, I'm pleased to report that we have achieved a resilient set of results for the first half of 2025-2026. I would like to express my sincere thanks and gratitude for the hard work and efforts of all our colleagues who have made this possible. As we approach the 20th anniversary of Link's IPO, I believe that this is also a moment for us to reflect with pride. Together, we have delivered strong financial results and made a positive impact on our communities, even as we face many challenges along the way. The achievements we have realized over the past 20 years give us every reason to be confident in Link's ability to successfully navigate the path ahead. Back to the results.

That we have achieved a resilient set of results for the first half of 'twenty five 'twenty six and I would like to express my sincere thanks, and gratitude for the hard work and efforts of all our colleagues who make this possible.

As we approach the 20th anniversary of links the IPO.

I believe that this is also a moment for us to reflect with pride.

Together, we have delivered strong financial result, and with positive impact on our communities, even as we face many challenges along the way.

The achievements, we have realized over the past 20 years give us every reason to be confident that links ability to successfully navigate the path ahead.

That's a result negative rental reversion in Hong Kong and China mainland.

[Analyst] (Citi): Negative rental reversions in Hong Kong and Mainland China have impacted our overall performance, with NPI down and DPU declining. Despite the tough conditions, we remain committed to deliver strong returns to our unit holders. We have launched multiple efficiency initiatives aimed at reducing costs and preserving margins. On the balance sheet front, our capital position remained robust, supported by credit markets' flight to quality and our blue-chip reputation. Net gearing stood at 22.5%, and our cost of borrowing has declined to 3.2%. We have also retained A ratings from S&P, Moody's, and Fitch. This strong foundation enables us to pursue inorganic growth and portfolio diversification. Our expansion into Australia and Singapore demonstrates this strategy, with retail assets in both markets achieving near full occupancy and strong double-digit reversion. Our KS and John will now give more details.

It has impacted our overall performance with N P I down and GPU declining.

Despite the tough conditions, we remain committed to deliver strong returns to our unit holders.

We have launched multiple efficiency initiatives aimed at reducing costs and preserving margins.

On the balance sheet front, our capital position remained robust supported by credit markets flight to quality and our blue chip reputation.

Net gearing stood at 22, 5% and our cost of borrowing has declined to three 2%.

And we have also retained a ratings from S&P Moody's and Fitch.

This strong foundation and enable us to pursue inorganic growth and portfolio diversification.

Our expansion into Australia, and Singapore demonstrate this strategy with retail assets in both markets, achieving near full occupancy and strong double digit reversion.

Okay, and John will now give more details.

Thank you George good afternoon to everyone.

John Saunders: Thank you, George. Good afternoon to everyone. Despite the ongoing macroeconomic headwinds, we have taken the strategic decision to retain high occupancy levels at the expense of rental revenue. Our continued focus on cost restructuring will involve certain one-off charges. Meanwhile, we expect operating conditions in the second half to slightly worsen before stabilizing. We believe our non-discretionary retail and car park assets will remain resilient, nonetheless. Our international business is a highlight. As George mentioned, our retail assets in Singapore and Australia achieved near full occupancy and double-digit positive rental reversions during the period. On the financing side, we have benefited from the temporary dip in high borrow, and our borrowing costs dropped to 3.2%. We have prudently managed our interest rate exposure, with expectations of longer-term rates easing, and I'll share more details in the next few slides.

Despite the ongoing macroeconomic headwinds.

We have taken the strategic decision to retain high occupancy levels at the expense of rental revenue.

Our continued focus on cost restructuring were involved certain one off charges.

Meanwhile, we expect operating conditions in the second half to slightly worsen before stabilizing.

We believe our non discretionary retailers and copper assets will remain resilient nonetheless.

Our international business is and highlight.

As George mentioned, our retail assets in Singapore, and Australia achieved near full occupancy and double digit positive rental reversion during the period.

On the financing side, we have benefited from the temporary dip in high ball and our borrowing costs dropped to three 2%.

We have prudently manage our interest rate exposure with expectations of longer term rates easing.

And I will share more details in the next few slides.

Valuation of the lingering portfolio stood at 223 billion Hong Kong dollars as of end September two zero to five down about one 3% from six months ago.

John Saunders: Valuation of the Link REIT portfolio stood at HKD 223 billion as of end September 2025, down about 1.3% from six months ago. Hong Kong and the Chinese mainland still hold the majority part of our portfolio at around 88%. Our international, with the majority in Australia and Singapore, took up the rest. Cap rates have been relatively stable compared to six months ago. Breaking down by geographies, ongoing weakness in rental performance across Hong Kong and the Chinese mainland has led to a decline in valuations. For our international portfolio, valuations have remained stable in local currency terms. However, the depreciation of HKD gave a slight uplift in reported valuations overall. Lastly, on capital management, our strong financial position is underpinned by a healthy balance sheet, as reflected in the key metrics shown below.

Hong Kong in the Chinese mainland still hold the major majority part of our portfolio at around 88% all.

Our international with the majority in Australia, and Singapore took up the rest.

Cap rates have been relatively stable compared to six months ago.

Breaking down by geographies ongoing weakness in rental performance across Hong Kong in the Chinese mainland has led to a decline in valuations.

Our international portfolio valuations have remained stable in local currency terms. However.

However, the depreciation of Hong Kong dollar gave a slight uplift in reported valuations overall.

Lastly on capital management our.

Our strong financial position is underpinned by a healthy balance sheet.

As reflected in our key metrics shown below.

As of September 30th net gearing remain at a healthy level.

John Saunders: As of 30 September 2023, net gearing remained at a healthy level, while the average borrowing cost declined to 3.2%, supported by the temporary dip in high borrow during the first half, as discussed. Our fixed debt ratio remained within the prudent range of 50% to 70% at 66%, reflecting our continued careful management of interest rate exposure, and heightened uncertainty over future rate movements. Financial stability is further reinforced through competitive credit margins and effective risk management. Over the past six months, we successfully refinanced more than HKD 10 billion of debt at highly competitive rates, achieving a lower overall margin compared to the previous year. Total debt increased slightly from HKD 53.5 billion to HKD 55 billion, primarily due to currency translation effects. Our debt maturity profiles remain healthy, with an average tenure of 2.9 years and a well-staggered schedule extending over the next 13 years.

The average borrowing cost declined to three 2% supported by the temporary dip in high bar during the first half.

Just.

Our fixed debt ratio remain within the prudent range of 50% to 70% at 66%.

Reflecting our continued careful management of interest rate exposure and heightened uncertainty over future rate movements.

Financial stability is further reinforced through competitive credit margins and effective FX risk management.

Okay.

Over the past six months, we successfully refinanced more than 10 billion Hong Kong dollars of debt at highly competitive rates, achieving a lower overall margin compared to previous year.

Total debt increased slightly from $53 5 billion to 55 billion, primarily due to currency translation effects.

Our debt maturity profile has remained healthy with an average tenure of two nine years and a well staggered schedule extending over the next 13 years.

Strong a ratings from all three agencies secure favor favorable funding terms supporting our future financing needs.

John Saunders: Strong A ratings from all three agencies secure favorable funding terms, supporting our future financing needs. We also remain well below covenant thresholds, providing ample headroom for acquisition and strategic opportunities. With that, I'll now hand over to John for the portfolio highlights. Thank you.

We also remain well below our covenant thresholds, providing ample headroom for acquisition and strategic opportunities.

With that I'll now hand over to John portfolio.

Portfolio highlights thank you.

Thank you very much cash and a welcome to all of you. Thank you for coming.

Duncan Owen: Thank you very much, KS, and welcome to all of you. Thank you for coming. I'll now walk you through the Link REIT portfolio highlights, starting, of course, with the performance of our Hong Kong retail segment. Despite market challenges, occupancy remained very solid at well over 97%. Although revenue declined by 3.1% year over year, mainly due to negative 6% ± reversions, tenant sales showed improvement, narrowing the decline to just over 2%. I'll now break that down by category for you. Supermarkets in the foodstuffs segment actually returned to positive growth, which is both encouraging, and it marks the first increase since 2023. In that sector, we outperformed the Hong Kong market in the first half. F&B for the first half was flat, and that was broadly in line with the overall Hong Kong market trends.

I'll now walk you through the link REIT portfolio highlights starting.

Of course with the performance of our Hong Kong retail segment.

Despite market challenges occupancy remained very solid.

Ah well over 97% and although revenue declined by three 1% year over year, mainly due to negative six plus percent reversion.

But pleasingly tenant sales showed improvement narrowing the decline to just over 2% and on that break that down by category for you.

Supermarkets in the foodstuffs segment actually returned to positive growth, which is both encouraging and it marks the first increase since 2023 and in that sector, we outperformed the Hong Kong market in the first half.

F&B for the first half was flat.

Flat and that was broadly in line with the overall Hong Kong market trends.

But the overall decline in linked tenant sales was dragged down by general the general retail segment, which includes of course, only a small proportion of our valuable goods as opposed to our main.

Duncan Owen: The overall decline in Link tenant sales was dragged down by the general retail segment, which includes, of course, only a small proportion of valuable goods as opposed to our main tenancy focus on non-discretionary. Overall, occupancy costs stayed very healthy at around 13%. I would say that together, these metrics do suggest that while some challenges do still persist, resilience within the portfolio remains very strong and evident across our entire range of portfolio. That said, retail businesses in Hong Kong do continue to face some near-term pressure from heightened e-commerce competition, and that has weighed on some non-discretionary trades. To cope with the challenges, we continue to proactively refine our tenant mix to stay ahead of evolving market trends, and we'll share more details on these initiatives in the forthcoming slides.

Tenancy focus on non discretionary.

Overall occupancy cost stayed very healthy at around 13% and I would say that together. These metrics do suggests that while some challenges do so possessed resilience within the portfolio remains very strong and evident across.

Entire range of portfolio.

That said retail businesses in Hong Kong do continue to face some near term pressure from heightened e-commerce competition and that has weighed on some non discretionary trades, but.

But to cope with the challenges we continue to proactively refine our tenant mix to stay ahead of evolving market trends and we will share more details on these initiatives in the forthcoming slides.

Well, so as a testament to our extremely capable leasing team we've secured a little over 345, new leases during the reporting period, which is a very strong results. Indeed.

Duncan Owen: Also, as a testament to our extremely capable leasing team, we've secured a little over 345 new leases during the reporting period, which is a very strong result indeed. Leasing activity was shaped in large part by emerging trends, including specialty F&B, learning and interest classes, and also game and family entertainment. We also capitalized on growing demand from Chinese mainland brands, and that's further diversifying our tenant mix beyond specialty F&B to include new operators in fashion, services, and entertainment. Meanwhile, tenant retention remained extremely healthy at around 80%, which underscores our focus on engagement and long-term partnerships. Revenue from car parks and related business was broadly stable. Monthly income softened a little due to fewer tickets, but upward tariff adjustments helped offset much of that impact. In addition, we've rolled out smart parking systems to streamline operations and introduced dynamic pricing and diversified services.

Leasing activity was shaped in large part by emerging trends, including specialty F&B learning and interest classes and also game and family Entertainment.

We also capitalize on growing demand from Chinese mainland brands and that's further diversifying our tenant mix beyond specialty F&B to include new operators in fashion services and entertainment.

Meanwhile, tenant retention remained extremely healthy at around 80%, which underscores our focus on engagement and long term partnerships.

Revenue from car parks and related business was broadly stable monthly income softened, a little juice or fewer tickets, but upward tariff adjustments helped offset much of that impact.

In addition, we've rolled out smart parking systems to streamline operations and introduced dynamic pricing and diversified services.

Leveraging real time analytics. This approach aligns rates with demand patterns and that helps us maximize utilization and also deliver greater flexibility and value for our customers.

Duncan Owen: Leveraging real-time analytics, this approach aligns rates with demand patterns, and that helps us maximize utilization, and also deliver greater flexibility and value for our customers. Moreover, with the rising popularity of EVs, the growing demand for parking spaces equipped with charging facilities will provide additional support for our business performance. As part of our defensive strategy, we have continued with our asset enhancement projects with a current HKD 2.3 billion pipeline. During the reporting period, we invested HKD 59 million at Lei Yue Mun and HKD 21 million at TKO Plaza. These efforts reflect our vision to future-proof our assets, and those two projects are expected to respectively deliver ROIs of 14.5% and in QQR at just over 29%. Alongside these major upgrades, we also made smaller improvements, including reconfiguring spaces to better meet tenant needs, and to optimize product layout for better productivity.

Moreover, with the rising popularity of Evs, the growing demand for parking spaces equipped with charging facilities will provide additional support for our business performance.

As part of our defensive strategy, we've continued with our asset enhancement projects with our current $2 3 billion Hong Kong dollar pipeline.

During the reporting period, we invested $59 million at Lehman and 21 million TKO spot.

These efforts reflect our vision to future proof our assets and those two projects are expected to respectfully deliver rois of 14.5% and and chunk mono at just over 29%.

Alongside these major upgrades, we also made smaller improvements, including reconfiguring spaces to better meet tenant needs and to optimize product layout for product better productivity.

Now, let's shift our focus to the Chinese mainland retail portfolio.

Duncan Owen: Now let's shift our focus to the Mainland China retail portfolio. In the first half of the financial year, there were still market headwinds, which were exerting pressure across that Mainland portfolio. Despite the challenges, though, the retail portfolio continues to show very strong occupancy of 95.9% amid the prolonged tough conditions. Rental reversion was soft due to subdued sales sentiment, primarily in Beijing. If you include Link Plaza, Link Plaza Zhongguancun, and the retail portion of Link Square, rental reversions actually, quite pleasingly, were positive at +2.5%. We continue to optimize asset quality to drive sustainable growth, and significant AIs were successfully completed at Qianhe and Tongzhou, with a combined capital expenditure exceeding HKD 440 million. Both projects achieved outstanding double-digit ROIs, even in the current more challenging market environment. I'll give you more details on the asset enhancement at Qianhe now.

In the first half of the financial year, the western market headwinds, which we're exerting pressure across that our mainland portfolio.

Despite the challenges, though the retail portfolio continues to show very strong occupancy of 95, 9% amid the prolonged tough conditions rent.

Rental reversion was soft due to subdued sells sentiment primarily in Beijing and indeed, if you include linked Plaza link Plaza junk on churn and the retail portion of link square rental reversion is actually quite pleasingly, we're positive.

Trustee, 0.5%.

We continue to optimize asset quality to drive sustainable growth and significance. A eyes were successfully completed at <unk> and changzhou with a combined capital expenditure exceeding 440 million renminbi.

Both projects achieved outstanding double digit rois, even in the current more challenging market environment and I'll give you more details on the asset enhancement at T N now.

We also completed just before I get to that several small scale projects Central walk Li one ship out and as I mentioned before John Gunn Chin with an average ROI of around 9%.

Duncan Owen: We also completed, just before I get to that, several small-scale projects: Link Central Walk, Link Plaza Liwan, Link Plaza Qibao, and, as I mentioned before, Link Plaza Zhongguancun, with an average ROI of around 9%. Combined with the strategic tenant remixing efforts, we've attracted more innovative and competitive brands. Let me walk you through an example from Link Plaza Qianhe that I think really highlights our asset enhancement capabilities. Down in the basement here, we strategically downsized an anchor supermarket tenant and introduced Foodie Plus, which is Link's own food court concept, and we applied that to the freed-up space. We also took an underutilized area and turned it into leasable space, which further maximizes the value of the property. This approach isn't unique to Qianhe, of course. In fact, we implemented a similar concept at select assets in our Mainland China portfolio.

Combined with the strategic tenant Remixing efforts, we've attracted more innovative and competitive brands.

So let me walk you through an example from La Plaza churn her but I think really highlights our asset enhancement capabilities.

So down in the basement here, we strategically downsized and anchor supermarket tenant and introduced 30, plus which is linked zone food Court concept and we applied that to the freed up space. We also took an underutilized area and turned it into leasable space, which further maximizes the value of the property.

This approach isn't unique to churn here of course in fact, we implemented a similar concept at select assets in our Chinese mainland portfolio.

This included Lynx Central walk linked closely one and linked Plaza Changzhou and it's proven to be really quite successful.

Duncan Owen: This included Link Central Walk, Link Plaza Liwan, and Link Plaza Tongzhou, and it's proven to be really quite successful. Now I want to move on to our international retail portfolio. In Singapore, we had near full occupancy, and very pleasingly, double-digit rental reversion. I think that demonstrates strong leasing demand from tenants, and underscores the dominant and strategic locations of our malls there. Thanks to SG60 promotions and the rollout of government vouchers, we saw solid support for tenant sales. That said, retail sentiment is still a little cautious, and we need to monitor any signs for any slowdown in discretionary spending there. In Australia, occupancy across our retail centers remained very solid at over 98%, and the rental reversion was an extremely strong and quite impressive 16%+. Tenant sales were also up by over 15%.

Now, let me move onto our international retail portfolio.

In Singapore, we had near full occupancy and very pleasingly double digit rental reversion and I think that demonstrates strong leasing demand from tenants and underscores the dominant in strategic locations of our moves there.

Thanks to S. G 60 promotions and the Rollouts of government vouchers, we saw solid support for tenant sales.

That said retail sentiment is still a little cautious and we need to monitor any signs for any slowdown in discretionary spending that.

In Australia occupancy across our retail sensors remained very solid at over 98% and the rental reversion was an extremely strong and quite impressive 16 plus percent tenant sales are also up by over 15%.

So looking ahead, we remain optimistic about the retail sector. Thanks to rising household incomes lower interest rates and improving consumer sentiment.

Duncan Owen: Looking ahead, we remain optimistic about the retail sector, thanks to rising household incomes, lower interest rates, and improving consumer sentiment. Let me just share with you now, if I may, some updates on our strategy. We've continued to actively manage and optimize the existing Link portfolio, but we're also expanding Link's real estate investment management capabilities, as you've heard, to some degree of success, as mentioned by the chairman earlier. In the first half, our focus on active management, operational efficiency, and streamlining has helped us reduce operating costs, preserve margins, and this, of course, will be a constant, ongoing effort. I'm also pleased to report that we've recently completed the streamlining of our integrated facilities management, the IFM contracts, and this should yield significant savings, both for now and in the long term.

Let me just share with you now if I may some updates on our strategy. We've continued to actively manage and optimize the existing link portfolio, but we're also expanding links real estate investment management capabilities and as you've heard.

To some degree of success as mentioned by the chairman earlier.

In the first half our focus on active management operational efficiency and streamlining has helped us reduce operating costs preserve margins and this of course will be a constant ongoing effort.

I'm also pleased to report that we've recently completed the streamlining of our integrated facilities management. The I F M contracts and this should yield significant savings both for now and in the long term.

We're also actively exploring new investments opportunities with a particular focus as we mentioned before in Singapore in Australia, while we continue to look for ways to divest and recycle assets, but only where appropriate.

Duncan Owen: We're also actively exploring new investment opportunities, with a particular focus, as we've mentioned before, in Singapore and Australia, where we continue to look for ways to divest and recycle assets, but only where appropriate. On the investment management front, as I said, you've heard from the chairman, Link Real Estate Investment Trust Partners is making very solid, very pleasing progress in forming partnerships with third-party capital partners. We've already received commitments from new investors, which is extremely pleasing after a cold start 18 months ago. I'll now pass back, if I may, to George for closing remarks. George.

On the investment management front as I said, you've heard from the chairman linked real estate partners is making very solid very pleasing progress in forming partnerships with third party capital partners and we've already received commitments from new investors, which is extremely pleasing after a cold start 18 months ago.

So I'll now pass back if I may to George for closing remarks, George Thank.

Thank you John for running through the details before Q&A I wanted to take a moment to express my heartfelt thanks for the.

John Saunders: Thank you, John, for running through the details before Q&A. I want to take a moment to express my heartfelt thanks for the trust and support that I've received over the past 16 years. I'm truly grateful to our many stakeholders, colleagues, and partners. Of course, I want to especially thank so many of you here in the room today, our unit holders and research analysts, for all your ongoing support, the buy recommendations from time to time, and not too often sell recommendations. It's truly a pleasure to serve as Group CEO and have played a part in this remarkable Hong Kong success story. Over the past 20 years, Link has grown and thrived through many market cycles, overcome many challenges such as financial crisis, social unrest, and even a global pandemic. All thanks to the dedication of our team.

Trust and support that I've received over the past 16 years.

I'm truly grateful for to our many stakeholders and colleagues and partners and of course, I want to especially if things. So many of you here in the room today, our unit holders and research analysts for your ongoing support.

The buy recommendations from time to time.

Too often sell recommendation.

Over the.

It's truly a pressure to serve as our group CEO and have play a part in this remarkable Hong Kong success stories.

Over the past 20 years linked has grown and fry through many market cycles.

Overcome many challenges such as financial crisis, social unrest and even a global pandemic. So all thanks to the dedication of our team.

The success that we've achieved both financially and in terms of the impact that we have made toward our communities has always been guided by a simple vision that we launch in November 2010.

John Saunders: The success that we've achieved, both financially and in terms of the impact that we have made to the communities, has always been guided by a simple vision that we launched in November 2010: to be a world-class real estate investor and manager, serving and improving the lives of those around us. I want to extend my best wishes to Link and all my colleagues. Together, we have built a strong and resilient platform, and one that will be well prepared to meet any challenges that lie ahead. Thank you very much. I look forward to seeing how this truly exceptional organization will continue to evolve as I start my garden leave on 1 January 2024. Thank you.

To be a world class real estate investor manager surfing and improving the lives of those around us.

So I want to extend my best wishes to link and all my colleagues together, we have built a strong and resilient platform and one that will be well prepared to meet any challenges that lie ahead. So thank you very much I look forward to seeing how this truly exceptional organization and will continue to evolve as I start my.

God in leaf and first of January.

Thank you.

Thank you George we all hoped you have on order.

[Analyst] (Citi): Thank you, George. We all hope you have all the best and happy retirement. Now it comes to Q&A sessions. For those of you here, you can raise your hands and ask questions. For those who are joining us through the webcast, you can use the Q&A function to answer your questions. Please state your name and the company that you represent. I'll count first.

All the best and happy retirement.

So now he can stay Q&A sessions, okay, but that's not yeah, you can raise your hands and ask questions and then for those who are joining us via the webcast you can't use that Q&A functions to answer your questions and please state your name and the company that you represent.

Okay, how fast.

Thank you very much offers a fall. Thank you Josh awful your leadership I will Miss you and just wish you all the best.

Ko Chung Eun: Thank you very much. First of all, thank you, George, for your leadership. We'll miss you, and just wish you all the best. This is Carl Chen from JP Morgan, and I have three questions. My first question is probably more for Duncan. As we know, we are trying to identify a new CEO, right? Just curious from your perspective, what kind of qualities or track record do you most look forward to in the new CEO? When the new CEO is on board, what kind of KPI you will give him or her? Just curious if there's any tentative timeline on when the new CEO will be on board. That's my first question on the new CEO. The second question is on the potential asset acquisition in Australia.

So this is car Chan from JP Morgan and I have three questions. My first question is probably more for Duncan. So as we know we are trying to identify a new CEO of righteousness curious from your perspective on what kind of quality is our track record of your most Ah.

Look forward to in a new CEO and then when the new CEO is on board what kind of Kpis are you will give him or her and I was just curious if theres any tentative timeline on when the new CEO will be on board. So that's my first question on the new CEO and a second question is on the potential asset acquisition in Australia. So just curious if you can give.

It is a bit more thoughts on the process behind.

Ko Chung Eun: Just curious if you can give us a bit more thoughts on the process behind. Number one, why are we interested in those three shopping malls in Australia? How value equitative do you think it will be? How do we plan to fund the acquisition? Will this be a pure acquisition, or will this be part of the fund management that we have been talking about? That's my second question on the Australia potential acquisition. My third question is on Hong Kong retail sales, because if we just look at the tenant sales for the last quarter, it seems like the year-on-year decline actually widened a little bit. Just curious for, let's say, October and November so far, do we see some marginal improvement? What's our latest guidance on the rental reversion for the second half of the year? Thank you very much.

Number one why are we interested in those three shopping malls in Australia, how accretive do you think it will be and how do we plan to fund the acquisition and Buddhist B, a pure acquisition or it will just be part of their fund management that we've been talking about so that's my second question on the Australia potential acquisition and my third question is on Hong Kong retail sales.

Because if we just looked at it had on our sales for the last quarter or it seems like the year on year decline actually widened a little bit. So just curious for let's say October and November so far do we see some marginal improvement and what our latest guidance on the Ranger. We version for the second half of the year. Thank you very much.

Thank you three questions, but three or four questions in each of the questions.

Carl Choi: Thank you. Three questions, but three or four questions in each of the questions. I'll try and deal with point one, and I'll hand to George, but I'll give a couple of headlines on point two and three. Actually, before I hand to John, the CEO process, there's a high degree of transparency on it. It's a comprehensive search, it's an international search, and there is a process ongoing. I won't comment in too much detail, but I'll give you a little bit of guidance. We are looking for a real estate investor with a proven track record who has worked across border and in an international environment. We are looking for someone who has done that in a public as well as a private environment.

So let me I'll try and deal with 0.1, and I'll hand to George but I'll give a couple of headlines on 0.2 and three.

Before I hand, John.

The C O process, there's a high degree of transparency on it is a comprehensive search.

It's an international search and.

There is a process ongoing so I won't comment too much detail, but I'll give you a little bit of guidance, we are looking for.

A real estate investor with a proven track record who has works across border and in an international environment.

We are looking for someone who has done that in a public as well as the private environment.

And we want someone who of course will continue to uphold the brand of and the integrity of the brand and link and bring a good degree of humility to how link and its in keeping with its brand operates I think those things are given in some ways, but I think it's very important that we focus on those.

Carl Choi: We want someone who, of course, will continue to uphold the brand and the integrity of the brand in Link and bring a good degree of humility to how Link, and its in keeping with its brand, operates. I think those things are a given in some ways, but I think it's very important that we focus on those as key criteria moving forwards. In terms of timing, it's a proper process that is taking some time. It's begun as a global search. It has gone from a long list to a long medium list to a medium medium list to a medium list to a long short list. There will be a prolonged period of time, probably, before we can agree terms with the final candidate.

Key criteria moving forwards.

In terms of timing.

It's a proper process that is taking some time it began as a global search it has been gone from a long list to a long medium list to a medium medium lift to our medium lift to our long short list, but there will be a prolonged period of time, probably before we can agree to.

To the final candidates.

And it is likely a number of the candidates have extended notice periods because of the seniority of the existing organizations and the part that you didn't have that I'll add is for that reason, it's key that we put in the interim management arrangements that we did promoting John Saunders to the board. So there were two executive directors and we have.

Carl Choi: It is likely a number of the candidates have extended notice periods because of the seniority in their existing organizations. The part that you didn't ask that I'll add is for that reason, it's key that we put in the interim management arrangements that we did, promoting John Saunders to the board. There were two executive directors, and we have the chair's committee for oversight and support of the strategy, with a real focus on ensuring we don't take a break or a pause in execution of the strategy going forwards during that interim period. That's the real focus. In terms of the other two, I don't think we'll comment on specific acquisitions. What I think I would say is acquisitions of retail malls in Australia would be very much in line with our publicly declared strategy.

Chess Committee for oversight and support of our strategy with a real focus on ensuring we don't take a break or a pause in execution of the strategy going forwards during that interim period. So that's a real focus.

In terms of the other two I don't think will comment on specific acquisitions, what I think I would say is.

Acquisitions of retail mouths in Australia would be very much in line with our publicly to cloud strategy.

John Saunders often described this as the company superpower and management of miles and as I said in my part of the presentation at the start.

Carl Choi: John Saunders often describes this as the company's superpower in management of malls. As I said in my part of the presentation at the start, our core competence is management of retail malls in Hong Kong, the Greater Bay Area, as well as other locations in APAC, such as Australia and Singapore. It should come as no surprise to analysts or investors that we might be seeking opportunities in those markets. In terms of the third question and the headline about Hong Kong retail sales, well, the reversions have gone down 6.4% this half. The only thing I'll add, and I'll avoid stealing more of John's thunder, is there is an obvious lag effect. There is an average lease length, a normal lease length of three years in Hong Kong.

Our core competence is management of retail miles in Hong Kong, the greater Bay area as well as other locations in APAC, such as Australia, and Singapore. So it should come as no surprise to analysts or investors that we might be seeking opportunities in those markets.

In terms of the third question on the headline about Hong Kong retail sales.

Well the reversion has gone down six 4% this half.

The only thing I'll add.

On avoid stealing more of John's Thunder is there is an obvious lag effect. There was an average lease length of normal lease length of three years in Hong Kong.

If a property was lapped three years ago at the market rent with the best will in the world. Most of those market rents are lower today and when those leases renew there will be at the market rent, which will be lower so although we are genuinely seeing increased footfall.

Carl Choi: If a property was let three years ago at the market rent, with the best will in the world, most of those market rents are lower today. When those leases renew, they'll be at the market rent, which will be lower. Although we are genuinely seeing increased footfall, all sorts of positive signs of recovery, the real world may be recovering positively, but the impact on our numbers and seeing it come through in the numbers will have a time lag. John.

All sorts of positive signs of recovery.

The real world, maybe recovering positively, but the impact on our numbers and seeing it come through the numbers, we'll have a time lag.

John.

Yeah sure so specifically on the.

Duncan Owen: Yeah, sure. Specifically on the Australia thing, I think we've said for quite some time that we are interested in doing more Australia. Clearly, the Australia portfolio, the existing portfolio, is treating us very well. I think the retail is very much center and core to what we do. This is not at all opportunistic. It's very much strategic in nature, and it's an extremely good fit, I think, with what we already have down there as a portfolio and what we're very comfortable managing and operating. There was a question about funding, etc. We have plenty of capacity on the balance sheet to fund a transaction like that. I think that allows us to bring to bear a fast liquidity solution for that particular situation. I think they're good assets.

Australia thing I think we've said for quite some time.

But we are interested in doing more Australia, clearly the Australia portfolio as existing op portfolio is treating us very well I think.

The retail is very much central and core to what we do so this is not it's all opportunistic it's very much strategic.

In nature.

And it's extremely good fish I think with what we already have down there is a portfolio and what we're very comfortable managing and operating.

There was a question about our you know funding et cetera, we have plenty of capacity on the balance sheet.

To fund the transaction like that and I think that allows us to bring to bear a.

First liquidity solution for.

So that particular situation so I.

I think we that you know that that they're good assets. So I think we can do more with them.

Duncan Owen: I think we can do more with them, and we'll see what happens as we go from here.

And and we'll we'll see what happens as we go from here.

Cindy.

Okay.

[Analyst] (Citi): Thank you. This is Cindy from Citi. I also have three questions. The first one, I want to follow up on your Link real estate partners. Just now we mentioned there has been some initial success and commitment. Can you walk us through the current structure of the third-party capital with you? Is there any target for AUM? How should we think about your pace, say, in three years or five years? What will it be? In terms of the potential investment target for the real estate platform, is it similarly with priority for Australia, followed by Singapore? Any difference with your own platform? This is the first question. The second question, I want to touch a little bit on your own portfolio reconstruction. Just now we heard you want to increase your Australia portfolio.

I think from.

And from Citi.

That's a great questions. The first one I wanted to follow up on your real estate.

So just now we mentioned.

Our success and commitment so can you walk us through the current structure.

The third party capital with you and is there any pockets.

And how should we think about your pace.

Yes.

Is what will that be.

Investment targets.

Similarly, with the priorities that Australia, followed by Singapore.

The difference with your own platform. This is the first question.

And the second question I wanted to touch a little bit on your own portfolio. Construction. So just now you want to increase your Australia.

Yes.

Pockets of increasing Australia portfolio what percentage.

[Analyst] (Citi): Is there, say, a target of increasing Australia portfolio to what percentage within the overall portfolio? Is it fair to say that you are thinking it's getting more confident and interested to buy in today than, say, three months or six months ago? Why are you getting a little bit more interested? In terms of, say, divestment, is there any asset within your portfolio that you think can be well interested to sell it and recycle capital? The third question is actually on your cost control initiatives. We heard a lot of good news that you just shared on cost controls, but that has yet to reflect in the financial results. If I hear correctly, I think KS mentioned that it could worsen in the second half before things getting better.

The overall portfolio and it is fair to say that you are thinking and it's getting more comfort and the interest that you're buying today than say three months or six months. If at all and why are you getting a little bit more interest rates and in terms of say divestment is there any in your portfolio that you think can be interested to sell it that way.

Capital.

And just a question actually on your cost control initiatives.

I heard a lot of good news that you just shared on cost controls.

That have yet to reflect the financial results.

Quickly I think Boston.

Second half besides things getting better.

Shall we say a little bit.

How come it's come true.

[Analyst] (Citi): Can you share with us a little bit on how cost control has been doing? How would it affect our overall performance? When it stabilized, what type of margin levels are we targeting at? Thank you.

How would it affect our overall performance and when things stabilize what type of margin levels.

Thank.

Thank you.

Thank you.

Ill give some headline answers again, particularly around question, one and questions to I'll pass to John and then to chaos respects of lift question three.

Carl Choi: Thank you. I'll give some headline answers again, particularly around question one. Questions two, I'll pass to John and then to KS respectively for question three. First of all, the overriding principles of the strategy for third party or for balance sheet are to buy the right assets that enhance returns, and the quality of earnings for the group and the unit holders of the group. We do not have a fixed AUM target. The target is to buy the right assets on balance sheet, and to buy the right assets in partnership where we're co-investing to get the right returns from the assets. There will naturally be some management enhancing, and there may well be some management fees that come with managing other partners' money alongside ours, which is aligned and is long-term.

First of all the overriding principles of the strategy for third party for balance sheets or to buy the right assets that enhance returns on the quality of earnings for the group and the unit holders of the group.

We do not have a fixed AUM targets.

The target is to buy the right the right assets on balance sheet and to buy the right assets in partnership where we're co investing to get the right returns from the assets that will naturally be some management enhancing and they may well be some management fees that come with managing other partners money alongside.

Das, which is aligned and this long term.

But we're essentially a REIT that is looking first and foremost to maximize the value of its capital invested by its balance sheet.

Carl Choi: We're essentially a REIT that is looking first and foremost to maximize the value of its capital invested by its balance sheet. In terms of the target returns, I think this is relevant. It's self-evident that the balance sheet returns have tended to be high single-digit. Where we allocate 10% or 20% of the balance sheet towards the funds business or special situations, we would reasonably expect those returns to be higher and to be more enhancing to provide diversification. You could look at a value-add style type of return that would be 15% plus. In terms of, I think, the second question, which was very much focused, I think I've got some detailed notes here on timing, and then we moved on to a degree to recycling.

In terms of the target returns I think this is relevant.

Self have is self evident that the balance sheet returns have tended to be high single digit.

Where we allocate 10 or 20% of the balance sheet towards funds business or special situations. We would reasonably expect those returns to be higher and to be more enhancing to provide diversification. So you could look at a value add style Rita.

Type of return that would be 15% plus.

In terms of I think the second question.

Which was very much focused I think I've got some detailed notes here on.

On timing and then we moved on to a degree to recycling, yes, we'll always look to recycle, but what we would not want to do was hold on to assets full.

Carl Choi: Yes, we'll always look to recycle, but what we would not want to do was hold on to assets, follow the market down, and sell at the bottom of the market, especially where there are assets that we have conviction on. I think there may, however, be some non-core assets that do not fit the criteria I've said in the past that might not be retail malls and might not be in the obvious target geographies that are obviously adjacent to us, and we know and can operate in. You could pick any number of offices, as an example, in the UK or warehousing in the mainland. In terms of the cost control, before I hand to John on question two, this year has a lot of noise in the cost control because when you make cost controls with targets, there are some exceptional items that go with that.

Follow the market down and sell at the bottom of the market, especially where the assets that we have conviction on.

So I think I think there may however, be some noncore assets that don't fit the criteria I've said in the past that might not be retail mouse and might not be in the obvious target geographies that are obviously adjacent tools.

And we know them.

Operator.

So you could pick any number of offices as an example in the U K or warehousing in the mainland.

In terms of the cost control before Hunter join on question two.

This year has a lot of noise in the cost control because when you make cost controls. We've targets. There are some exceptional items that go with that so again the benefits will come through in the full annualized if you like normalized cost controls that we would be making there.

Carl Choi: Again, the benefits will come through in the full annualized, if you like, normalized cost controls that we would be making. There are some one-offs this year, but essentially, the current annualized savings for the running and operating costs are a little bit in excess of HKD 200 million. John.

There are some one offs this year, but essentially.

The current annualized savings for the running and operating costs are a little bit in excess of 200 million Hong Kong dollars.

Sean.

Yeah, certainly so.

Duncan Owen: Yeah, certainly. Just adding a little to the third-party side. Obviously, it's private capital for a reason. The clue's in the name. What I can say is that the clients who've trusted us as fiduciaries to manage capital on their behalf so far are all very well-known names, and are all institutional capital. I think the chairman said it very well when he said, we don't have a specific target per se, but I think our style has been to do things and then tell you that we've done them, rather than perhaps tell you that we're going to do lots of things, and it takes some time. I detected a couple of slightly widened eyes that after 18 months, we do have a billion effectively under management, and I'd expect that to grow, and we'll continue to give you updates as time goes by.

Just adding a little to the third party side.

And obviously, it's private capital for a reason with losing the name, but what I can say is that the clients who trusted us as fiduciaries to manage capital on their behalf. So far they are all very well known names under rule institutional capital and I think the chairman said it very well when he said we don't have a specific target per se.

But I think our style has been to do things and then tell you that we've done them rather than perhaps tell you that we're going to do lots of things.

And it takes some time, so I detected a couple of slightly widened eyes that after 18 months you know, we do have $1 billion.

Effectively under management and I'd expect that to grow and we'll continue to give you updates as time goes by.

Why Australia I think is a number of reasons why Australia and why the retail sector and in more detail I mean, Australia as I said before it's it's doing very well in terms of the existing portfolio. So I think it shows that where you have a high quality center in new Mexico, our capabilities to it we can produce outsized returns.

Duncan Owen: Why Australia, I think, is a number of reasons why Australia and why the retail sector in more detail. I mean, Australia, as I said before, it's doing us very well in terms of the existing portfolio. I think it shows that where you have a high-quality center and you match our capabilities to it, we can produce outsized returns and accrete earnings for the DPU. It's helpful, of course, that Australia has some fantastic demographics behind it, and that affects all areas of society, including property, but it's particularly powerful for retail and retail catchment. That's fundamentally, I think, a lot of what's driving it. I think it makes very good use of the balance sheet because we are clearly able to invest at rates which significantly beat our cost of capital.

And you know accrete earnings for the GPU is helpful of course that Australia has some fantastic demographics behind it and that affects all areas of society, including our property, but it's particularly powerful for retail and retail catchment. So that's fundamentally.

I think a lot of what's driving it.

And I think it makes.

It makes it will get very good use of the balance sheet, because we are clearly able to invest.

Investor rates, which significantly beat our cost of capital.

Okay, Yes.

I think on the point that Chad articulated on cost savings.

Carl Choi: I think on the point that Chair articulated on cost savings, if you look at the business, there's probably about, from the revenue line down, 10% of revenue that is controllable, whether it's staff cost at the property level or staff cost outside the property level at the regional centers. I think where we have come in the first round is that with some of the staff headcount optimization or restructuring, there will be one-off separation costs. No difference from a lot of companies as they go through restructuring, of course. This year, we'll see a bit more taking in, I guess, the senior departures or some of these departures will come in the second half of the year.

I think if you look at the business, there's probably about.

From the revenue line down 10% of revenue that is controllable.

Whereas whether staff costs at the property level of staff costs outside of property level at the regional centers.

And where we have come in the first round is dead.

Some of the.

Staff head count optimization or restructuring there will be one of separation costs.

No different from a lot of companies as they go through structural restructuring of course.

This year, we will see a bit more taking.

Taking in S.

I guess, a senior departures on Sunday departures will come in the second half of the year.

And then like what chairman has said on a structured basis.

Carl Choi: Like what Chairman has said, on a structured basis into the next financial year, the aim is to shoot for about HKD 200 million of savings every year. Thank you.

Into the next financial the aim is to shoot for about 200 over a million of them savings every year.

<unk>.

Hum.

Yeah.

[Analyst] (Citi): Okay. Carl?

Hi, Karl Choi from Bank of America, three quick questions first on the third party capital question just want to find out if there are any limitations to the capital that you have raised in terms of for example, geographies, where you can make the investment and going forward. How should is there any guiding principle between.

George Hongchoy: Hi, Carl Choi from Bank of America. Three quick questions. First, on the third-party capital question, just want to find out if there are any limitations to the capital that you have raised in terms of, for example, geographies where you can make the investment. Going forward, is there any guiding principle between acquisitions that you'll be making based on your own balance sheets and where you'll be tapping third-party capital to make those acquisitions? Second question is, any more color on Mainland China, especially Zhongguancun Mall? Looks like the negative rental reversion was quite severe in the first half because it dragged down the whole portfolio. Should we see some stabilization half and half? The third question is regarding a quick one, housekeeping, is regarding the headcount-related reduction charges.

<unk> that you've been making or based on your own balance sheets and where.

Were you be tapping third party capital to make those acquisitions and second question is there any more color on mainland China, especially don't quantifying more looks like the negative rental reversion was quite severe in the first half because it drag down the whole portfolio.

Should we see some stabilization in half and half and the third question is regarding a quick one housekeeping is that regarding the head count related.

Reduction.

Charges should I clarified that that you'd be making additional income after absorbing those charges. So you won't be isolating them out separately.

George Hongchoy: Should I clarify that you'll be making your digital income after absorbing those charges, so you won't be isolating them out separately? Thanks.

Okay.

Thank you again I'm going to hand over to my colleagues, but in very simple terms, where we're working with third parties in partnership or in a fund structure.

Carl Choi: Thank you. Again, I'm going to hand over to my colleagues. In very simple terms, where we're working with third parties in partnership or in a fund structure, yes, the returns are higher. There's typically value-add style returns, and yes, the strategies are relatively unencumbered, albeit they would be very focused in the region of APAC. The geographies could be wider, the sectors could be wider, as opposed to the balance sheets where there's a big focus on the particular four APAC markets I've mentioned, retail malls, and our super strength. In terms of the reversion, I'll hand to John on this point. I think the key factor for all of the reversions, whether they're upwards or downwards, whether they're Beijing malls in the mainland or elsewhere, is there's always a lag indicator.

Yes. The returns are higher there's typically valuate style returns.

And yes, the strategies are relatively unencumbered, albeit they would be very focused in the region of APAC also the geographies could be wider sectors could be wider.

As opposed to the balance sheets, where there's a big focus.

On the particular for APAC markets, I've mentioned and retail miles an hour super strength.

And in terms of the.

The reversion I'll I'll I'll hand to John on this this point, but I think the.

The key factor for all of the reversion, whether that upwards or downwards wherever that Beijing mouse and the mainland or elsewhere is there's always a lag indicator to what's happening on the ground is always ahead of what you see in the financial numbers that come through because of that lag effect and I think it.

Carl Choi: What's happening on the ground is always ahead of what you see in the financial numbers that come through because of that lag effect. I think it's really important to note that as you do your modeling for the numbers, etc.

It's really important to note that as you do your modeling for the numbers et cetera.

John.

Yeah.

So on the third party capital side versus the balance sheet. So I think the balance sheets is very clear.

George Hongchoy: John?

Carl Choi: Yeah. On the third-party capital side versus the balance sheet, I think the balance sheet is very clear. It continues to be very committed to Hong Kong and the Greater China area, the Greater Bay Area particularly. It's also very much a retail and, to some degree, an office-focused business. It's fundamentally outside of Greater China. It's focused on Australia and Singapore. That takes care of the balance sheet. In some respects, that's relatively straightforward. As you can see from some of the results, when you get the right assets with the right operational management, you can produce very good returns from those. The fund, or the fund, the third-party business, the capital business, that is capable of operating on a wider scope, taking in some other jurisdictions and investment classes. It has a wider remit.

It continues to be very committed to our Hong Kong and.

The greater China area, the greater Bay area in particular.

It's also very much a retail and to some degree in office focus business and its fundamentally outside of greater China, It's focused on Australia.

Australia.

And Singapore, so that takes care of the balance sheet in some respects that's relatively straightforward.

But again as you can see from some of the results when you get the right assets with the right operational management you can produce very good returns from those the fund or the fund the third party business the capital business.

That is.

Capable of operating on a on a wider scope taking in some other.

Jurisdictions and our investment classes.

So it has a it has a wider remit, but having said that it's still fundamentally operating.

Carl Choi: Having said that, it's still fundamentally operating in the same developed Asian markets. I think that probably covers the third-party capital side. In Zhongguancun and the sort of reversions, generally speaking, in China, I think in that asset particularly, there were some challenges. There was a new mall that was down the road that came into existence. We had some weaknesses in occupancy, which is highly unusual for us because normally we pride ourselves on having very full buildings, as you can see from the results. We had to deal with that. In order to deal with that, that meant that there were steeper than normal reversions because suddenly we were competing, as I say, with a new offering. They've increased occupancy there, or we've done lettings for around 35% plus of the building overall.

In the same developed Asian markets.

So I think that probably covers the third party capital side.

In junction and the sort of reversion is generally speaking in China.

I think in in that asset, particularly there was some challenges there was a new mall that was down the road.

That that came into existence. So we.

Had some.

You know weaknesses in occupancy, which is highly unusual for us because normally we pride ourselves on having very full buildings as you can see from the results.

We had to deal with that and in order to deal with that that meant that there was steeper than normal reversion because suddenly we were competing as I say with a with a new offering but they've increased occupancy there. We've we've we've done lettings for roundabout 35 plus percent of the building overall so.

I I don't want to be too confident in predicting but I do feel that that is largely shored up and could there be some more weakness that comes from the general markets, yes, potentially but I think we're now on a level playing field in terms of that asset and by the way that asset is.

Carl Choi: I don't want to be too confident in predicting, but I do feel that that is largely shored up. Could there be some more weakness that comes from the general market? Yes, potentially. I think we're now on a level playing field in terms of that asset. By the way, that asset is a perfectly good asset. It just suddenly faced some competition, and we've dealt with that. As I said earlier, when you take out the impact of that particular property from the overall results in China, what's very encouraging is that we actually saw growth in reversions in China overall. I think with some cautiousness going forward, I think it's not a bad picture.

It is a pretty good asset it just suddenly faced some competition and we've dealt with that and as I say when as I said earlier when you take out the impact of that particular property from the overall results in China.

What's very encouraging is that we actually saw growth.

In revisions in China overall, so I think it's a it's.

With some cautiousness going forward I think it's a it's not a bad picture.

On the headcount reduction I guess.

George Hongchoy: On the headcount reduction, I guess the way it's done is between a redundancy or retirement, there are statutory as well as contractual payments that we are obligated to fulfill. The accounting treatment is such that the expense of these payments needs to be all front-loaded to the last day of the employment. That's why I say a lot of this will then be surfacing as we cross into the end of the financial year, into the new year. I guess when the exercise was conducted in the first half and the execution of this stuff is being done within this period, quite a fair bit of this one-off will then be expensed into the second half of the financial year.

The way it's done is between a redundancy or retirement, there are statutory as far as <unk> contracture payments that we are obligated to fulfill.

And the accounting treatment is such that the expense of these payments needs to be all front loaded to the last day of the employment. So that's why I say a lot of discipline and be surfacing as we cross into the end of the financial year into the new year and I guess.

We plan to exercise was conducted in the first half and the execution of this stuff is being done with not dispute at all quite a fair bit of this one awkward NB.

Expense into the second half of the financial year.

Mac.

[Analyst] (Citi): Mark?

Thank you management this is mark <unk> from UBS.

George Hongchoy: Thank you, Management. This is Mark Leung from UBS. I got about three questions. I think the first one is regarding the retail sales on the ground. I think in the first half, our attendance sale was mainly dragged by the general retail, which significantly underperformed the overall Hong Kong market. Just want to share what kind of category we underperformed. You also mentioned about the e-commerce penetration. That's linked to the second question because I think in last week, one of the local e-commerce operators said they want to eliminate the brick-and-mortar retail in Hong Kong. Just want to see your view and what's our strategy in defending our position for the local neighborhood mall in regard to the e-commerce threat. Number three is regarding the occupancy cost ratio. I think currently it's about 13%.

About three questions I think the first one is regarding on the retail sales on the ground I think in first half hour tenants have us mainly dragged by the general retail, which Nick immensely underperformed. The overall Hong Kong market just wanted to share what kind of category. We underperform you also mentioned that Buster ecommerce penetration.

So that's linked to the second question because I think in last week, one of the local peak.

E Commerce, operator, they said they want to eliminate our brick and motor read housing Hong Kong. So just want to see all of you and what's our strategy in defending our position body local neighborhood more in regard on an E. Commerce Fred's number free is regarding on the occupancy cost ratio I think currency is about 14%.

But if you look on the right path across seems the attendants margin squeezing and also maybe some of the supermarket are cutting our price do you think that the.

George Hongchoy: If you look on the wider board across, it seems the attendance margin is squeezing, and also maybe some of the supermarkets are cutting the price. Do you think that the occupancy cost ratio may need to further trend down in the future in order to retain the talent? If that's the case, what is the sustainable level? Last but not least, it's about the Hong Kong car park. We have a slight decline in the car park. Just want to check with Management what is our future growth outlook for the Hong Kong car park because it seems the number of cars continued to not rebound despite the population increase. Thank you.

Occupancy occupancy cost ratio may lead to further trend down in the future in order in order to retain the talent. That's the case what is a sustainable level last but not least is the apples to Hong Kong car Park, we have a slight decline in a car park and I just wanted to check with management, while is our future growth outlook for the Hong Kong pocket because since the.

Number of cars continue to.

It's not we plan despite a population.

Thank you.