Half Year 2026 Capitaland Investment Ltd Earnings Call

August 13, 2026

Speaker #2: A very good morning, ladies and gentlemen, and welcome to CapitaLand Investment's first half 2026 results briefing. You can hear a lot of noise here because we have many friends joining us here in person.

Moderator: A very good morning, ladies and gentlemen, and welcome to CapitaLand Investment's H1 2026 results briefing. You can hear a lot of noise here because we have a lot of friends who are joining us here in person. Before we begin, just please note that this session is actually being recorded. With that, once again, thank you so much for joining us this morning, both in person as well as friends who are joining us online. My name is Grace, and I will be moderating this morning's session. As you have seen from our results this morning, CLI has delivered a strong set of results for H1, and this was driven primarily by strong momentum in our listed as well as our private funds. Paul will have the pleasure of sharing with you details of our results after this.

Speaker #2: So, before we begin, please note that this session is being recorded. With that, once again, thank you so much for joining us this morning, both in person as well as to our friends who are joining us online.

Speaker #2: My name is Grace, and I'll be moderating this morning's session. As you have seen from our results this morning, CLI has delivered a strong set of results for the first half, and this was driven primarily by strong momentum in our listed as well as our private funds.

Moderator: My name is Grace, and I will be moderating this morning's session. As you have seen from our results this morning, CLI has delivered a strong set of results for H1, and this was driven primarily by strong momentum in our listed as well as our private funds. Paul will have the pleasure of sharing with you details of our results after this.

Speaker #2: Paul will have the pleasure of sharing a few details of our results after this. What's important is that, building on this momentum, we are now sharpening our focus to accelerate growth and value creation.

Moderator: What is important is that building on this momentum, we are now sharpening our focus to accelerate growth and value creation. For that, Chee Koon will share with you what are some of our strategic priorities and plans ahead, and we look to share more details with you in the coming months. Thereafter, we will open the floor for Q&A. With that, Paul, over to you.

Speaker #2: And for that, Chikun will share with you what some of our strategic priorities and plans ahead are. We look forward to sharing more details with you in the coming months.

Speaker #2: Thereafter, we will open the floor for Q&A. And with that, Paul, over to you.

Speaker #3: Thanks, Grace. Good morning, everyone. It's lovely to see all of you today. I've been asked a couple of times why I'm wearing a tie today.

Paul Tham: Thanks, Grace. Morning, everyone. It is lovely to see all of you today. I have been asked a couple of times about why I am wearing a tie today. This is my lucky tie for those of you who do not know. We have had the best operating profit improvement in the last five years for us. If you had seen us in 2024, 2025 was a pivot year, right? In 2024 and 2025, profitability started to go up. We like to think that this year is an indication that that growth is going to continue, and that we should see this continuing in the foregoing years. So I am wearing my lucky tie to make sure I do not jinx anything today by being too positive. I am going to go through our results fairly quickly. It is a fairly straightforward set of results. Then I will pass it over to Chee Koon.

Speaker #3: This is my lucky tie, for those of you who don't know. We've had the best operating profit improvement in the last five years, for us.

Speaker #3: And if you had seen us in '24, '25 was a pivot year, right? In '24 and '25, profitability started to go up, and we like to think that this year is an indication that that growth is going to continue, and that we should see this continuing in the forthcoming years.

Speaker #3: So I'm wearing my lucky tie to make sure I don't jinx anything today by being too positive. So, I'm going to go through our results fairly quickly.

Speaker #3: It's a fairly straightforward set of results, and then I will pass it over to Chikun. So let me just jump straight into the numbers.

Paul Tham: So let me just jump straight in to the numbers. So, revenue for us is about flat. This is directionally exactly how we are trying to grow the business. On the left-hand side, you see our fee revenue up 20%. This is the part of the business that eventually is supposed to form effectively what is CLI. 20% growth, particularly what you will see is 50% of that growth or the growth rate of about 50% came from our private and listed funds. Which is the part of the business which is really our two main engines which we are trying to grow. On the right-hand side where you can see our real estate investment business, you would see that drop of 24%. This is partly due to deconsolidations and divestments.

Speaker #3: So revenue for us is about flat. This is directionally exactly how we are trying to grow the business. On the left-hand side, you see our fee revenue, up 20%.

Speaker #3: This is the part of the business that eventually is supposed to form, effectively, what is CLI. Twenty percent growth—particularly, what you'll see is 50% of that growth, or a growth rate of about 50%, came from our private and listed funds.

Speaker #3: Which is the part of the business which is really our two main engines that we're trying to grow. On the right-hand side, where you can see our real estate investment business, you would see that drop of 24%.

Speaker #3: This is partly due to deconsolidations and divestments. Actually, the main driver was—some of you may remember from our last results—we divested, or deconsolidated, a US corporate housing platform called Synergy out of our Escrow Lodging platform.

Paul Tham: Actually, the main driver was, as some of you may remember from our last results, we divested or deconsolidated a US corporate housing platform called Synergy out of our Ascott Lodging platform. The profit contribution from that entity was actually slightly negative. But from a revenue contribution, it contributed SGD 134 million in the H1 of last year. And that is really the bulk of the big drop. So actually, things are moving directionally exactly how we are hoping for on the revenue side. And similarly, on the profit side, what you can see on the left-hand side, is profit for the operating side is up 13%, driven with the big uplift coming from the fee business. And I will spend a little bit more time talking through the fee business on the next slide. But it has been very good growth for us there. The real estate investment business held steady.

Speaker #3: The profit contribution from that entity was actually slightly negative. But from a revenue contribution, it contributed $134 million in the first half of last year.

Speaker #3: And that's really the bulk of the big drop. So, actually, things are moving directionally exactly how we are hoping for on the revenue side.

Speaker #3: And similarly, on the profit side, what you can see on the left-hand side is that profit for the operating side is up 13%, with the big uplift coming from the fee business.

Speaker #3: And I'll spend a little bit more time talking through the fee business on the next slide. But it's been very good growth for us there.

Speaker #3: The real estate investment business held steady. This was slightly better than we had expected. We expect the real estate business to come down over time as we divest assets.

Paul Tham: This was slightly better than we had expected. We expect the real estate business to come down over time as we divest assets. But we did actually, we reduced our stakes in the REITs, and we divested some assets. But the profitability held largely steady, largely from the fact that interest cost is down for us. So we took some savings there, which helped uplift that. And we had a little bit of gains from some of the divestments or operating divestments. On the portfolio gains, largely flat year-on-year. We expect this number to be generally, as always, around zero. Given that we have divested a fair bit of properties over the years, going forward, we would expect this to be really slightly above or slightly below on a general run rate basis.

Speaker #3: But we did, actually—we reduced our stakes in the REITs, and we divested some assets. But the profitability held largely steady, mainly due to the fact that interest cost is down for us.

Speaker #3: So we took some savings there, which helped uplift that. And we had a little bit of gains from some of the divestments, or operating divestments.

Speaker #3: On the portfolio gains, it's largely flat year on year. We expect this number to generally, as always, be around zero. Given that we have divested a fair bit of properties over the years, going forward, we would expect this to be really slightly above or slightly below on a general run-rate basis.

Speaker #3: And then you can see total PATMI for us, first half of the year, up 14%. So, on the fee income side, this was a large part of the driver for us.

Paul Tham: Then you can see total PATMI for us H1 of the year up 14%. So on the fee income side, this was a large part of the driver for us. As you can see, going from left to right, particularly our two main engines of listed and private. For the listed side, as most of you know, it had a very good H1. Very high transaction volume, more than SGD 10 billion worth of transactions. And this was across multiple REITs, and equity fundraisings. So we had four of our eight REITs raise equity, and we had five of the REITs active on transactions in the H1, which was why there was so much flow. To be fair, this is not fully a repeatable number, half on half.

Speaker #3: As you can see, going from left to right, particularly with our two main engines: listed and private. For the listed side, as most of you know, it had a very good first half.

Speaker #3: Very high transaction volume, more than $10 billion worth of transactions. And this was across multiple REITs. And equity fundraisings. So we had four of our eight REITs raise equity.

Speaker #3: And we had five of the REITs active on transactions in the first half, which was why there was so much flow. To be fair, this is not fully a repeatable number.

Speaker #3: Half on half. But we do expect that transaction activity in general—we've seen this pick up for both the private funds and the listed funds.

Paul Tham: But we do expect that transaction activity in general, we have seen this picked up for both the private funds and the listed funds, we expect that that will continue. We would expect a lot of that 66 you see from the listed funds, a fair bit of that will convert into recurring income. That will give us a little bit of an uplift going forward. But we do have announced transactions, and more are expected that will impact the H2 of this year. Private funds had excellent revenue growth for us. A lot of that came from the acquisition of Wingate last year. Private credit is now contributing quite materially to our revenue pickup. We are quite encouraged to see that together with our other funds also starting to perform.

Speaker #3: We expect that will continue. So, we would expect a lot of that $66 million you see from the listed funds, a fair bit of that will convert into recurring income.

Speaker #3: So that will give us a little bit of an uplift going forward. But we do have announced transactions, and more are expected, that will impact the second half of this year.

Speaker #3: Private funds had excellent revenue growth for us. A lot of that came from the acquisition of Wingate last year, so private credit is now contributing quite materially to our revenue pickup.

Speaker #3: So we are quite encouraged to see that, together with our other funds also starting to perform. The second funds in multiple series that we've had, whether it is Living or the Asia Pac Credit Fund, are also starting to contribute higher revenues, which is part of what has been driving that growth.

Paul Tham: The second funds in multiple series that we have had, whether it is Living or the Asia Pac Credit Fund, are also starting to contribute higher revenues, which is part of what has been driving that growth. Then similarly, you will see a little bit of one-off transaction performance fees. Part of that came from the fact that one of our India funds generated some significant carry for us. We are very proud of that team. That contributed to the P&L for this half. We would expect that there will be a little bit more in terms of performance fees and one-offs in the H2. But it is a nice uplift. Some of that fees now includes from a Wingate perspective when we originate and structure deals. Similar to the REITs, it forms a little bit of what we would consider an acquisition fee or a structuring fee.

Speaker #3: And then, similarly, you'll see a little bit of one-off transaction performance fees. Part of that came from the fact that one of our India funds generated some significant carry for us.

Speaker #3: We're very proud of that team, and that contributed to the P&L for this half. We would expect that there will be a little bit more in terms of performance fees and one-offs in the second half.

Speaker #3: But it's a nice uplift. And some of those fees now include, from a Wingate perspective, when we originate and structure deals—similar to the REITs—it forms a little bit of what we would consider an acquisition fee or a structuring fee.

Speaker #3: Commercial management was up 6%. Commercial management had some of their gains from improvement in leasing over the quarter, and also improving property performance, which drove their management fees up.

Paul Tham: Commercial management, up 6%. Commercial management had some there gains from improvement in leasing over the quarter and also improving property performance, which drove their management fees up 6%. Quite honestly, it is a little bit faster than we expect them to grow. So it was a very good H1. Might moderate slightly. But good performance and also notably, our margins actually ticked up quite a fair bit from operational improvement and efficiency from the commercial management team. Lodging numbers here look a little bit stable, but if you exclude the one-offs, a year ago this time we had some termination fees, some sale of franchises, and actually some write-backs. Without that, we are actually up about 4%. Lodging continues to grow. More importantly, as we talk through lodging, is we are really building for the future on the lodging side.

Speaker #3: Six percent, quite honestly, is a little bit faster than we expect them to grow. So it was a very good first half. It might moderate slightly.

Speaker #3: But good performance. And also, notably, our margins actually ticked up quite a fair bit from operational improvement and efficiency from the commercial management team.

Speaker #3: Lodging numbers here look a little bit stable. But if you exclude the one-offs, a year ago at this time we had some termination fees, some sale of franchises, and actually some write-backs.

Speaker #3: Without that, we're actually up about 4%. So, lodging continues to grow. More importantly, as we talked through lodging, we're really building for the future on the lodging side.

Speaker #3: As a profit contributor, currently it is less impactful than the overall value of the platform, as it continues to invest for growth. So overall, a strong first half for us—up 20% on the fee side.

Paul Tham: As a profit contributor currently, it is less impactful than the overall value of the platform as it continues to invest for growth. Overall, a strong H1 for us, up 20% on the fee side. On the real estate investment earnings, as mentioned, it held steady. If you look at the chart, what you will notice, maybe just a few things to highlight, listed funds, almost completely stable. A little bit of movement because of accounting treatment on how we handle FX. But we think as long as we bring down our stakes, this contribution may come down slightly. But we are expecting from most of our REITs to see organic growth in their performance to help offset some of that stake dilution.

Speaker #3: On the real estate investment earnings, as mentioned, it held steady. If you look at the chart, what you will notice—maybe just a few things to highlight.

Speaker #3: Listed funds are almost completely stable. There's a little bit of movement because of accounting treatment on how we handle FX. But we think as long as we bring down our stakes, this contribution may come down slightly.

Speaker #3: But we are expecting most of our REITs to see organic growth in their performance to help offset some of that stake dilution. Private funds' contribution has increased.

Paul Tham: Private funds contribution has increased, is expected to also increase going forward as we have been divesting some of our lower-yielding assets, and reinvesting into credit, into value-add opportunities, and those generate a higher return. For instance, if we sold a Singapore logistics asset or an industrial asset, we also sold some stakes down in China. Those may have been contributing between 2% to 4% yields or 2% to 5% yields. For the new reinvested investments for us, for the funds, generally, we would be targeting between an 8% to 12%. Because of that, we expect we will continue to see an uplift in this portion. For the non-fund investments, a lot of this is actually due to a single transaction where we sold one IPAC in China, which is one of our last strata commercial assets, which was a legacy asset that we had previously.

Speaker #3: This is expected to also increase going forward, as we've been divesting some of our lower-yielding assets and reinvesting into credit, into value-add opportunities.

Speaker #3: And those generate a higher return. So for instance, we sold a Singapore logistics asset, or an industrial asset. We also sold some stakes down in China.

Speaker #3: Those may have been contributing between 2% to 4% yields—so, 2% to 5% yields. For the new reinvested investments for us, for the funds, generally we would be targeting between 8% to 12%.

Speaker #3: So because of that, we expect we'll continue to see an uplift in this portion. And then for the non-fund investments, a lot of this is actually due to a single transaction, where we sold one iPark in China, which is one of our last strata commercial assets—this was a legacy asset that we had previously.

Speaker #3: It looks like a big movement on an EBITDA basis, but actually, as you saw from the last slide, on a profit basis there is actually no change.

Paul Tham: It looks like a big movement on an EBITDA basis, but actually, as you saw from the last slide, on a profit basis, there is actually no change. The reason is part of this is accounting treatment for us. We had to take some of the foreign exchange currency losses in the EBITDA performance. But when we show PATMI for the sector, we offset all of the deferred tax or the Land Appreciation Tax provisions. Oddly enough, while it looks like a big decline, it was actually a slight increase for us in contribution from that asset divestment. Finally, just on our gearing and debt levels. We still continue to have a fair bit of headroom. Most importantly for us, I think its interest cost has come down. We are expected to stay at this level or actually go down slightly further. Hopefully, that continues to improve for us.

Speaker #3: The reason is, part of this is accounting treatment for us. We had to take some of the foreign exchange currency losses in the EBITDA performance.

Speaker #3: But when we show PATMI for the sector, we offset all of the deferred tax or the land appreciation tax provisions. So, oddly enough, while it looks like a big decline, it was actually a slight increase for us in contribution from that asset divestment.

Speaker #3: Finally, just on our gearing and debt levels, we still continue to have a fair bit of headroom. Most importantly for us, I think, is that interest cost has come down.

Speaker #3: We expect it to stay at this level, or actually go down slightly further, so hopefully that continues to improve for us. And then, just very quickly, four slides on business updates before handing the time to Chi Koon.

Paul Tham: Just very quickly, four slides on business updates before handing the time to Chee Koon. On our four verticals, just to give you a little bit more qualitative update on what has been going on. On the private funds side, with Andrew and Kishor and the team, we have actually had a good H1 on multiple fronts. We have seen good fundraising momentum, so we are up SGD 1.4 billion in fundraising. Combine it with what was raised for the public funds. We have raised SGD 3.7 billion in the H1, which is 50% higher than where we were at this time last year. There has been strong engagement, I would say, particularly in the areas which we are building more and more credibility on. Obviously, we have had the second raise in the living fund, Clara Two. We have had a second raise in our Asia Pacific credit fund.

Speaker #3: On our four verticals, just to give you a little bit more qualitative update on what has been going on. On the private fund side, with Andrew and Kishore and the team, we've actually had a good first half on multiple fronts.

Speaker #3: We've seen good fundraising momentum, so we're up $1.4 billion in fundraising. Combined with what was raised for the public funds, we've raised $3.7 billion in the first half, which is 50% higher than where we were at this time last year.

Speaker #3: There's been strong engagement, I would say, particularly in the areas where we are building more and more credibility. Obviously, we've had the second raise in the living fund, CLARA 2.

Speaker #3: We've had a second raise in our Asia Pacific credit fund. We believe we'll be able to raise a third fund off the back of that later this year.

Paul Tham: We believe we will be able to raise a third fund off the back of that later this year. The fundraising momentum has been there. The key for us really has been actually making sure that we can do the last bullet point, which is the deployment and looking for opportunities. As you can see, a number of the private funds have been active in living in India, in logistics. So deals are starting to move. While there has been fluctuations, I think in near-term uncertainty, from what we have seen in the market, there is a little bit more confidence or a little bit more certainty on the long-term view, which has allowed a number of these transactions to move. The last bullet point in the middle, we announced just three days ago? Two days ago?

Speaker #3: So, the fundraising momentum has been there. The key for us, really, has been actually making sure that we can do the last bullet point, which is the deployment, and looking for opportunities.

Speaker #3: And so as you can see, a number of the private funds have been active in living, in India, and in logistics. So deals are starting to move.

Speaker #3: While there have been fluctuations, I think in the near-term uncertainty—based on what we've seen in the market—there is a little bit more confidence, or a little bit more certainty, on the long-term view, which has allowed a number of these transactions to move.

Speaker #3: And then the last bullet point in the middle: we announced just three days ago—two days ago, two days ago—about our China private REIT, our China P REIT, where we raised 3 billion renminbi.

Paul Tham: Two days ago, about our China private REIT, our China P-REIT, where we raised RMB 3 billion. This is important for us on two fronts. One is this grows our platform in China, where we are very focused on still building an RMB for RMB business, tapping domestic capital to grow. This also gives us another avenue to recycle out of some of our legacy assets. For this one particular mall, CapitaMall Lujiazui in Shanghai, you will see that start to show up in our H2 numbers, but this will start contributing meaningfully for us for divestments. We are still excited that Tzu-Hsiang and the China team have more divestments planned for H2. On the listed funds, I will not spend too much time. A lot of this is public information on the deal flow.

Speaker #3: And this is important for us on two fronts. One is, this grows our platform in China, where we're very focused on still building a renminbi-for-renminbi business, tapping domestic capital to grow.

Speaker #3: But also, this gives us another avenue to recycle out of some of our legacy assets. And as for this one particular mall, CapitaMall LuWan in Shanghai, you'll see that start to show up in our second-half numbers.

Speaker #3: But this will start contributing meaningfully for us for divestments, and we're still excited that Zhixiang and the China team have more divestments planned for the second half.

Speaker #3: On the listed funds, I won't spend too much time. A lot of this is public information on the deal flow. What I would say is, what we have been trying to do is, going forward, we would like to see the growth rate of our listed funds platform be faster than historically it has been.

Paul Tham: What I would say is what we have been trying to do is going forward, we would like to see the growth rate of our listed funds platform be faster than historically it has been. Historically, we have grown at about 3% to 4%, and this has been a core anchor for us. Obviously, H1 of this year was very strong, but our expectations is that we should be able to uplift that growth a little bit through multiple avenues. Obviously, our couple of big REITs are growing very well. Even our Ascott Trust, our India Trust, have been active in the market as well. Together with our Japan Hotel REIT, which came together when we did the SC Capital acquisition, we expect that we will continue to see across the portfolio more transaction activity and growth there.

Speaker #3: Historically, we've grown at about 3% to 4%. This has been a core anchor for us. Obviously, the first half of this year was very strong.

Speaker #3: But our expectation is that we should be able to uplift that growth a little bit through multiple avenues. Obviously, our couple of big REITs are growing very well.

Speaker #3: But even our Escort Trusts, our India Trusts, have been active in the market as well. And so, together with Japan Hotel REIT, which came together when we did the SC Capital acquisition, we expect that we'll continue to see, across the portfolio, more transaction activity and growth there.

Speaker #3: Together with efforts to launch new REITs—hopefully the first one this year being the second C-REIT that will go out—we expect that this platform will be able to grow as well.

Paul Tham: Together with efforts to launch new REITs, hopefully the first one this year being the second C-REIT that will go out. We expect that this platform will be able to grow as well. Commercial management, as mentioned, had a very good H1. I would say as we look at our business going forward of our listed and private funds, commercial management is one of our strongest advantages, particularly here in Singapore, but also in Malaysia, in China and India. Something that as we have been reviewing the business, we thought worth highlighting is if you look on the left-hand side table. This is the, we picked just the Singapore selection of assets that are managed under CapitaLand's commercial management team. If you look at the margins versus the market average, you can see that across every asset class, generally, we would have improved performance.

Speaker #3: Commercial management, as mentioned, had a very good first half. I would say, as we look at our business going forward, of our listed and private funds, commercial management is one of our strongest advantages, particularly here in Singapore.

Speaker #3: But also in Malaysia, in China, in India. And something that we were— as we've been reviewing the business, we thought worth highlighting is, if you look on the left-hand side table, we just picked the Singapore selection of assets that are managed under CapitaLand's commercial management team.

Speaker #3: If you look at the margins versus the market average, you can see that across every asset class, generally, we would have improved performance. This is actually very important for us as a fund manager.

Paul Tham: This is actually very important for us as a fund manager. This is one of our operating capabilities that we leverage, and we share with investors, and it is one of the reasons they invest behind our funds and our REITs. So we think of commercial management really as a strategic contributor to the funds business for us. While the growth, obviously, if it has got a big base, while the growth this H1 was good, if it moderates or picks up depending on leasing activity, which can be a little bit lumpy for us, this is a very important part of the business that we expect will continue to grow and contribute. Then finally, on lodging. So lodging had a very good signings H1. As you can see, we signed 8,400 new units. This is a pickup from the previous year.

Speaker #3: This is one of our operating capabilities that we leverage and share with investors, and it's one of the reasons they invest in our funds and our REITs.

Speaker #3: So we think of commercial management really as a strategic contributor to the funds business for us. So while the growth, obviously, it's got a big base.

Speaker #3: While the growth this first half was good, it may moderate or pick up depending on leasing activity, which can be a little bit lumpy for us. This is a very important part of the business that we expect will continue to grow and contribute.

Speaker #3: And then finally, on lodging. So, lodging had a very good signings first half. As you can see, we signed 8,400 new units. This is a pickup from the previous year.

Speaker #3: And this is added together with the pipeline of openings. Why this is important for us is, while they don't immediately contribute to revenue—which is why you have seen a little bit of a slower growth than usual from our lodging side—this builds our pipeline for future revenue growth.

Paul Tham: This is added together with the pipeline of openings. Why this is important for us is while they do not immediately contribute to revenue, which is why you have seen a little bit of a slower growth than usual from our lodging side, this builds our pipeline for future revenue growth. It is one of the things that as an organization, we are able to underwrite that growth a lot more knowing that the signings have happened and will come online over a 1 to 3-year period, depending on whether they are conversions or greenfields. We are quite excited for the future on the growth on the lodging platform. Eventually, we believe we will start seeing those numbers flow in much more nicely into the P&L.

Speaker #3: So, it is one of the things that, as an organization, we're able to underwrite that growth a lot more, knowing that the signings have happened and will come online over a one- to three-year period, depending on whether they're conversions or greenfields.

Speaker #3: So we're quite excited for the future and the growth of the lodging platform. Eventually, we believe we'll start seeing those numbers flow in much more nicely into the P&L.

Speaker #3: So, that is the quick update on our performance for the first half. I'm going to pass this to Chiku to talk about how we are looking ahead.

Paul Tham: That is the quick update on our performance for H1, and I am going to pass this to Chiku to talk about how we are looking ahead.

Speaker #4: Hi. Morning. Thank you, everyone, for joining us this morning. Thank you, Paul, for, I hope, a pretty concise but clear presentation. I think the results encouraging, at least for the team, shows that the efforts last few years in laying the foundation and transforming the business into an asset manager paying off.

Lee Chee Koon: Hi. Morning. Thank you everyone for joining us this morning. Thank you, Paul, for, I hope, a pretty concise but clear presentation. I think the results are encouraging, at least for the team. It shows that the efforts last few years in laying the foundation and transforming the business into an asset manager is paying off. Last year, we have a good fundraising momentum. This year, it continues. Really we want to position the company for growth. Again, the large part of our growth today is driven by the REITs business. We have 8 REITs today. Obviously, the big REIT, CICT, CLAR, always running at the front, driving a lot of transaction, and we believe that that will continue to be the case.

Speaker #4: Last year, we had good fundraising momentum. This year, it continues. Really, we want to position the company for growth. And again, a large part of our growth today is driven by the REITs business.

Speaker #4: We have eight REITs today. Obviously, the big REITs—CICT and CLAR—are always running at the front, driving a lot of transactions, and we believe that will continue to be the case.

Speaker #4: And we have a handful of smaller REITs, and we want to take a more active approach as a sponsor, working more closely with the various REIT CEOs to see how we can help to improve the returns to all unitholders.

Lee Chee Koon: We have a handful of smaller REITs, and we want to take a more active approach as a sponsor to work more closely with the various REIT CEOs to see how we can help to improve the returns to all unitholders and see how we can narrow the gap, if they are trading below NAV. This is something that Paul has explained about in terms of the possibility and the potential. We spent some time talking, and in fact, I have not even had the chance to brief my REIT CEO. I have conveniently asked Paul to help me look after the REITs to drive the REITs growth in a very concerted and dedicated fashion going forward. Paul, thank you. He has to be accountable for what he says, right? Yeah. Moving on the private fund side of the business.

Speaker #4: And see how we can narrow the gap if they are trading below NAV. And this is something that Paul has explained about, in terms of the possibility.

Speaker #4: And the potential, and we spent some time talking. And in fact, having even had the chance to brief my REIT CEO, I have conveniently asked Paul to help me look after the REITs to drive the REITs' growth in a very concerted and dedicated fashion going forward.

Speaker #4: Paul, thank you. I mean, yes, he has to be accountable for what he says, right? Yeah. So then, moving on, on the private fund side of the business.

Speaker #4: Most of you who track, in terms of the asset management, fund flows to real estate generally have been low. But even then, I think we are doing relatively well.

Lee Chee Koon: Most of you who track in terms of the asset management fund close to real estate generally has been low. But even then, I think we are doing relatively well. I think what we want to do on the real estate side of the equation is to really focus on strategies that we can scale, make a difference, we can do repeatable strategies, things like living, hospitality, products, our commercial management, office retail, that continues to be something that we are strong at. Of course, you cannot be investing everywhere. You need to be very selective in terms of the locations. Also to leverage how to work more closely with the REITs platform. Actually, a number of GPs and LPs are stuck with a lot of their real estate positions that cannot find liquidity.

Speaker #4: I think what we want to do on the real estate side of the equation is to really focus on strategies that we can scale and make a difference.

Speaker #4: We can do repeatable strategies, things like leaving hospitality products, our commercial management office, and retail—that continues to be something that we are strong at.

Speaker #4: Of course, you can't be investing everywhere. You need to be very selective in terms of the locations, and also to leverage how to work more closely with the REITs platform.

Speaker #4: Actually, a number of GPs and LPs are stuck with a lot of their real estate positions. They cannot find liquidity. So the question is, how do we—how does the private funds team work closely with the REITs to offer liquidity for, of course, assets that we like, for portfolios that we like.

Lee Chee Koon: The question is, how do the private funds team work closely with the REITs to offer liquidity for assets that we like, for portfolios that we like, provide liquidity, and then allowing us to build up the private funds at the same time. That is how we are thinking about the private funds. But real estate itself, the flow will continue to not be strong simply because a lot of capital is going to tech, AI, and because of interest rates, it is not going to be strong. But what we need to do is to look at the capabilities that we have, the operating platforms that we have built up in the company. For instance, Pat has built up a very interesting self-storage platform. We are one of the leading players in Asia.

Speaker #4: Provide liquidity, and then allow us to build up the private funds at the same time. So that's how we are thinking about the private funds.

Speaker #4: But for real estate itself, the flow will continue to not be strong simply because a lot of capital is going to tech, AI, and because of interest rates, it's not going to be strong.

Speaker #4: But what we need to do is look at the capabilities that we have, the operating platforms that we have built up in the company.

Speaker #4: For instance, Pat has built up a very interesting self-storage platform. We are one of the leading players in Asia. We are looking to broaden that in other parts of the world and are in active discussions, both in terms of opportunities and with LPs.

Lee Chee Koon: We are looking to broaden that in other parts of the world in active discussions, both in terms of opportunities and with LP. I think that is one area that we can leverage on operating capabilities together with both assets and operating capabilities to raise AUM. That is one sector. The other factor will be in terms of data center. Data center, it is all the craze everywhere, especially in the US. We have built a distinctive advantage in terms of our data center platform in India. Kishore is helping to look at that ability to get access to land, to get power, and building up quite nicely. We are actually wanting to convert that into a platform where we can bring in partners and to raise capital around it as well. The other platform that we look at could potentially be our India logistics platform.

Speaker #4: I think that's one area where we can leverage on operating capabilities, together with both assets and operating capabilities, to raise AUM. That's one sector.

Speaker #4: The other sector will be in terms of data centers. Data centers are all the craze everywhere, especially in the US. We have built a distinctive advantage in terms of our data center platform in India.

Speaker #4: I mean, Kishor is helping to look at that ability to get access to land, to get power, and building up quite nicely. We are actually wanting to convert that into a platform where we can bring in partners and raise capital around it as well.

Speaker #4: The other platform that we look at could potentially be our India logistics platform. Very interesting platform that is supported with a strong JV partner. I think there's an interesting opportunity for us to convert that into a platform and to really scale up very significantly in India.

Lee Chee Koon: Very interesting platform that is supported with a strong JV partner. I think there is an interesting opportunity for us to convert that into a platform and to really scale up very significantly in India. Of course, we spent some time talking about Ascott. Ascott has been a key pillar of our operating platform for CLI. It helped us to build Ascott REIT, nice platform allowing us to create private equity funds. That is a platform that we believe can potentially be created into different products or look for ways to bring in partners to monetize the value and to continue to support its growth. The fee income is growing nicely. I think these are things that we will be looking at in terms of driving the growth of the business. Of course, the other part that is getting quite interesting is the credit side.

Speaker #4: Of course, we spent some time talking about ASCOD. ASCOD has been a key pillar of our operating platform for CLI. It's helped us to build the sender's—sorry, ASCOD REIT.

Speaker #4: It's a nice platform allowing us to create private equity funds, and that's a platform that we believe can potentially be developed into different products or used to look for ways to bring in partners to monetize its value and continue to support its growth.

Speaker #4: The fee income is growing nicely. I think these are things that we will be looking at in terms of driving the growth of the business.

Speaker #4: And of course, the other part that is getting quite interesting is the credit side. When we looked at it, we knew that the real estate side of the business was going to be slow.

Lee Chee Koon: When we looked at it, we knew that the real estate side of the business was going to be slow. That is why we bought the Wingate platform in Australia, have a team, and managed to convince Kishore to join us. He has a very exciting growth plan in terms of our credit, our alternatives out of business. We will find a time to share more details in terms of the growth plan for the different business verticals, maybe sometime in Grace, when is that going to happen? Oh, you will let them know. Anyway, she is finding the time where we will find a day where we will spend some time to go through all the different growth plans over the next few years, then you can see the growth trajectory. But really we are positioning the company for growth. We do understand that flow into the real estate will be slow.

Speaker #4: And that's why we bought the Wingate platform in Australia, have a team, and managed to convince Kishor to join us. He has a very exciting growth plan in terms of our credit and our alternatives out of the business.

Speaker #4: I mean, we will find a time to share more details in terms of the growth plan for the different business verticals—maybe sometime in Q3. Grace, when is that going to happen?

Speaker #4: Oh, you let them know. Okay. Anyway, she's finding the time. Well, we will find a day where we will spend some time going through all the different growth plans over the next few years.

Speaker #4: Then you can see the growth trajectory. But really, we are positioning the company for growth. We do understand that flow into the real estate will be slow.

Speaker #4: It's a cyclical issue, but in the meantime, we need to look for different growth platforms and opportunities, so that we can continue to drive the fee income for the group and for our investors.

Lee Chee Koon: It is a cyclical issue, but in the meantime, we need to look for different growth platforms and opportunities so that we can continue to drive the fee income for the group and for our investors. Just taking a step back, if you look at CLI, we did the transformation in 2021. We still have a pretty big balance sheet because a lot of these are legacy balance sheet assets, joint venture funds, development funds that were created during the time when CapitaLand was still a developer. The way we are going to organize the business is into a core and the non-core side of the business, where the core side of the business really focuses on the REITs, the private funds, and supported by our operating platforms.

Speaker #4: And then, just taking a step back, if you look at CLI, we did the transformation in 2021. We still have a pretty big balance sheet.

Speaker #4: Because a lot of these are legacy balance sheet assets—joint venture funds, development funds—that were created during the time when CapitaLand was still a developer.

Speaker #4: So, the way we are going to organize the business is into a core and a non-core side of the business, where the core side of the business really focuses on the REITs, the private funds, and is supported by our operating platforms.

Speaker #4: And then the non-core side, or some call it non-core—you can call it legacy—will be a lot of our asset stakes in the REITs, the private funds, and some of our legacy balance sheet assets in markets like China and some other markets. We want to focus on accelerating the divestment of these assets so that we can recycle the proceeds, either for growth or to return capital to shareholders.

Lee Chee Koon: The non-core side, some call it non-core, you can call it legacy, will be a lot of our assets stakes in the REITs, the private funds, and some of our legacy balance sheet assets in markets like China and some other markets that we want to focus to accelerate the divestment of these assets so that we can recycle the proceed either for growth or to return capital to shareholders. So that is really how we are going to organize ourselves. During the time when we meet all of you during the investor day, we will spend more time to explain to you how things will look like and we flash out a bit more details in terms of the numbers. So that is really the gist of the key things. In terms of driving the divestment for China, I think the China team has done well.

Speaker #4: So that's really how we're going to organize ourself. And going I mean, during the time when we meet all of you during the investor day, we'll spend more time to explain to you how things will look like and the flesh out a bit more details in terms of the numbers.

Speaker #4: So, that's really the gist of the key things. In terms of driving the divestment for China, I mean, I think the China team has done well.

Speaker #4: I think we are probably the only player that has raised a panda bond that has created a seed REIT in the process of launching the second one, a private REIT, and a dedicated China for China private funds.

Lee Chee Koon: I think we are probably the only player that has raised a panda bond, that has created a C-REIT in the process of launching the second one, a private REIT, and a dedicated China for China private funds. Then creating different channels for us to recycle some of the assets in China while growing the asset managements out of business. That initiative we will continue. It is something that we are well-positioned to tap the domestic capital. We want to grow the fee income. It is a big market, but there are some older balance sheet assets that we do need to clear, and we will be very disciplined about clearing them, redeploying the proceeds into, I would say, higher yielding and more better returns opportunities for the group. So that is really setting the stage.

Speaker #4: And then creating different channels for us to recycle some of the assets in China, while growing the asset management side of the business. That initiative we will continue.

Speaker #4: It's something that we are well positioned to tap the domestic capital. We want to grow the fee income. It's a big market, but there are some older balance sheet assets that we do need to clear and we'll be very disciplined about clearing them, redeploying the proceeds into I would say higher yielding and more better returns opportunities for the group.

Speaker #4: So that's really setting the stage. And then maybe I'll get the rest of the colleagues to join us, just to take questions from the team or from the audience.

Lee Chee Koon: And then, maybe I get the rest of the colleagues to join us, just to take questions from the audience.

Speaker #2: Sure, thanks. Thanks, Jihoon. So as Andrew, Kishor, and Kevin take their seats up front, just a reminder: we're now in the Q&A session. For those of us who are here, there are microphones.

Moderator: Sure. Thanks, Chee Koon. So as Andrew, Kishore, and Kevin take their seats up front, just a reminder, we are now in the Q&A session. For those of us who are here, there are microphones. Yes, I see you. Number 1, number 2, number 3. So, there will be microphones that will be passed around. Please state the name and the organization. And for those of us who are joining online, please key in your questions in the chat box, and then likewise, state your name and your organization, and we will take the questions. So Mervin, you get to go first.

Speaker #2: Yes, I see you—number one, number two, number three. So, there will be microphones; they'll be passed around. Please state your name and organization.

Speaker #2: And for those of us who are joining online, please key in your questions in the chat box, and likewise state your name and your organization. We'll take the questions accordingly.

Speaker #2: So, Mervyn, you get to go first.

[Analyst] (J.P. Morgan): Hi, I am Mervin from J.P. Morgan. Congrats Qi Kun and team on excellent set of results. Good end to your five-year journey or close to five-year end journey with the demerger with CLD. So I am sure a lot of hard work to deliver this very strong result. Maybe you can go to slide 15 in terms of the non-core businesses. That SGD 7 billion to 9 billion divestment target. I am not quite sure whether you can share with us timeframe to deliver on that, and in terms of capital allocation, is there a percentage that you may want to return back to shareholders, be it via dividends or buybacks? How are you thinking about that? In terms of the non-strategic holding in REITs, what does that exactly mean?

Mervin Song: Hi, I am Mervin from J.P. Morgan. Congrats Qi Kun and team on excellent set of results. Good end to your five-year journey or close to five-year end journey with the demerger with CLD. So I am sure a lot of hard work to deliver this very strong result. Maybe you can go to slide 15 in terms of the non-core businesses. That SGD 7 billion to 9 billion divestment target. I am not quite sure whether you can share with us timeframe to deliver on that, and in terms of capital allocation, is there a percentage that you may want to return back to shareholders, be it via dividends or buybacks? How are you thinking about that? In terms of the non-strategic holding in REITs, what does that exactly mean?

Speaker #5: Hi, I'm Mervyn from JP Morgan. Congrats, Jihoon and team, on the excellent results. Good end to your five-year journey, or close to five-year journey, with the demerger with CLD.

Speaker #5: I'm sure there was a lot of hard work to deliver these very strong results. Maybe we can just go to slide 15 to discuss the non-core businesses.

Speaker #5: That's a $7 to $9 billion divestment target. I'm not quite sure whether you can share with us the timeframe to deliver on that. And in terms of capital allocation, is it a percentage that you may want to return to shareholders via dividends or buybacks?

Speaker #5: Are you thinking about that? In terms of the non-strategic holding in REITs, what does that exactly mean? Is it for some of the REITs where you're not quite sure about the growth, or do you want to pare down to 15% or even lower?

[Analyst] (J.P. Morgan): Is it for some of the REITs where you are not quite sure about the growth or you want to pare down to 15% or even lower? And if you were to pare down, are we thinking about in-specie distribution, or you like to do a block trade via excellent J.P. Morgan trading team with attractive commissions? So those are my key questions. Thanks.

Mervin Song: Is it for some of the REITs where you are not quite sure about the growth or you want to pare down to 15% or even lower? And if you were to pare down, are we thinking about in-specie distribution, or you like to do a block trade via excellent J.P. Morgan trading team with attractive commissions? So those are my key questions. Thanks.

Speaker #5: And if you were to pare down, are we thinking about inter-species distribution, or would you prefer to do a block trade via the excellent JP Morgan trading team with attractive commissions?

Speaker #5: So, those are my key questions. Thanks.

Speaker #4: Okay. I will leave the timeframe part to Jihoon because that puts deliverables on all of us. Maybe just to share a little bit on the numbers.

Paul Tham: Okay. I will leave the timeframe part to Qi Kun because that puts deliverables on all of us. Maybe just to share a little bit on the numbers. The majority of the SGD 7 billion to 9 billion that we see as embedded value is largely balance sheet and legacy fund investments for us, which form the majority of that. While obviously a large part of that is in China, that also includes other assets we have in the portfolio, whether in Singapore or in India or in Europe, which we would like to divest as well. It does include some of what we would consider excess REIT holdings. I do not think this part is new to any of you. We have always talked about holding about 15% in our REITs. For CapitaLand Ascendas REIT, we already are at 16%. So I do not think that is a big change.

Speaker #4: The majority of the $7–$9 billion that we see as embedded value is largely balance sheet and legacy fund investments for us, which form the majority of that.

Speaker #4: While obviously a large part of that is in China, that also includes other assets we have in the portfolio, whether it's Singapore, India, or Europe, which we would like to divest as well.

Speaker #4: It does include some of what we would consider excess REIT holdings. I don't think this part is new to any of you. We have always talked about holding about 15% in our REITs.

Speaker #4: For Ascendas REIT, we are already at 16%, so I don't think that's a big change. It's just that if you look at our $8 billion of REIT units, if we were to average about 15%, that would bring us down to $6 billion.

Paul Tham: It is just that if you look at our SGD 8 billion of REIT units, if we were to average about 15%, that would bring us down to SGD 6 billion. So there is a couple of billion there that, in theory, can be returned. I would say we have not quite landed on how we will use that capital. Our expectation is at least half of that would go into reinvestment for growth. We believe there are a lot of opportunities, whether in living or in credit, where we can invest the money behind for growth. Obviously, from a CFO perspective, we would like to pay down some debt as well. But I would imagine at least a third is something that possibly could be a return to shareholders. I do not expect us to do a distribution in specie very much, quite honestly.

Speaker #4: So, there's a couple of billion there that, in theory, can be returned. I would say we have not quite landed on how we will use that capital.

Speaker #4: Our expectation is that at least half of that would go into reinvestment for growth. We believe there are a lot of opportunities, whether in living or in credit, where we can invest the money behind for growth.

Speaker #4: Obviously, from a CFO perspective, we like to pay down some debt as well. But I would imagine at least a third is something that possibly could be a return to shareholders.

Speaker #4: I don't expect us to do a distribution in specie very much, quite honestly. We find that it is something that we considered, but generally there is such a long period where the DIS gets announced and holding period.

Paul Tham: It is something that we consider, but generally there is such a long period where the DIS gets announced and holding period. We have obviously done block trades on several of our REITs, and we only do big blocks. We do not like dripping into the market. So, to be fair, if anybody would like to buy SGD 150 million or more of any of our REIT blocks, that is the type of size where we are a little bit more agreeable to. But we are not looking to do anything that would harm the REIT share prices, right? If we see impact on the REIT share prices, we are not in an urgent need to divest.

Speaker #4: We have obviously done block trades on several of our REITs, and we only do big blocks. We don't like dripping into the market. So, to be fair, if anybody would like to buy $150 million or more of any of our REIT blocks, that's the type of size where we are a little bit more agreeable to.

Speaker #4: But we're not looking to do anything that would harm the REIT share prices, right? If we see impact on the REIT share prices, we're not in an urgent need to divest.

Speaker #4: So I do think that together with the REIT units, but more the bulk of what we have on balance sheet, it does give us a good opportunity to have capital for growth and relief for a return to shareholders.

Paul Tham: So I do think that together the REIT units, but more the bulk of what we have on balance sheet, it does give us a good opportunity to have capital for growth, and really for a return to shareholders.

Speaker #6: In terms of timing, I think we will share more during the time when we meet the investors. Give us a bit of time.

Lee Chee Koon: In terms of timing, I think we will share more during the time when we meet the investors. Give us a bit of time. We are going to set up a dedicated team just to look at selling down our stakes in the funds, the balance sheet, including some of the smaller sub-scale strategies that were formed, because we just want to focus on the company, on doing the big scalable funds, the strategies where you use fewer headcount, do much bigger transactions. The encouraging thing that we are having today is we are in conversations with interesting LPs that want us to focus on deploying capital in a meaningful way on dedicated strategies.

Speaker #6: But we're going to set up a dedicated team just to look at selling down our stakes in the funds, the balance sheet, including some of the smaller, subscale strategies that were formed. Because we just want to focus the company on doing the big, scalable funds—the strategies where you use fewer headcount and do much bigger transactions.

Speaker #6: The encouraging thing that we are having today is we are in conversations with interesting LPs that want us to focus on deploying capital in a meaningful way on dedicated strategies.

Speaker #6: So we need to make sure that we channel all our resources and to really sunset on the smaller strategies and to focus on things that give us the to build repeatable bigger strategies higher margins that can have better flow through to the bottom line.

Lee Chee Koon: We need to make sure that we channel all our resources and to really sunset on the smaller strategies and to focus on things that give us the to build repeatable, bigger strategies, higher margins that can have better flow through to the bottom line. Give us a bit of time just to come back to you with the details.

Speaker #6: Yeah, so give us a bit of time just to come back to you with the details. Yeah.

Speaker #2: Derek.

[Company Representative] (Capitaland Investment): Derek?

[Company Representative] (DBS): Good morning. Derek from DBS. I guess I have got two questions. First question is on Ascott, Qi Kun. Just your thoughts on the fact that I see Ascott as key to the group now. Just wondering whether, as part of your value unlock strategy, do you need to hold 100%? That is my first question. My second question is, as you pivot to growth and you also want to sell, are you a seller first or a buyer later? I am just wondering whether in this environment, how do we balance between the two? Buy your new platform.

Derek Tan: Good morning. Derek from DBS. I guess I have got two questions. First question is on Ascott, Qi Kun. Just your thoughts on the fact that I see Ascott as key to the group now. Just wondering whether, as part of your value unlock strategy, do you need to hold 100%? That is my first question. My second question is, as you pivot to growth and you also want to sell, are you a seller first or a buyer later? I am just wondering whether in this environment, how do we balance between the two? Buy your new platform.

Speaker #5: Good morning. Derek from DBS. I guess I have two questions. First question is on escrow. Jihoon, just your thoughts on the fact that I see escrow as key to the group.

Speaker #5: Just wondering, as part of your value unlock strategy, do you need to hold 100%? That's my first question. Then, my second question is, as you pivot to growth and also want to sell, are you a seller first or a buyer later?

Speaker #5: So I'm just wondering, in this environment, how do we balance between the two? Buy your new platforms or...

Speaker #4: So, your second question again, just to clarify.

Lee Chee Koon: Sorry, your second question again, just to clarify.

[Company Representative] (DBS): Are you a seller first or unlocking value first in your next few steps in your strategy, or are you concurrently looking at new platforms to buy? For new platforms, are you more interested in FUM or operating capability? Just two thoughts around that.

Derek Tan: Are you a seller first or unlocking value first in your next few steps in your strategy, or are you concurrently looking at new platforms to buy? For new platforms, are you more interested in FUM or operating capability? Just two thoughts around that.

Speaker #5: Are you seller-first or unlocking value-first in your next few steps in your strategy, or are you concurrently looking at new platforms to buy?

Speaker #5: And for new platforms, are you more interested in FUM or operating capability? So just these two thoughts around that.

Speaker #6: So when we look at the new investment, it has to make sense. It has to deliver ROE and be equitable to our investors. Today, if you ask me, the place that we are most ready to give a lot of capital to is things like private credit. It's easy because, I mean, to be honest, the deals that we are looking at, generally we are very comfortable in terms of the underwriting. The returns are more than 10% to us.

Lee Chee Koon: When we look at the new investment, it has to make sense. It has to deliver ROE and be accretive to our investors. Today, if you ask me the place that we are most ready to give a lot of capital to is things like on the private credit. It is easy because to be honest, the deals that we are looking at, generally, we are very comfortable in terms of the underwriting. The returns are more than 10%. To us, it is quite a no-brainer that we can deploy our balance sheet even significantly, even if we cannot raise third-party capital. The unfortunate thing is every time we have oversubscription. So we have difficulty in deploying more capital to Kishore, even if we want to, because the returns are good. He can share more with you later.

Speaker #6: It's quite a no-brainer that we can deploy our balance sheet even significantly. Even if we cannot raise third-party capital, the unfortunate thing is, every time we have oversubscription.

Speaker #6: So we have difficulty in deploying more capital to Kishore even if we even if we want to because the returns are good and yeah, I mean, you can he can share more with you.

Speaker #6: So we are not opposed to getting operating capabilities that can help drive our FUM growth. In terms of platforms today, we will be selective.

Lee Chee Koon: We are not opposed to getting operating capabilities that can help to drive our FUM growth. In terms of platforms today, we will be selective. It has to make sense. It has to be additive. Today, there are many platforms that, except for the big GPs, there are many platforms that actually, I think are struggling in terms of fundraising. But multiples for many of these platforms are still high. The question is, do you want to pay multiples for platforms that are no longer raising capital? We want to be careful about that.

Speaker #6: It has to make sense. It has to be additive. We just do not want to—today, there are many platforms that, except for the big, big GPs, there are many platforms that actually, I think, are struggling in terms of fundraising.

Speaker #6: Then do you really—but multiples for many of these platforms are still high. And the question is, do you want to pay multiples for platforms that are no longer raising capital?

Speaker #6: So we want to be careful about that. Yeah, in terms of divestments, I mean, I think the discipline is as long as we can recycle the capital at a fair price, I think we want to prioritize getting that going.

Lee Chee Koon: In terms of divestments, I think the discipline is as long as we can recycle the capital, I think at a fair price, I think we want to prioritize to get that going, because the capital that is unlocked, if we can redeploy it for better investors or even returning the excess capital to shareholders, I think these are good options that we have. We just want to be very disciplined in terms of the use of capital. The conversations that we have, and the ability we believe to be able to raise bigger fund, also means that we do not need such a big balance sheet. So we can be a lot more capital efficient in the way we run our business.

Speaker #6: Because the capital that's unlocked—if we can redeploy it for better investments or even return the excess capital to shareholders—I think these are good options that we have.

Speaker #6: We just want to be very disciplined in terms of the use of capital. Yeah. And the conversations that we have and the ability we believe to be able to raise bigger funds also means that we don't need such a big balance sheet.

Speaker #6: Yeah. So we can be a lot more capital efficient in the way we run our business. Yeah. Because the initially when we first started out trying to when we first started in 2021, to do this asset management journey, we were confronted with interest rates that were rising.

Lee Chee Koon: Because initially when we first started out, when we first started in 2021, to do this asset management journey, we were confronted with interest rates that were rising, Ukraine war, and a slowdown in China, suddenly making fundraising so difficult. We really had to work very hard to convince people why they want to work with us. But I think that journey, that difficulty is always behind us, and that's why we're a lot more confident that we can run with a much smaller balance sheet than needed going forward. Yeah.

Speaker #6: The Ukraine war and the slowdown in China have suddenly made fundraising very difficult. So we really had to work very hard to convince people why they would want to work with us.

Speaker #6: But I think that journey, that difficulty, is behind us. And that's why we are a lot more confident that we can run with a much smaller balance sheet than needed, going forward.

Speaker #6: Yeah.

Speaker #5: You my advice.

[Analyst] (CLSA): You might go first.

Wong Yew Kiang: You might go first.

Speaker #6: You raised a very interesting question, Derek, about acquisition of FUM versus operating capability. For me, I would take the latter in a heartbeat, for the reasons that Jihoon mentioned on the FUM side. FUM is expensive now.

Lee Chee Koon: You raise a very interesting question, Derek, about acquisition of FUM versus operating capability. For me, I would take the latter in a heartbeat. For the reasons that Chee Koon mentioned on the FUM side, FUM is expensive now, and if you're paying a forward multiple, you have to be confident that the ability to continue to raise FUM is there, and we question that ability. We're being very circumspect about acquiring FUM, and I think that's the right discipline we should have. But the question around operating capability is an interesting one. If you look at the sectors that we have chosen to focus on, because we believe that there are secular tailwinds, hospitality, living, logistics, self-storage, commercial. I'll defer to Kishore on the alt side, but on the real estate side, all five of these sectors require operating capabilities in order to generate alpha for investors.

Speaker #6: And if you're paying a forward multiple, you have to be confident that the ability to continue to raise FUM is there. And we question that ability.

Speaker #6: So, we're being very circumspect about acquiring FUM, and I think that's the right discipline we should have. But the question around operating capability is an interesting one.

Speaker #6: If you look at the sectors that we have chosen to focus on because we believe there are secular tailwinds—hospitality, living, logistics, self-storage, commercial—all differ to Kishore on the alt side.

Speaker #6: But on the real estate side, all five of these sectors require operating capabilities in order to generate alpha for investors. And our LPs are telling us this very clearly.

Lee Chee Koon: And our LPs are telling us this very clearly. So if you're heading into an environment where your LP capital is increasingly discerning and careful about how they are deploying capital, as a GP, your ability to demonstrate platform alpha, to sweat your assets, bringing operational expertise to the sectors that we have chosen to invest into, is, to me, a fundamental ingredient in our narrative to LPs, and our right to play and right to win. So if you look across our sectors now, we've got two phenomenal, if I may say so, in-house groups, lodging management and commercial management. Lodging management ties very neatly to what we are trying to do in hospitality and to a secondary extent in living. Commercial management is hand in glove with everything that we're trying to do on the commercial side of the house.

Speaker #6: So if you're heading into an environment where you're re increasing your LP capital is increasingly discerning and careful about how they are deploying capital, as a GP, your ability to demonstrate platform alpha to sweat your assets, bringing operational expertise to the sectors that we have chosen to invest into is to me a fundamental ingredient in our narrative to LPs, in our right to play and right to win.

Speaker #6: So if you look across our sectors now, we've got two phenomenal, if I may say so, in-house groups: Lodging Management and Commercial Management.

Speaker #6: Lodging management ties very neatly to what we are trying to do in hospitality and, to a secondary extent, in living. Commercial management is hand in glove with everything that we're trying to do on the commercial side of the house.

Speaker #6: And as Jihoon mentioned earlier, we've now got investments in interesting logistics platforms. I think we can do more. And we've got interesting platforms in self-storage.

Lee Chee Koon: And as Chee Koon mentioned earlier, we have now got investments in interesting logistics platforms. I think we can do more. We have got interesting platforms in self-storage. There is a logic behind what we are investing into, and to your question, where do you see us looking to deploy some of this capital that we are going to recycle? I would certainly expect us to invest more heavily into platforms that can help us deliver that alpha to LP capital, more so than FUM. Sorry, I forgot to answer your question around Ascott. Sorry, I forgot. Kevin reminded me. I was not trying to avoid that question. That means Ascott is growing very nicely. We actually have different inquiries from investors, LPs wanting to participate in the growth of the platform.

Speaker #6: So, there is a logic behind what we are investing into. And to your question, where do you see us looking to deploy some of this capital that we're going to recycle?

Speaker #6: I would certainly expect us to invest more heavily into platforms that can help us deliver that alpha to LP capital, more so than FUM.

Speaker #3: Sorry, I forgot to answer your question earlier. Sorry, I forgot—Kevin reminded me. I was not trying to avoid that question. So let me answer: it is growing very nicely.

Speaker #3: We actually have different enquiries from investors and LPs wanting to participate in the growth of the platform. It's asset-light, the fee income is very rich, and we will be open-minded to look at this because there are interesting M&A opportunities that Kevin is looking at.

Lee Chee Koon: Its asset light, the fee income is very rich, and we will be open-minded to look at this because there are interesting M&A opportunities that Kevin is looking at. From a CLI, if we are an asset manager, we need to think about whether we want to fund all the M&A on our own, or we bring in LPs that can help to do that and drive the platform growth in a much more efficient manner as well. Some of the LPs that participate in a platform or investors that participate in a platform could be investors in our lodging or hospitality funds as well. It has to be a win-win when we look at some of these opportunities. Yeah.

Speaker #3: I mean, from a CLI perspective, if we are an asset manager, do we need to think about whether we want to fund all the M&A on our own, or whether we bring in LPs that can help to do that and drive the platform growth in a much more efficient manner as well?

Speaker #3: And some of the LPs that participate in the platform, or investors that participate in the platform, could be investors in our lodging or hospitality funds as well.

Speaker #3: So it has to be a win-win when we look at some of these opportunities. Yeah.

Speaker #2: Joy: Hi, Joy from HSBC. If I may just follow up on Derek's question and this discussion on platforms. You have certain platforms like Escort that sit at the group level, and you have platforms that sit at the fund level.

Paul Tham: Joy?

[Company Representative] (HSBC): Hi. Joy from HSBC. If I may just follow up on Derek's question and just this discussion on platform. You have certain platforms like Ascott that sits at the group level, and you have platforms that sit at the fund level. What is the ideal sort of construct, you think, from a platform? As a group, do you want to own all the operating capabilities over time and then raise capital below you? Or you do want to monetize your operating capability as you build up?

Joy Wang: Hi. Joy from HSBC. If I may just follow up on Derek's question and just this discussion on platform. You have certain platforms like Ascott that sits at the group level, and you have platforms that sit at the fund level. What is the ideal sort of construct, you think, from a platform? As a group, do you want to own all the operating capabilities over time and then raise capital below you? Or you do want to monetize your operating capability as you build up?

Speaker #2: What is the ideal sort of construct you envision for a platform? As a group, do you want to own all the operating capabilities over time, and then raise capital beneath you?

Speaker #2: Or do you want to monetize your operating capability as you build up?

Speaker #6: I think we are I don't think there's a one-size-fits-all. It depends on the opportunities. If the operating capability, let's say for I mean, we have a data center operating capability, which I would say that is an advantage in India, do I can I say that our data center capability is one that cuts across to the developed markets?

Lee Chee Koon: I don't think there is a one-size-fits-all. It depends on the opportunities. If the operating capability, let us say for we have a data center operating capability, which I would say that is an advantage in India. Can I say that our data center capability is one that cuts across to the developed markets? I would say no. That is an advantage that we have, and we need to focus on how do we organize it to bring in the capital, grow the AUM. That makes sense. There is no one-size-fits-all. We need to look at where is our strength, what does the market want? Because you also have to listen to the LP, and we need to match it with the capabilities that we have. Yeah. Kishor, you want to add?

Speaker #6: I would say no. But that's an advantage that we have, and we need to focus on how we organize it to bring in the capital and grow the AUM. That makes sense.

Speaker #6: So there's no one-size-fits-all. We need to be looking at where our strengths are, what the market wants, because you also have to listen to the LP.

Speaker #6: And we need to match it with the capabilities that we have. Yeah, yeah. I was just going to add, Joy, there are a couple of really good examples that bear this to life, right?

Kishore Moorjani: Yeah, I was just going to add, Joy, there's a couple of really good examples that bear this to life. Chee Koon mentioned Ascendas-Firstspace in India, which is our industrial logistics platform. By any metric, we're probably number 3 in the market. The largest player is probably going to go public or trade any day now. We look at that as very clearly going from assets to a product, to a platform, to monetizing for our investors, right? Even if we exit that at some point, the IP that has been created and our ability to build and create value and monetize that track record is more important to us to redeploy either in the same or a different asset class. Same thing in data centers. It's going from assets to product to platform.

Speaker #6: Jihoon mentioned AFS in India, which is our industrial logistics—probably number three in the market. The largest player is probably going to go public, or trade, any day now.

Speaker #6: We look at that as very clearly going from assets, to a product, to a platform, to monetizing for our investors, right? Even if we exit that at some point, the IP that has been created and our ability to build, create value, and monetize that—that track record is more important to us to redeploy, either in the same or a different asset class.

Speaker #6: Same thing in data centers, right? It's going from assets to product to platform. And again, it'll be very targeted where we can, where we have real ability to scale and to win.

Kishore Moorjani: It'll be very targeted where we have real ability to scale and to win. So I think on data centers, you'll see us, both Ascendas-Firstspace and data centers, you'll see us in the next couple of months come up with clear pathways to how we're scaling that. But that also sets a longer-term roadmap to how we're actually then going to monetize that.

Speaker #6: So I think on data centers, you'll see us—both AFS and data centers—you'll see us in the next couple of months come up with clear pathways to how we're scaling that. But that also sets a longer-term roadmap to how we're actually then going to monetize that.

[Company Representative] (HSBC): Thank you. I have two other questions. One on fee. Very glad to see the fee growth. Are we at a stage where we can comfortably start to underwrite double-digit fee growth going forward? As your carry and event-driven start to be a meaningful contribution. The second question is on balance sheet. Chee Koon, you say you don't need such a big balance sheet. Is share buyback still not a topic that we want to talk about? Thank you.

Joy Wang: Thank you. I have two other questions. One on fee. Very glad to see the fee growth. Are we at a stage where we can comfortably start to underwrite double-digit fee growth going forward? As your carry and event-driven start to be a meaningful contribution. The second question is on balance sheet. Chee Koon, you say you don't need such a big balance sheet. Is share buyback still not a topic that we want to talk about? Thank you.

Speaker #2: Thank you. And I have two other questions. First, I am very, very glad to see the fee growth. Are we at a stage where we can comfortably start to underwrite double-digit fee growth going forward?

Speaker #2: You know, as your carry and event-driven start to be a meaningful contribution. And the second question is on balance sheet. Jihoon, you say you don't need such a big balance sheet.

Speaker #2: Is share buyback still not a topic that we want to talk about? Thank you.

Speaker #6: All right. I will answer the first question. Jihoon knows my views on share buybacks, so I will let him answer that one. So, on the fee growth, I think if we're talking about the revenue line, yes, absolutely comfortable on double-digit growth.

Paul Tham: All right. I will answer the first question. Chee Koon knows my views on share buyback, so I will let him answer that one. So on the fee growth, I think if we're talking about the revenue line, yes, absolutely comfortable on double-digit growth. We are still investing behind a couple of our verticals. Private funds, lodging, we are still investing behind for growth. So it may not contribute directly into a P&L double digit. But we certainly hope to be there on that component. We also need that, for the fee business to grow faster than historically it has, because it's making up for the drop in our real estate investment business. So certainly, from a revenue viewpoint, double digits. Profit contribution, we hope so.

Speaker #6: We are still investing behind a couple of our verticals—private funds and lodging. We are still investing behind them for growth. So, it may not contribute directly into the P&L double-digit.

Speaker #6: But we certainly hope to be there on that component. We also need the fee business to grow faster than it has historically, because it's making up for the drop in our real estate investment business.

Speaker #6: Viewpoint, double digits. Profit contribution—we hope so.

Speaker #3: In terms of share buyback, I think the important thing is what we look at is, when we recycle capital, we work with a much smaller balance sheet if we can find interesting growth opportunities.

Lee Chee Koon: In terms of share buyback, I think the important thing is what we look at it is when we recycle capital, we work with a much smaller balance sheet. If we can find interesting growth opportunities, to me, that is always the priority to deploy. But if there are not enough good opportunities, our preference is to be able to return money to shareholders through dividend. We are not saying that we are not prepared to, but it is just a means of you do it. Whether you do a share buyback or you do dividend, our preference is if we do not invest, we prefer to give more back to shareholders via the dividend route. So it is just giving back to shareholders but in different ways.

Speaker #3: To me, that's always the priority—to deploy. But if there are not enough good opportunities, our preference is to be able to return money to shareholders. We are not saying that we are not prepared to, but it's just a means of how you do it—whether you do a share buyback or you do a dividend.

Speaker #3: Our preference is, if we don't invest, we prefer to give more back to shareholders via the dividend route. Yeah, so it's just giving back to shareholders in different ways.

Speaker #3: Yeah.

Speaker #2: Maybe we go to Rachel behind us. Hi, good morning. Jihoon and Jim, congrats on the strong results. Maybe first question from me: Could you give us some color in terms of how you envision your geography split to be after all this unlocking value and stuff?

Paul Tham: Maybe we go to Rachel behind us.

[Analyst] (DBS): Hi, good morning, Chee Koon and team. Congrats on the strong results. Maybe first question on me. Could you give us some color in terms of how you envision your geography split to be after all this unlocking value and stuff? More details on this S$7 to 9 billion split by geographies. How much is actually from China? How much is actually from your private funds? Just to give us some color on that.

Rachel Tan: Hi, good morning, Chee Koon and team. Congrats on the strong results. Maybe first question on me. Could you give us some color in terms of how you envision your geography split to be after all this unlocking value and stuff? More details on this S$7 to 9 billion split by geographies. How much is actually from China? How much is actually from your private funds? Just to give us some color on that.

Speaker #2: And more details on this $7 to $9 billion split by geographies—how much is actually from China? How much is actually from your private funds?

Speaker #2: Yeah, just to give us some color on that.

Speaker #6: So I would say about two-thirds of the $7 to $9 billion comes from China. About slightly less than half—maybe one-third, sorry, about 30 to 40 percent—comes from our private funds.

Paul Tham: I would say about two-thirds of the S$7 to 9 billion comes from China. About slightly less than half, maybe one-third, sorry. About 30% to 40% comes from our private funds. The remainder is balance sheet and excess holdings in REITs and platforms. In terms of overall geographical split, I think the longer-term goal for us has not changed. The idea is that we do not want more than 20% exposure to any market. So we would expect, as we look at the different growth markets, we would look to increase in Australia, in Japan, in India. For the other markets, generally the guide for us is about 20% or less, with the exception being Singapore, where obviously we have more exposure and this being our home country, we are more comfortable with that.

Speaker #6: The remainder is balance sheet and excess holdings in REITs and platforms. In terms of overall geographical split, I think the longer-term goal for us has not changed.

Speaker #6: The idea is that we don't want more than 20 percent exposure to any market. So, as we look at the different growth markets, we would look to increase in Australia, Japan, and India.

Speaker #6: So, for the other markets, generally the guide for us is about 20 percent or less, with the exception being Singapore, where obviously we have more exposure, and this being our home country, we're more comfortable with that.

Speaker #2: So no Europe, US?

[Analyst] (DBS): No Europe, US?

Rachel Tan: No Europe, US?

Speaker #6: So, we have about $10 billion of investments in Europe and the US right now. I wouldn't say we are excluding growing further there, but our focus is still primarily Asia.

Paul Tham: We have about 10 billion of investments in Europe and US right now. I wouldn't say we are excluding growing further there, but our focus is still primarily Asia.

Speaker #3: So in Europe, if there are interesting platforms to acquire, we will. Yes, it makes sense, and it has to make us competitive in subsequent fundraising and to be able to create more opportunities.

Lee Chee Koon: In Europe, if there are interesting platforms to acquire, we will. It has to make sense, and has to make us competitive in subsequently the fundraising and to be able to create more opportunities. US, we always like US. It's a deep market. It's a big market. The issue is that it's so competitive, so you need to find the right opportunity and the right entry point. At least when you go in, you go in meaningfully, and you can compete with the big boys. Otherwise, you don't get access to the deals, you don't get access to all the capital, then you just have a platform that can't compete. Those are the considerations. Yeah.

Speaker #3: The US—we always say the US is a deep market. It's a big market. The issue is that it's so competitive, so you need to find the right opportunity and the right entry point.

Speaker #3: At least when you go in, you go in meaningfully, and you can compete with the big boys. Otherwise, you don't get access to the deals.

Speaker #3: You don't get access to all the capital, then you just have a platform that can't compete. So those are the considerations. Yeah.

Speaker #2: Okay. Then my next question is really looking at divestments. I think you have done the China private REIT, right? Potentially a CWT tool in the second half.

[Analyst] (DBS): Okay. My next question is really looking at divestments. I think you have done the China private REIT, right, potentially a C-REIT, two in H2. Should we look at these divestments to think about your special dividends at the end of the year, one third from coming out from this? Or should we expect more divestments in H2?

Rachel Tan: Okay. My next question is really looking at divestments. I think you have done the China private REIT, right, potentially a C-REIT, two in H2. Should we look at these divestments to think about your special dividends at the end of the year, one third from coming out from this? Or should we expect more divestments in H2?

Speaker #2: Should we look at these divestments to think about your special dividends at the end of the year—one-third coming out from this? Or should we expect more divestments in the second half of the year?

Speaker #6: So we're certainly working towards more divestments. Over the next few months, I would say, besides China, we are looking at other assets that we have, which hopefully will go out later this year.

Paul Tham: We are certainly working towards more divestments over the next few months. I would say besides China, we are looking at other assets that we have, which hopefully will go out later this year. I think in terms of capital return, it is something that we are still working through. Whenever Grace comes up with that date, which she doesn't want to share, I think we will be able to share a little bit more on specifics on the plans going forward, for growth and also for return of capital.

Speaker #6: I think in terms of capital return, it is something that we are still working through. And whenever Grace comes up with that date, which she doesn't want to share, I think we'll be able to share a little bit more on specifics of the plans going forward, for growth and also for return of capital.

Speaker #2: All right. Thank you.

[Analyst] (DBS): All right. Thank you.

Rachel Tan: All right. Thank you.

Speaker #3: We hope that during the investor day, we can tell you where the growth sectors are and how we're going to be deploying the capital. You'll have at least a line of sight of what we hope to do.

Lee Chee Koon: We hope that during the Investor Day, we can tell you where are the growth sectors, how we are going to be deploying the capital. You have at least a line of sight of what we hope to do, and then how we are thinking in terms of the dividends and all. These are all questions I know investors will all be asking. We hope to give clarity by then. Yeah.

Speaker #3: And then, what is the—how are we thinking in terms of the dividends and all? I mean, these are all questions I know investors will be asking.

Speaker #3: We hope to give clarity by then. Yeah.

Speaker #2: If you don't mind, we'll do Brendan Vils behind, and we'll come back with Shane.

Moderator: If you don't mind, we will do Brandon first behind, then we will come back to Shane.

Speaker #3: Okay, thanks. Brendan here from Citi. Just three questions. The first one would be the $47 to $9 billion, right? Can you give us a rough estimate in terms of the impact to core P&L and also the NAV on that $12.5 billion, and also on your earlier forecast of this mid-single-digit growth?

[Analyst] (Citi): Okay. Thanks. Brandon here from Citigroup. Just three questions. The first one would be, SGD 47 billion to SGD 49 billion, right? Can you give us a rough estimate in terms of impact to core PATMI and also the NAV on that SGD 12.5 billion and also on your earlier forecast of this mid-single digit growth? By doing this SGD 47 billion to SGD 49 billion, what kind of impact would we see on that? That is my first question. The second question relates to the pace of divestment, especially for the two-thirds of the SGD 47.9 billion. Obviously, we have seen CLI being pretty aggressive and forthcoming in guiding us that you guys want to sell China. By bracketing these China assets into SGD 79 billion this time around, does it mean that you are going to be more aggressive?

Brandon Lee: Okay. Thanks. Brandon here from Citigroup. Just three questions. The first one would be, SGD 47 billion to SGD 49 billion, right? Can you give us a rough estimate in terms of impact to core PATMI and also the NAV on that SGD 12.5 billion and also on your earlier forecast of this mid-single digit growth? By doing this SGD 47 billion to SGD 49 billion, what kind of impact would we see on that? That is my first question. The second question relates to the pace of divestment, especially for the two-thirds of the SGD 47.9 billion. Obviously, we have seen CLI being pretty aggressive and forthcoming in guiding us that you guys want to sell China. By bracketing these China assets into SGD 79 billion this time around, does it mean that you are going to be more aggressive?

Speaker #3: So, but basically, by doing this $7 to $9 billion, what kind of impact could we see on that? That's my first question. The second question relates to the pace of divestment, especially for the two-thirds of this $7 to $9 billion.

Speaker #3: I mean, obviously, we have seen CRI being pretty aggressive and forthcoming in guiding us that you guys want to sell China. So, by bracketing these China assets into $7 to $9 billion this time around, does it mean that you're going to be more aggressive?

Speaker #3: Are you going to be like, how can we be assured that this time around you're going to be executing this divestment faster than before?

[Analyst] (Citi): How can we be assured that this time around you are going to be executing this divestment faster than before? My last question would be with regard to the 3% to 4% AUM growth on the REITs. Any guidance on how you are going to achieve that, especially for the REITs outside of CapitaLand China Trust and CapitaLand Integrated Commercial Trust? Thanks.

Brandon Lee: How can we be assured that this time around you are going to be executing this divestment faster than before? My last question would be with regard to the 3% to 4% AUM growth on the REITs. Any guidance on how you are going to achieve that, especially for the REITs outside of CapitaLand China Trust and CapitaLand Integrated Commercial Trust? Thanks.

Speaker #3: Yeah, and my last question will be with regards to the 3% to 4% AUM growth on the REITs. So, any guidance on how you're going to achieve that, especially for the REITs outside of CLARK and CICT?

Speaker #3: Thanks.

Speaker #6: Brendan, maybe I can clarify. We want to accelerate the divestment of our China legacy assets, but we still want to grow our asset management business in China.

Lee Chee Koon: Brandon, maybe I clarify. We want to accelerate the divestment of our China legacy assets. We still want to grow our asset management business in China. There is still a lot of capital, domestic capital, C-REITs, and P-REITs that we can do that can help to drive the fee income for the group. There are legacy assets in the past from the development funds that we want to accelerate. It is not that we want to sell China, I just want to clarify that part. Okay.

Speaker #6: There's still a lot of domestic capital, SEA REITs, and PREs that we can do that can help to drive the fee income for the group.

Speaker #6: So, there are legacy assets from the development funds in the past that we want to accelerate. So, it's not that we want to sell China.

Speaker #6: I just want to clarify that part. Okay, yeah. In terms of earnings split, I would say when we look at the $7 to $9 billion, and obviously, we still need to refine and come through, and we'll share more on the numbers.

Paul Tham: In terms of earnings split, I would say when we look at the SGD 79 billion, and obviously we still need to refine and come through, and we will share more on the numbers when doing investor day. Generally, the core platform, I would say, contributes 75% of our earnings. That 75% of earnings has been growing at a much faster rate, because that is the part that we have been focusing behind the listed and private funds, including the China private funds business. That growth rate actually is much stronger than our base rate. I think as you mentioned, and the challenge for us, which we want to do, is we want to be able to divest the legacy portfolio in the right orderly manner that gets us the right amount of capital to reinvest into growing that core business.

Speaker #6: When, during Investor Day—but generally—the core platform, I would say, contributes 75 percent of our earnings. And that 75 percent of earnings has been growing at a much faster rate, right?

Speaker #6: Because that's the part that we've been focusing on behind the listed and private funds, including the China private funds business. So that growth rate actually is much stronger than our base rate.

Speaker #6: I think as you mentioned and the challenge for us, which we want to do is we want to be able to divest the legacy portfolio in the right orderly manner that gets us the right amount of capital to reinvest into growing that core business.

Speaker #3: Yeah. So Brendan, if you look at what happened in China, the real estate market started to slow in the last few years.

Lee Chee Koon: Brandon, if you look at what happened in China, the real estate market started to slow in the last few years. At the same time, you see the authorities being constructive in creating a channel for C-REITs and then allowing private REITs. More recently, I think for some of you who have been following China closely, Shanghai government announcing the preliminary ideas in terms of land tenure extension. China is a big country, and they want to make sure that things are organized in an orderly fashion. All these are, I would say, positive signals. That would allow investors to find ways to properly exit. It is just the way the market is.

Speaker #3: But at the same time, you see the authorities being constructive in creating channels for seaweeds, and then allowing private REITs. More recently, I think for some of you who have been following China closely, the Shanghai government announced the preliminary ideas in terms of land tenure extension.

Speaker #3: I mean, China is a big country, and they want to make sure that things are organized in an orderly fashion. All these, I would say, are positive signals.

Speaker #3: That would allow and allow investors to find ways to properly exit and it just it's just it's just the way the market is. And I think that the team has worked very hard in getting their regulators to approve to first form the seaweed and now we are trying to get another seaweed going.

Lee Chee Koon: I think that the team has worked very hard in getting their regulators to approve to first form the C-REIT, and now we are trying to get another C-REIT going, and then with a period. That creates a different. Now the vehicles are there. It allows us to do things a lot faster. The difficulty is creating the vehicle because of the conversation with the authorities. They want to make sure that things are orderly, it is fair to all investors, and because things are new, it just takes a longer time. For CLI today, we are known, I would say that our reputation in the REITs market in Singapore is established because we have been around for the last 20 over years. It takes time, right, to build up the portfolio, constantly doing the right things. That is why people continue to invest with us.

Speaker #3: And then with the period, that creates a difference. Now the vehicles are there. It allows us to do things a lot faster. The difficulty is creating the vehicle.

Speaker #3: Because of the conversations with the authorities, they want to make sure that things are orderly and that things are fair to all investors. And because things are new, it just takes a longer time.

Speaker #3: I mean, the for CRI today, we are known I would say that we our reputation in the REITs market in Singapore has been is established because we have been around for the last 20 over years.

Speaker #3: It takes time, right, to build up the portfolio by constantly doing the right things, and that's why people continue to invest with us. It's the same thing that I think the China capital market is going through for the real estate sector.

Lee Chee Koon: It is the same thing that I think that China, the capital market is going through, for the real estate sector. Paul, there was the question on how we are going to drive growth in REIT. Do you want to take that?

Speaker #3: Yeah.

Speaker #2: Paul, there was a question on how we're going to drive growth in REITs. Do you want to take that?

Speaker #6: So, we are looking at a few options. Obviously, the REITs team has done a good job, and we've seen the different REITs grow, particularly in this first half.

Paul Tham: We are looking at a few options. Obviously, the REITs team has done a good job and we have seen the different REITs grow, particularly this H1. We have seen a lot of movement. I would not say it is just the big REITs. Actually, we saw transactions from CapitaLand Ascott Trust. We saw transactions close for CapitaLand India Trust as well in equity fundraising. I think across the board, it has been positive. We are looking from a sponsor viewpoint, how can we strengthen that growth? I think there are a few ideas that we are considering. One is, I think Irving put it best. We are looking at the idea of short-term warehousing for rebuilding the sponsor pipeline, working with the REITs so that they can find DPU accretive acquisitions.

Speaker #6: We've seen a lot of movement, and I wouldn't say it's just the big REITs. Actually, you know, we saw transactions from Ascendas REIT. We saw transactions close for CLI as well, and equity fundraisings.

Speaker #6: So I think, across the board, it's been positive. We are looking, from a sponsor viewpoint, at how we can strengthen that growth. I think there are a few ideas that we are considering.

Speaker #6: One is, I think, Urban for the best. We are looking at the idea of short-term warehousing for rebuilding the sponsor pipeline. Working with the REITs so that they can find DPU-accretive acquisitions—some of that, potentially, we can do in a short-term warehouse to help them with that, so that when they go out for their equity fundraisings, it's DPU-accretive.

Paul Tham: Some of that, potentially we can do in a short-term warehouse to help them with that, so that when they go out for their equity fundraising, it is DPU accretive. We are also looking at coming alongside some of our REITs for larger transactions. Both so that it is more workable for them, the size is more manageable, but also so that it creates a pipeline for them. Potentially for some of the things in a portfolio that have been made less ideal can be exited. There are a number of optionees we are looking at. As Chee Koon mentioned, this is not something that we have yet spent a lot of time working through. That is certainly the intent over the next few weeks as we will build out that plan and share more.

Speaker #6: We are also looking at coming alongside some of our REITs for larger transactions, both so that it's more workable for them—the size is more manageable—but also so that it creates a pipeline for them.

Speaker #6: And potentially, for some of the things in a portfolio that are becoming less ideal, they can be exited. So, there are a number of opportunities we are looking at.

Speaker #6: And as you know, as Jikoon mentioned, this is not something that we have yet spent a lot of time working through. But that is certainly the intent over the next few weeks.

Speaker #6: As we build out that plan, we'll share more.

Speaker #3: Just to add to that, Brendan, a third component is having the real asset side—private and public—work closely together. We see this model happening in places like Australia, where folks are able to combine products as long as the mandates are consistent and aligned, and no investor is disenfranchised, right?

Lee Chee Koon: Just to add to that, the third component is having the real asset side, private and public work closely together. We see this model happening in places like Australia, where folks are able to combine products as long as the mandates are consistent and aligned, and no investor is disenfranchised, right? If once your interests are aligned, it does not really matter where you draw your capital from because you can then discharge your fiduciary duty. This is something to us, I think we see this as a unique selling feature for CLI. We have REITs lined up with the verticals, hospitality we got REIT, living got REIT, logistics got REIT, commercial got REIT. These are big REITs, strong REITs with a capital that they can deploy.

Speaker #3: So if, once your interests are aligned, it doesn't really matter where you draw your capital from because you can then discharge your fiduciary duty.

Speaker #3: And this is something to us—I think we see this as a unique selling feature for CRI, where we've got REITs lined up with the verticals, hospitality.

Speaker #3: We've got living, we've got REIT. Logistics, we've got REIT. Commercial, we've got REIT. And these are—we have big REITs, strong REITs, with capital that they can deploy. But to Paul's point, and because we know that DPU accretion is critical, you can find a way to work together where you can deliver DPU accretion in an orderly and predictable way, so that your unitholders can see it coming, even if it doesn't happen on day one.

Lee Chee Koon: To Paul's point, because we know that DPU accretion is critical, you can find a way to work together where you can deliver DPU accretion in an orderly and predictable way that your unitholders can see it coming, even if it does not happen on day one. That is something I think we can do better as a house. We have, I would say, quite a unique ability to do so because we have REITs and private equity lined up quite neatly under the verticals. Thanks. Shen, can we have the mic over here?

Speaker #3: So that's something I think we can do better as a house. And we have, I would say, quite a unique ability to do so because we have REITs and private equity lined up quite neatly under the verticals.

Speaker #2: Thanks. Shen? Can we have the mic over again? Hi, morning. This is Shen from Goldman. My first question is on the lodging management platform.

[Analyst] (Goldman Sachs): Hi, morning. This is Shen from Goldman Sachs. My first question is on the lodging management platform. Is that included in the S$7 billion to S$9 billion non-core? Can you explain the EBITDA margin decline? Second question is on operating PATMI growth. H1 is at 13% versus earlier guidance of mid-single digit. Any change in guidance? If not, what will actually drive a weaker H2?

Xuan Shen: Hi, morning. This is Shen from Goldman Sachs. My first question is on the lodging management platform. Is that included in the S$7 billion to S$9 billion non-core? Can you explain the EBITDA margin decline? Second question is on operating PATMI growth. H1 is at 13% versus earlier guidance of mid-single digit. Any change in guidance? If not, what will actually drive a weaker H2?

Speaker #2: Is that included in the $7 to $9 billion non-core? And can you explain the EBITDA margin decline? Second question is on operating PACME growth.

Speaker #2: First half is at 13%, versus earlier guidance of mid-single digits. Any change in guidance? If not, what will actually drive a weaker second half?

Speaker #6: So in the $7 to $9 billion, we have not included Ascot. We have not included any of the operating platforms. I think it is something that potentially we could include, but it is not currently on our balance sheet.

Paul Tham: In the SGD 7 to 9 billion, we have not included Ascott. We have not included any of the operating platforms. I think it is something that potentially we could include, but it is not as currently on a balance sheet. The SGD 7 to 9 billion we look at it as balance sheet value. As you can imagine, most of our operating platforms are actually carried at a pretty low value. We do see potential upside from stake sales or divestments, but we are currently not including that in the SGD 7 to 9 billion.

Speaker #6: The 7 to 9, we look at it as balance sheet value. As you can imagine, most of our operating platforms are actually carried at a pretty low value.

Speaker #6: So, we do see potential upside from stake sales or divestments, but we're currently not including that in the seven to nine.

Speaker #3: Ascot is core, by the way. Even if you bring in investors, it's still core because it helps us drive funds and helps us grow the REITs.

Lee Chee Koon: Ascott is core, by the way. Even if you bring in investors, it is still core because it helps us to drive funds and help us to grow the REIT. Just to explain in case some of my Ascott colleagues, including Kevin, thinks that he is a non-core to CLI.

Speaker #3: Just to explain, in case some of my Ascot colleagues, including Kevin, think that we are going to think that he's non-core to CRI.

Speaker #6: In terms of the EBITDA drop—and I don't know if Kevin would like to share more—a large part of that was really because of the one-offs.

Paul Tham: In terms of the EBITDA drop, if Kevin would like to share more, a large part of that was really because of the one-offs. We picked up termination fees, franchise fees, and we had bonus provision write backs in the H1 of last year. All of which actually impacted the number. If you strip that out, margin is actually about flat.

Speaker #6: We picked up termination fees and franchise fees, and we had bonus provision write-backs in the first half of last year, all of which actually impacted the numbers.

Speaker #6: If you strip that out, margins are actually about flat.

Speaker #3: Yeah, so just to add on to Paul, if you take out the one-offs, actually the recurring part of the business is growing about 16%.

Lee Chee Koon: Yeah. Just to add on to Paul, if you take out the one-offs, actually the recurring part of the business is growing about 16%. But sometimes one-offs are also a bit of a timing, and we do expect to pick up some one-offs in the H2. This could be like sale of franchise, like what Paul mentioned in Australia. Could be some compensation fees that we get in different times of the year. I think these are all short-term fluctuations, which we are a little bit less concerned. What the bigger picture paints is that with 1,000 properties right now, 60% are operational, 40% are coming online in the next 3 years. You do the math, you can see the growth that is coming in the next couple of years.

Speaker #3: But sometimes one-offs are also a bit about timing. And we do expect to pick up some one-offs in the second half. And this could be like the sale of a franchise, like what Paul mentioned in Australia.

Speaker #3: There could be some compensation fees that we receive at different times of the year. So, I think these are all short-term fluctuations, which we are a little bit less concerned about.

Speaker #3: What the bigger picture paints is that—with this illustration, right? About 1,000 properties right now: 60% are operational; 40% are coming online in the next three years, right?

Speaker #3: So, if you do the math, you can see the growth that's coming in the next couple of years.

Speaker #2: Would you be able to guide us on the normalized EBITDA margin?

[Analyst] (Goldman Sachs): Would you be able to guide us on a normalized EBITDA margin?

Xuan Shen: Would you be able to guide us on a normalized EBITDA margin?

Speaker #3: I think, generally speaking, we want to hit closer to about 30%. Right now, we're operating at about a 20% level. But that's because, really, we're still investing a lot in the business.

Lee Chee Koon: I think generally speaking, we want to head towards closer to about 30%. Right now we are operating about at a 20% level, but that is because really we are still investing a lot in the business. We are building up our loyalty program, our systems, capabilities, and if you noticed, we have also opened up our addressable market. We used to be just doing service apartments. Today we are doing resorts. We are signing up full service hotels. Doing that gives us a lot more signings. You see the signings are up. So we want to focus a lot more on the growth bit of the business. We signed about over 40 hotels and service apartments year to date, H1, and then we opened about over 20 of them. If we continue at this pace of adding new properties, opening new properties, that is where the growth is coming for us.

Speaker #3: We're building up our loyalty program, our systems, and our capabilities. If you noticed, we've also opened up our addressable market—we used to be just doing serviced apartments.

Speaker #3: Today we're doing resorts. We're signing up full-service hotels, and doing that gives us a lot more signings. And you see the signings are up, right?

Speaker #3: So we want to focus a lot more on the growth bit of the business. We signed over 40 hotels and serviced apartments year to date, in the first half.

Speaker #3: And then we opened over 20 of them. So if we continue at this pace of adding and opening new properties, that is where the growth is coming from for us.

Speaker #3: And once you have that growth, you gain operating leverage. And when you gain operating leverage, your margins will naturally improve. That operating leverage will come from that 40% that's not opened yet.

Lee Chee Koon: Once you have that growth, you gain operating leverage. When you gain operating leverage, your margins will naturally improve. That operating leverage will come from the 40% that is not open yet. Sometimes the margins, when you compare against other players, you need to compare against like for like, whether it is net margins, gross margins, whether the players include the reimbursable. So the numbers could look a bit confusing. So when you compare, you need to compare like for like.

Speaker #3: Sometimes, the margins—when you compare against other players—you need to compare against, like, Fortnite. Whether it's net margins or gross margins, whether the players include the reimbursable.

Speaker #3: So, some of the numbers could look a bit confusing. So, yeah. So when you compare, you need to compare like with like. For tonight, yeah.

Speaker #6: Just on the earnings guidance, we were at mid-single-digit guidance for the full year. At the start of the year, I don't think we've changed guidance.

Paul Tham: Just on the earnings guidance. So we were mid-single digit guidance for full year. At the start of the year, I don't think we have changed guidance. Certainly, we hope to be on the higher end of mid-single digits, but we are still keeping that as guidance.

Speaker #6: Certainly, we hope to be on the higher end of mid-single digits, but we're still keeping that as guidance.

Speaker #2: Moving again. The mic is behind you. Move.

Moderator: Mohsin again. The mic is behind you, Mohsin.

[Analyst] (J.P. Morgan): Oh, sorry. Maybe can you go to slide 7? Obviously pleasing to see EBITDA margins for the fee business improving. It is about 56% fee as potential FPM also going up. But if you were to strip out those legacy funds, those subscale funds, how high could this number be? Any guidance on that?

Mervin Song: Oh, sorry. Maybe can you go to slide 7? Obviously pleasing to see EBITDA margins for the fee business improving. It is about 56% fee as potential FPM also going up. But if you were to strip out those legacy funds, those subscale funds, how high could this number be? Any guidance on that?

Speaker #3: Oh, sorry.

Speaker #6: Maybe we can go to slide seven. Obviously, it's pleasing to see EBITDA margins for the fee-based search improving to about 56%. The fee-based percentage for FEM is also going up.

Speaker #6: But if you were to strip out those legacy funds, those sub-scale funds, how high could this number be? Yeah. Any guidance on that?

Speaker #3: So, I would say, when we look at the two businesses,

Paul Tham: Well, I would say when we look at the two business, even though we have combined it here, we look at the two slightly separately. From our listed funds business, given the scale we have with our REITs, generally we expect 60%, 60% plus margins. For the private funds, when we get to a steady run rate excluding carry, we would like a 30% to 40% margin. On a blended basis, actually, if you strip out the one-offs and everything else, we do not expect to move too far from this. We would expect to be about 50%, assuming over time it stabilizes.

Speaker #4: Even though we've combined it here, we look at the two slightly separately. From our listed funds business, given the scale we have with our REITs, generally we expect 60 to 60-plus percent margins.

Speaker #4: For the private funds, when we get to a steady run rate—excluding carry—we would like a 30% to 40% margin. So, on a blended basis, if you actually strip out the one-offs and everything else, we don't expect to move too far from this.

Speaker #4: We would expect it to be about 50%, assuming that over time it stabilizes.

Speaker #6: Sure. I appreciate that you're still forming your strategy for the listed REIT business with the management team there. But how aggressive do you think you can go?

[Analyst] (J.P. Morgan): Sure. I appreciate you still forming your strategy for the listed REIT business with the management team there. But how aggressive do you think you can go? Are we going to do onshore India REITs? Are we going to privatize CapitaLand China Trust? What are we going to do with Malaysia? Legacy funds, are you willing to take those losses? Keppel has been willing to take losses and move on, return capital back to shareholders, which the market has rewarded. Just trying to get your sense in terms of how you are thinking about how quickly you want to move. Obviously, the cost savings with Strating Paul, we have discussed before, when can we see those cost savings come through in terms of hitting the bottom line? Thanks.

Mervin Song: Sure. I appreciate you still forming your strategy for the listed REIT business with the management team there. But how aggressive do you think you can go? Are we going to do onshore India REITs? Are we going to privatize CapitaLand China Trust? What are we going to do with Malaysia? Legacy funds, are you willing to take those losses? Keppel has been willing to take losses and move on, return capital back to shareholders, which the market has rewarded. Just trying to get your sense in terms of how you are thinking about how quickly you want to move. Obviously, the cost savings with Strating Paul, we have discussed before, when can we see those cost savings come through in terms of hitting the bottom line? Thanks.

Speaker #6: I mean, are we going to do onshore India REITs? Are we going to privatize CLCT? What are we going to do with Malaysia? Legacy funds—are you willing to take those losses?

Speaker #6: I mean, capital has been willing to take losses and move on, returning capital back to shareholders, which the market has rewarded. So, just trying to get your sense in terms of how you're thinking about how quickly you want to move and, obviously, the cost savings—which I think, Paul, we've discussed before.

Speaker #6: When can we see those cost savings coming through in terms of hitting the bottom line? Thanks. So, please come to Investor Day. We would like to share a lot more.

Paul Tham: Please come to Investor Day. We would like to share a little more. I know. I think some of the stuff, it's not that we haven't necessarily thought it through. I think we've agreed we're not necessarily at the point we want to share. We want to be able to share a complete plan and to be able to answer all the questions that come in. I do think on the REIT side, certainly we are looking to do more offshore listings, but even listings in Singapore, if we can. In terms of timing, when are we willing to take some of the potential adjustments, if needed, on some of the divestments? I think all of that, we look to share it as a more comprehensive plan.

Speaker #6: I know, I think some of the stuff isn't—it's not that we haven't necessarily thought it through. I think we've agreed we're not necessarily at the point we want to share.

Speaker #6: We want to be able to share a complete plan and to be able to answer all the questions that come in. I do think on the REIT side, we are certainly looking to do more offshore listings, but even listings in Singapore if we can.

Speaker #6: And in terms of timing, when are we willing to take some of the potential adjustments, if needed, on some of the divestments? I think all of that, we look to share as a more comprehensive plan.

Speaker #6: I'll drive the fee register for the date when Grace decides we should have the Investor Day.

[Analyst] (J.P. Morgan): I'll definitely register for the date when Chris decides when he should have Investor Day.

Mervin Song: I'll definitely register for the date when Chris decides when he should have Investor Day.

Speaker #2: Okay, one question here. You can.

Moderator: Okay. Welcome. One question here. Yuke.

Speaker #5: Hi, you’re from CLSA. Just two quick questions. For the seven to nine billion, can you give a sense of how much has been written down year on year?

[Analyst] (CLSA): Hi, Yuke. I'm from CLSA. Just two quick questions. The S$7 to S$9 billion, can you give a sense of how much it has been written down year-on-year? The second question is on Ascott. I understand that it's a core, but does it give any benefits to hold 100% or is 80%, 50%, 60%? Would it bring any difference to your bottom line or operating performance?

Wong Yew Kiang: Hi, Yuke. I'm from CLSA. Just two quick questions. The S$7 to S$9 billion, can you give a sense of how much it has been written down year-on-year? The second question is on Ascott. I understand that it's a core, but does it give any benefits to hold 100% or is 80%, 50%, 60%? Would it bring any difference to your bottom line or operating performance?

Speaker #5: And then the second question is on Escort. I understand that it's a core, but does it give any benefits to the whole 100%, or is it 80%, 50%, 60%?

Speaker #5: Would it make any difference to your bottom line or operating performance?

Speaker #3: No, no. I like I said just now, I said that we are open-minded. We don't mind bringing in investors that can be helpful to what we want to do, to help to further the M&A ambitions and to help to strengthen the distribution or the capability.

Lee Chee Koon: No, no. Like I said just now, I said that we are open-minded. We do not mind bringing in investor that can be helpful to what we want to do to help to further the M&A ambitions and to help to strengthen the distribution or the capability. We are totally open-minded about that. Yeah.

Speaker #3: So, we are totally open-minded about that. Yeah.

Speaker #5: So you don't have to hold 100%?

[Analyst] (CLSA): So you do not have to hold 100%?

Wong Yew Kiang: So you do not have to hold 100%?

Speaker #3: Yeah. I don't think we need to, but it's still an important part of our business. And I think we still need it to help us set up our new fund strategies, because today, if you look at our Clara 3 or Clara 2, there were a lot of investors coming because of our operating capabilities.

Lee Chee Koon: Yeah, I do not think we need to, but we are still an important part of our business, and I think we still need it to help us to set up our new funds strategies. Because today, if you look at our Clara 3 or CLARA II, it was a lot of investors come in because of our operating capabilities, the data, understanding where people are staying, the kind of risk that they are doing. So it does help us in terms of our fundraising. Yeah.

Speaker #3: The data helps us understand where people are staying and the kind of rates that they are getting. So it does help us in terms of our fundraising.

Speaker #3: Yeah.

Speaker #5: But is it critical to remain as a majority?

[Analyst] (CLSA): But is it critical to

Wong Yew Kiang: But is it critical to

Lee Chee Koon: Remain as a majority?

Speaker #3: We still want to own it. I mean, the question is really about how much stake we need to own. So, I think that's the question that you have.

Andrew Lim: We still want to own it. The question is how much stakes we need to own. I think that's the question that you do. We don't need to own 100%, if you ask me. Yeah.

Speaker #3: We don't need to own 100%, if you ask me. Yeah.

Speaker #5: Okay.

Lee Chee Koon: Okay.

Speaker #6: On the other question, you can. So, of the $7 to $9 billion, obviously some of them have no write-downs. I mean, the REIT units actually have anything.

Paul Tham: On the other question, you can. Of the SGD 79 billion, obviously some of them have no write down. In the REIT units, actually, if anything, some of that value has actually increased. Then for some of the Singapore or Europe assets, we've had some adjustments. I'd say the bulk, obviously, is the China portfolio. We've written down about SGD 1.6 billion over the last five years, cumulatively, which we shared at full year results. I would say on average, that means most of the assets in that grouping have probably been written down between 20% to 25%, if not 30%.

Speaker #6: Some of that value has actually increased. And then, for some of the Singapore or Europe assets, we've had some adjustments. I'd say the bulk, obviously, is the China portfolio.

Speaker #6: We've written down about $1.6 billion over the last five years, cumulatively, which we shared at full-year results. I would say, on average, that means most of the assets in that grouping have probably been written down between 20 to 25, if not 30%.

Speaker #5: Okay. Thanks.

Lee Chee Koon: Thanks.

Speaker #2: Okay, any more questions? I don't think we have any questions online. Director, you have a question? Okay, over here.

Moderator: Any more questions? I don't think we have any questions online. Dexter, you have a question? Okay. Over here.

Speaker #6: All right. Director from Bloomberg. Can I ask first about the Luan divestment that you did? It’s from a development fund that you had.

[Company Representative] (Bloomberg): Hi, Dexter from Bloomberg. Can I ask, first on the Luwan divestment that you guys did. It is from a development fund that you guys had. Am I right to assume then that the development fund is being winded down?

Speaker #6: Am I right to assume, then, that the development fund is being wound down?

Speaker #3: Is it you who wants to take that question?

Andrew Lim: You want to take that question?

Speaker #4: Thanks, Director. Yes, it's part of our Development Fund III. There are five assets. We have divested one, which is a Qingdao, to our AI Master Fund last year.

Paul Tham: Thanks, Dexter. Yes, it is a part of our Development Fund III. There are five assets. We have divested one, which is Qingdao, 52-Sin to our AIA Masterplan last year. This is the second one. I would call it an orderly finish to the fund that has been recapped once already. There are plans in accordance to the fund's timeline to further look at divestment of the final three assets.

Speaker #4: And then this is the second one. I would call it an orderly finish to the fund that has been recapped once already. Yeah. So there are plans, in accordance with the fund's timeline, to further look at divestment of the final three assets.

Speaker #6: Just two more. One is on the tenure extensions. So, obviously, like you mentioned just now, there have been some plans laid out. Do you foresee having to pay more, obviously, premiums to top up the tenures, especially in China?

[Company Representative] (Bloomberg): Just two more. One is on the tenure extensions. So obviously, like you mentioned just now,

Paul Tham: Okay

[Company Representative] (Bloomberg): there has been some plans laid out. Do you all foresee having to pay more obviously premiums to top up the tenures, especially in China? That's my first question. Second, on your discussions with LPs right now, you mentioned the fundraising environment. Are more LPs looking for co-investments, and more of a kind of equal relationship, JVs kind of structure rather than more of a blind pool fund kind of format going forward? Thanks.

Speaker #6: That's my first question. And second, on your discussions with LPs right now—you mentioned the fundraising environment—are more LPs looking for co-investments and more of an equal relationship, JVs, that kind of structure, rather than more of a blind pool fund kind of format going forward?

Speaker #6: Yeah. Thanks.

Lee Chee Koon: For the land extension policy just came out last week. We are reviewing the details, working through the numbers, what it means. I think it's too early for us to give a view at this point in time because, first, there's a policy, then the question is, we need to take the asset, and then we need to discuss and work out the numbers. So give us a bit of time. What I do want to say is that at least there's a mechanism. Once the rules are clear, at least you know how to assess, you can put a pricing to it, and whether it makes sense to top up or not depends on what it means for the returns for the asset level and also for the investors. Then we'll look at it on a case-by-case basis.

Speaker #5: For the land extension policy, the details just came out. We're working through the numbers and what it means. I think it's too early for us to give a view at this point in time because, first, there is a policy.

Speaker #5: Then the question is, do we need to take the asset, and then we need to discuss and work out the numbers? So, give us a bit of time, but what I do want to say is that at least there's a mechanism.

Speaker #5: Once the rules are clear, at least you know how to assess. You can put a pricing to it, and whether it makes sense to top up or not depends on what it means for the returns at the asset level and also for the investors.

Speaker #5: Then we'll look at it on a case-by-case basis. But having that clarity of rules for all investors, I think, is important. Yeah.

Lee Chee Koon: But having that clarity of rules for all investors, I think it's important.

Speaker #3: Can I pick up the LP question? I think Andrew can probably add on the real estate side. On credit and alternatives, Dexter, we're seeing a little bit of both.

Kishore Moorjani: Can I pick up the LP question? I think it's the and Andrew can probably add on the real estate side. On credit and alternatives, Dex, we're seeing a little bit of both. So in our ACP program, which is our flagship Fund I, needed about nearly 50%, 45% from balance sheet. It was 250 million. Fund II doubled that size and only took 20% from balance sheet. We actually had to scale back LPs. It's a good problem to have. We've been returning capital on that actually quite quickly. Fund III, we intend to do a first close, hopefully before the end of this year, and you'll see that size increase meaningfully. The balance sheet capacity or contribution go down from 20% again. So we're seeing that momentum, and that's from a broader base of LPs.

Speaker #3: So in our ACP program, which is our flagship Fund One, needed about nearly 50%, 45% from balance sheet—it was $250 million. Fund Two doubled that size and only took 20% from balance sheet.

Speaker #3: We actually had to scale back LPs. It's a good problem to have. Fund—we've been returning capital on that actually quite quickly. Fund three, we will—we intend to do a first close hopefully before the end of this year.

Speaker #3: And you'll see that size increase meaningfully. The balance sheet capacity or contribution goes down from 20% again. So we're seeing that momentum, and that's from a broader base of LPs.

Speaker #3: Separate from that, and specifically with insurance LPs, we have at least three very deep ongoing discussions around large managed accounts. They're not entirely credit, but they're dominantly credit.

Kishore Moorjani: Separate from that, specifically with insurance LPs, we have at least three very deep ongoing discussions around large managed accounts. They are not entirely credit, but they are dominantly credit. One is on a programmatic CLI-wide program. The second is specific to a target geography where they are looking for credit deployment and yield. The third is an aggregation of insurers in a specific market that wants to deploy, again, largely for alternate to fixed income yields. Those will be very deep pools for managed accounts, but we are at least on the credit side, we are seeing strong demand even on the commingled fund.

Speaker #3: One is on a sort of programmatic, CLI-wide program. The second is specific to a target geography where they're looking for credit deployment and yield.

Speaker #3: And the third is an aggregation of insurers in a specific market that want to deploy again, largely as an alternative to fixed income yield. So those will be very deep pools for managed accounts. But at least on the credit side, we're seeing strong demand, even on the commingled fund.

Speaker #6: So, broadly speaking, just to supplement, I think what you can see from Kishore's explanation is that you have a wide spectrum of preferences from different LPs, depending on their needs.

Andrew Lim: Broadly speaking, just to supplement, I think what you can see from Kishore's explanation is that you have a wide spectrum of preferences from different LPs depending on their needs. Some LPs are actually constrained. They cannot be more than a certain percentage of a fund. When they come in, they require other LPs, which speaks to the more commingled nature of it. You can then design a supplemental program for them to deploy what they need to deploy through co-investments or SMA type programs. The key for us as a house, I think, is to remain nimble and listen to our LPs. Rather than try to force fit what we think is best for them, we need to listen to them. Let them tell us what it is that they need from us as a house.

Speaker #6: Some LPs are actually constrained. They cannot be more than a certain percentage of a fund. So, when they come in, they require other LPs—which speaks to the more co-mingled nature of it.

Speaker #6: And then you can design a supplemental program for them, to deploy what they need to deploy through co-investments or SMA-type programs.

Speaker #6: So the key for us is a house. I think is to be remain nimble and listen to our LPs and rather than try to force fit what is what we think is best for them, we need to listen to them, let them tell us what it is that they need from us as a house.

Speaker #6: And wherever we feel that it is right for us to try to accommodate and design products and programs around their needs, I think that's where we have an ability to differentiate and distinguish ourselves.

Andrew Lim: Wherever we feel that it is right for us to try to accommodate and design products and programs around their needs, I think that is where I think we have an ability to differentiate and distinguish ourselves.

Speaker #6: Using different types of products as well. So we talked earlier about private-to-private, but we can also do private-to-public. Some investors are quite happy to do that.

Lee Chee Koon: Using different types of products as well. We talked earlier about private to private, but we can also do private public. Some investors are quite happy to do that. We already have investors in our system that invest in both our REITs and our private equity products, because you can blend a combination of cash on cash yields, liquidity, as well as thematics that suit different LPs and what they are looking for. Sorry, Chiquan, I think you wanted to say something. Andrew has covered most of the points that I wanted to say. The point maybe just to highlight is that we really want to focus on the bigger fund strategies. The smaller size type funds, there is no ability to scale. You will really see us sunsetting. We will not even bother to do because it does not make sense.

Speaker #6: We already have investors in our system that invest in both our REITs and our private equity products, because you can blend a combination of cash-on-cash yields, liquidity, as well as thematics that suit different LPs and what they are looking for.

Speaker #6: Sorry, Chico. I think you wanted to say something.

Speaker #5: I mean, Andrew, a couple of most of the points that I wanted to say about the point, maybe just to highlight is that we really want to focus on the bigger fund strategies so the smaller size type funds there's no ability to scale.

Speaker #5: You really see our sense. I think we won't even bother to do it because it doesn't make sense. We need to focus on building up the big AUM and the repeatable strategies for the group.

Lee Chee Koon: We need to focus on building up the big AUM and the repeatable strategies for the group. That is the discipline that we have, and you help to improve margins and negotiate for better, I would say fairer fees as well.

Speaker #5: So that's the discipline that we have. And you have to improve margins and negotiate for better, I would say, fairer fees as well.

Speaker #1: Thank you. Maybe one last question. Maybe we'll have Rachel, then we'll come back to Merlin for the last question. Rachel, over there.

Moderator: Thank you. Maybe one last question. Maybe we have Rachel, then we will come back to Mervin for the last question. Rachel, over there.

Speaker #7: Of course.

[Analyst] (DBS): Hi. Thank you. I just have one quick question. What happens to Ascott's target of that 500 million? Are you thinking of spinning off before it hits the target or after it hits the target? Or when can it still hit the target?

Rachel Tan: Hi. Thank you. I just have one quick question. What happens to Ascott's target of that 500 million? Are you thinking of spinning off before it hits the target or after it hits the target? Or when can it still hit the target?

Speaker #1: Hi, thank you. I just have one quick question. What happens to the escrow target of that $500 million? Are you thinking of spinning off before he hits the target, or after he hits the target?

Speaker #1: When can he still hit the target?

Speaker #6: Okay, I can answer the $500 million question. The spin-off question, I cannot answer. So, if you look at the 40% contracts that are not open, these are signed contracts.

Lee Chee Koon: Okay, I can answer the 500 million question. The spin-off question, I cannot answer. If you look at the 40% contracts that are not open, these are signed contracts, we have already exceeded the 500 million. It is just a matter of time before the 500 million comes in. Right? I think those are embedded revenue that will come in in the next couple of years. Yeah. The long and short is Ascott, the fee income growth, the EBITDA growth is building up very nicely. Right? And obviously because it is doing very well, you have a lot of interesting investors wanting to have conversations about wanting to participate in that growth. We are open-minded, but we want to be sure that we can bring in the investors. It is not just about unlocking the value.

Speaker #6: We have already exceeded the 500 million, so it's just a matter of time before the 500 million comes in, right? So I think those are embedded revenue that will come in over the next couple of years.

Speaker #6: Yeah, so the long and short is, as the fee income growth and the EBITDA growth are building up very, very nicely—right? And obviously, because it's doing very well, you have a lot of interesting investors wanting to have conversations about participating in that growth.

Speaker #6: We are open minded, but we want to be sure that we can bring in the investors. It's not just about unlocking the value. We want to help it to drive the growth even better, even through M&A or through distribution or bring down the help to bring down the cost.

Lee Chee Koon: We want to help it to drive the growth even better, even through M&A or through distribution or try to bring down the cost. It has to make sense. Then, I mentioned, there's no need for us to own 100%, but it's still a very important part of our business to help us to build new funds. If you look at our lodging assets that we own as a group, if you include the private funds plus the Japan Hotel REIT Investment Corporation plus the CapitaLand Ascott Trust, actually lodging is a big part of our business.

Speaker #6: It has to make sense. And then I mentioned, I mean, there's no need for us to own 100%, but it's still a very important part of our business to help us build new funds. And I mean, if you look at our lodging assets that we own as a group, if you include the private funds, plus the Japan Hospitality REIT, plus CapitaLand Ascendas REIT, actually, lodging is a big part of our business.

Speaker #6: And a lot of the—I mean, started off just doing long stay, but the data now, because the asset team has done resorts, going to hotels, the data, the understanding of where customers are going, how they're spending, makes a big difference in the way we talk to fund investors in building up the fund strategies for the hospitality or the living assets investments.

Lee Chee Koon: It started off just doing long stay, but the data now because The Ascott Limited team has done resorts going to hotels, the data, the understanding of where customers are going, how they're spending makes a big difference in the way how we talk to fund investors in building up the fund strategies for the hospitality or the living assets investments. Also just to give a sense, I think The Ascott Limited's management platform currently still manages about 60% of the CLAS properties. So that's quite a large proportion. Also the new, for example, Clara Two, we also work with the fund team to actually build up quite a lot of the assets that were brownfield, greenfield. Some of those assets actually give very good returns to investors. I think some of them are in excess of 30% IRR.

Speaker #6: Yeah. And also, just to give a sense, I think the Escort Management Platform currently still manages about 60% of the class properties, so there's quite a large proportion.

Speaker #6: And also, the new—for example, Clara 2—we also work with the fund team to actually build up quite a lot of the assets that were brownfield, greenfield.

Speaker #6: And some of those assets actually give very good returns to investors. I think some of them are in excess of 30% IRR. And some of those things that we achieve would be difficult to achieve if it's just an arm's length, third-party type operator who doesn't understand, you know, the objectives and what we're trying to get at.

Lee Chee Koon: Some of those things that we achieve would be difficult to achieve if it's just an arm's length third party type operator who doesn't understand the objectives and what we're trying to get at.

Speaker #1: Just one quick follow-up. The 40% contracted that you mentioned—how soon can we get to all of that 40%?

[Analyst] (DBS): Just one quick follow-up. The 40% contracted that you mentioned, how soon can we get to all the 40%?

Rachel Tan: Just one quick follow-up. The 40% contracted that you mentioned, how soon can we get to all the 40%?

Speaker #6: So, varying completion timelines. I think some of them are conversion projects, quite soon, in the next 12 months. Some of them are brownfield projects, maybe 24 months.

Lee Chee Koon: So varying completion timelines. I think some of them are conversion projects quite in the next 12 months. Some of them are brownfield, maybe 24 months. The greenfield ones are the ones that will take a bit longer. They are usually about 3 years or so. Right? So, I think the contracts are there. What we want is to make sure that they open on time. To be honest, some of them do slip, but the comforting point is that the project is there. It is just a matter of time when it opens.

Speaker #6: The greenfield ones are the ones that will take a bit longer. It's usually about three years or so, right? So I think the contracts are there.

Speaker #6: What we want is to make sure that they open on time. To be honest, some of them do slip, but the comforting point is that the project is there.

Speaker #6: It's just a matter of time before it opens.

Speaker #1: So, another two, three years' time? Yeah. Okay. Last question. Miles.

[Analyst] (DBS): So another 2, 3 years then?

Rachel Tan: So another 2, 3 years then?

Moderator: Yeah. Okay. Last question, Mervin.

Speaker #6: Maybe I can stick in too. First question: a big driver of earnings improvement is lower borrowing costs. Maybe if they could give some guidance for the second half?

[Analyst] (J.P. Morgan): Maybe I can sneak in 2. First question, a big driver of earnings improvement is lower borrowing costs. Maybe if you give some guidance for the H2, and as you pay down debt, paying off more expensive debt, how you think the interest costs will stabilize down too. Second question in terms of wanting to scale up, reduce some of the legacy funds. Is there a benchmark size for a private fund that makes sense for you? Which are your flagship funds you want to scale up today? Maybe you can describe them and perhaps some LPs are dialing into this call. They can send a check-in if you are opening the doors for them to contribute. So maybe you can just share your thoughts on that. Thanks.

Mervin Song: Maybe I can sneak in 2. First question, a big driver of earnings improvement is lower borrowing costs. Maybe if you give some guidance for the H2, and as you pay down debt, paying off more expensive debt, how you think the interest costs will stabilize down too. Second question in terms of wanting to scale up, reduce some of the legacy funds. Is there a benchmark size for a private fund that makes sense for you? Which are your flagship funds you want to scale up today? Maybe you can describe them and perhaps some LPs are dialing into this call. They can send a check-in if you are opening the doors for them to contribute. So maybe you can just share your thoughts on that. Thanks.

Speaker #6: And as you pare down debt, paying off more expensive debt, how do you think the interest cost could stabilize down too? Second question, in terms of—you know—one thing is to scale up, reduce some of the legacy funds.

Speaker #6: Is there a benchmark size for a private fund that makes sense for you? Which are your flagship funds you want to scale up today?

Speaker #6: Maybe you can describe them, and perhaps some LPs are dialing into this call. They can, you know, send a check in if you're opening your doors for them to contribute.

Speaker #6: So maybe we can just share your thoughts on that. Thanks.

Speaker #7: Thank you.

Lee Chee Koon: How much time do we have, Grace?

Speaker #6: How much time do we have? Grace? Okay. Okay. So, I'll answer that question by looking at the sizing of the market. As Chikun mentioned earlier, capital raising generally for real estate is, I would say, there's some headwinds there.

Moderator: We still have 3 minutes.

Lee Chee Koon: Okay. I will answer that question by looking at the sizing of the market. As Chiquan mentioned earlier, capital raising generally for real estate is, I would say there is some headwinds there.

Speaker #6: Historically, in the last year or so, we've been raising—about last year, we did $3.8 billion. I'd say this year we're on pace to deliver roughly about the same.

Andrew Lim: Historically, in the last year or so, last year we did 3.8. I would say this year we are on pace to deliver roughly about the same. So let us call it an annual cadence of, say, SGD 3 to 5 billion a year. That allows us to punch at or above our weight, if you consider that in the context of what Asia Pacific capital raising generally is able to accomplish in this environment, real estate. So SGD 3 to 5 billion a year, you extrapolate and you net off the funds that we will roll off and sunset. That is our, I would say, target organic growth. And then on top of that, we have what we talked about, platform acquisitions that allow us to scale FUM in a systematic and disciplined way to support the verticals, hospitality, living, logistics, self-storage, commercial.

Speaker #6: So let's call it an annual cadence of, say, $3 to $5 billion a year, right? That allows us to punch at or above our weight if you consider that in the context of what Asia Pacific capital raising generally is able to accomplish in this environment, real estate.

Speaker #6: So, three to five billion a year—if you extrapolate and you net off the funds that we will roll off and sunset—that's your, that's, I would say, target organic growth.

Speaker #6: And then on top of that, we have what we talked about—platform acquisitions. They allow us to scale FUM in a systematic and disciplined way to support the verticals.

Speaker #6: Hospitality, living, logistics, self-storage, commercial—and then that's the old side of the house, which is on a high growth trajectory, starting from a low base, but lots of interesting things happening that Keisha was building.

Andrew Lim: And then there's the alt side of the house, which is on a high growth trajectory, starting from a low base, but lots of interesting things happening that Kishore is building. What that number is, I think sign up for Investor Day. We will hopefully be able to share that for you.

Speaker #6: So what that number is—I think, sign up for Investor Day. We’ll hopefully be able to share that with you.

Speaker #3: Just on the interest rates—so, interest rates did come down, obviously, by 40 basis points, which was a nice savings for us. We kind of expect the second half of the year will be about this range, maybe down slightly.

Paul Tham: Just on the interest rates. Interest rates did come down, obviously, 40 basis points, which was a nice savings for us. We kind of expect the H2 of the year will be around about this range, maybe down slightly. Obviously, a part of that mix was because we have paid off some of the other currencies. We have got our Singapore float, which is still holding at a very low rate. I think if that does not move up, then we would see some of the same savings in the H2.

Speaker #3: Obviously, a part of that mix was because we've paid off some of the other currencies. So we've got our Singapore float, which is still holding at a very low rate.

Speaker #3: I think if that doesn't move up, then we would see some of the same savings in the second half.

Speaker #1: Okay. With that, thank you very much. We now have a lot of work to do, so that we can update you on our progress as we look to share more in the coming months.

Moderator: Okay. With that, thank you very much. We now have a lot of work to do so that we can update you on our progress as we look to share more in the coming months. Thank you very much, everyone. Have a pleasant day ahead.

Speaker #1: Thank you very much, everyone. Have a pleasant day ahead.

Operator: Goodbye

Moderator: Goodbye

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Half Year 2026 Capitaland Investment Ltd Earnings Call

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