Q2 2026 Swire Properties Ltd Earnings Call
Speaker #1: Mr. Tim Blackburn, Chief Executive of Swire Properties. And Mr. Rorscher, Chief Financial Officer of Swire Properties. Tim and Ror will first take us through the 2026 interim results, then we'll proceed to a Q&A session.
Speaker #1: Tim and Roy will first take us through the 2026 interim results, then we'll proceed to a Q&A session. Before we start the presentation, may we first take a look at a short video on the company's key highlights over the past six months.
Speaker #1: Before we start the presentation, may we first take a look at a short video on the company's key highlights over the past 6 months.
Speaker #1: Please enjoy. We are now inviting Tim and Ror to take us through the presentation. Tim, please.
Speaker #1: Please enjoy. We are now inviting Tim and Roy to take us through the presentation. Tim, please.
[Company Representative] (Swire Properties): May I now invite Tim and Roy to take us through the presentation. Tim, please.
Speaker #2: Great. Well, thank you. Thank you very much. I hope you enjoy the video. It's been a busy, busy first half of the year, but a very warm welcome.
Speaker #2: Great. Well, thank you. Thank you very much. I hope you enjoy the video. It’s been a busy first half of the year, but a very warm welcome.
Tim Blackburn: Well, thank you. Thank you very much. I hope you enjoyed the video. It's been a busy H1 of the year, but a very warm welcome. Good afternoon to Swire Properties' 2026 interim results briefing. As usual, I'll take you through the highlights for the first six months of the year, the key developments, and the progress we've been making with our HKD 100 billion investment plan. I'll cover some of the key portfolio updates, Roy will cover the financial highlights, our SD2050 strategy, and our sustainability achievements for the H1. I'll close briefly with some comments on the outlook for the H2 of the year, we'll take some questions. Our performance in the first six months of the year has been strong.
Tim Blackburn: Well, thank you. Thank you very much. I hope you enjoyed the video. It's been a busy H1 of the year, but a very warm welcome. Good afternoon to Swire Properties' 2026 interim results briefing. As usual, I'll take you through the highlights for the first six months of the year, the key developments, and the progress we've been making with our HKD 100 billion investment plan. I'll cover some of the key portfolio updates, Roy will cover the financial highlights, our SD2050 strategy, and our sustainability achievements for the H1. I'll close briefly with some comments on the outlook for the H2 of the year, we'll take some questions. Our performance in the first six months of the year has been strong.
Speaker #2: Good afternoon to Swire Properties 2026 interim results briefing. As usual, I'll take you through the highlights for the first 6 months of the year, the key developments, and the progress we've been making with our $100 billion Hong Kong dollar investment plan.
Speaker #2: Good afternoon, and welcome to Swire Properties' 2026 interim results briefing. As usual, I'll take you through the highlights for the first six months of the year, the key developments, and the progress we've been making with our HK$100 billion investment plan in Hong Kong.
Speaker #2: I'll cover some of the key portfolio updates, and then Roy will cover the financial highlights, our 20 SD2050 strategy, and our sustainability achievements, for the first half.
Speaker #2: I'll cover some of the key portfolio updates, and then Roy will cover the financial highlights, our SD2050 strategy, and our sustainability achievements for the first half.
Speaker #2: And I'll close briefly with some comments on the outlook for the second half of the year, and then we'll take some, some questions. So our performance in the first 6 months of the year has been strong.
Speaker #2: And I'll close briefly with some comments on the outlook for the second half of the year, and then we'll take some questions. Our performance in the first six months of the year has been strong.
Speaker #2: We reported an underlying profit of 4.9 billion Hong Kong dollars, which is an increase of 11% year on year, thanks to the significant contribution from residential sales, and the encouraging performance of the retail portfolio, both in Hong Kong and in the Chinese mainland.
Speaker #2: We reported an underlying profit of HK$4.9 billion, which is an increase of 11% year on year, thanks to the significant contribution from residential sales and the encouraging performance of the retail portfolio, both in Hong Kong and on the Chinese mainland.
Tim Blackburn: We reported an underlying profit of HKD 4.9 billion, which is an increase of 11% year-on-year, thanks to the significant contribution from residential sales and the encouraging performance of the retail portfolio, both in Hong Kong and in the Chinese Mainland. Recurring underlying profit of HKD 4.7 billion increased by 36% year-on-year, thanks primarily to the sale of the two houses in Deep Water Bay and the resilience of the office portfolio, the positive momentum in the retail portfolio, and the improvement in our managed hotels, all underpinned by the successful portfolio upgrades and the active capital recycling of non-core assets and the progress we're making with the HKD 100 billion investment plan.
Tim Blackburn: We reported an underlying profit of HKD 4.9 billion, which is an increase of 11% year-on-year, thanks to the significant contribution from residential sales and the encouraging performance of the retail portfolio, both in Hong Kong and in the Chinese Mainland. Recurring underlying profit of HKD 4.7 billion increased by 36% year-on-year, thanks primarily to the sale of the two houses in Deep Water Bay and the resilience of the office portfolio, the positive momentum in the retail portfolio, and the improvement in our managed hotels, all underpinned by the successful portfolio upgrades and the active capital recycling of non-core assets and the progress we're making with the HKD 100 billion investment plan.
Speaker #2: Recurring underlying profit of 4.7 billion Hong Kong dollars increased by 36% year on year, thanks primarily to the sale of the two houses in Deepwater Bay, and the resilience of the office portfolio, the positive momentum in the retail portfolio, and the improvement in our managed hotels, all underpinned by the successful portfolio upgrades and the active capital recycling of non-core assets.
Speaker #2: Recurring underlying profit of $4.7 billion Hong Kong dollars increased by 36% year on year, thanks primarily to the sale of the two houses in Deepwater Bay, and the resilience of the office portfolio, the positive momentum in the retail portfolio, and the improvement in our managed hotels, all underpinned by the successful portfolio upgrades and the active capital recycling of non-core assets.
Speaker #2: And the progress we've been making with the $100 billion investment plan. We've declared a first interim dividend of Hong Kong dollars 0.37, a 37 cents per share, in the first half of 2026, an increase of 6% year on year, which is consistent with our commitment to enhancing shareholder returns and our aim to deliver mid-single digit annual dividend growth, and to paying out approximately 50% of underlying profit in ordinary dividends over time.
Speaker #2: And the progress we've been making with the $100 billion investment plan. We've declared a first interim dividend of Hong Kong dollars $0.37, a 37 cents per share, in the first half of '26, an increase of 6% year on year, which is consistent with our commitment to enhancing shareholder returns and our aim to deliver mid-single digit annual dividend growth and to paying out approximately 50% of underlying profit in ordinary dividends over time.
Tim Blackburn: We declared a first interim dividend of HKD 0.37 per share in the H1 2026, an increase of 6% year-on-year, which is consistent with our commitment to enhancing shareholder returns and our aim to deliver mid-single-digit annual dividend growth and to paying out approximately 50% of underlying profit in ordinary dividends over time. We're now approaching our 10th consecutive year of delivering sustainable dividend growth. With a strong balance sheet and a healthy gearing ratio, the business remains on a solid financial footing. We're well-placed to achieve our long-term growth targets, thanks to the active capital recycling strategy. We have a diverse, high-quality development pipeline across all our core markets, combined with a track record of strong execution capability in Hong Kong and in the Chinese Mainland. In terms of key developments, I'll just touch on some of the highlights year to date.
Tim Blackburn: We declared a first interim dividend of HKD 0.37 per share in the H1 2026, an increase of 6% year-on-year, which is consistent with our commitment to enhancing shareholder returns and our aim to deliver mid-single-digit annual dividend growth and to paying out approximately 50% of underlying profit in ordinary dividends over time. We're now approaching our 10th consecutive year of delivering sustainable dividend growth. With a strong balance sheet and a healthy gearing ratio, the business remains on a solid financial footing. We're well-placed to achieve our long-term growth targets, thanks to the active capital recycling strategy. We have a diverse, high-quality development pipeline across all our core markets, combined with a track record of strong execution capability in Hong Kong and in the Chinese Mainland. In terms of key developments, I'll just touch on some of the highlights year to date.
Speaker #2: And we're now approaching our 10th consecutive year of delivering sustainable dividend growth. So with a strong balance sheet and a healthy gearing ratio, the business remains on a solid financial footing, we're well placed to achieve our long-term growth targets, thanks to the active capital recycling strategy we have a diverse high-quality development pipeline across all our core markets, combined with a track record of strong execution capability in Hong Kong and in the Chinese mainland.
Speaker #2: And we're now approaching our 10th consecutive year of delivering sustainable dividend growth. So, with a strong balance sheet and a healthy gearing ratio, the business remains on a solid financial footing.
Speaker #2: We're well placed to achieve our long-term growth targets thanks to the active capital recycling strategy. We have a diverse, high-quality development pipeline across all our core markets, combined with a track record of strong execution capability in Hong Kong and in the Chinese mainland.
Speaker #2: In terms of key developments, I'll just touch on some of the highlights, year to date. So in accordance with the $100 billion plan, we've continued to invest in the asset reinforcement of our office and retail portfolios in Hong Kong and the mainland.
Speaker #2: In terms of key developments, I'll just touch on some of the highlights year to date. So, in accordance with the $100 billion plan, we've continued to invest in the asset reinforcement of our office and retail portfolios in Hong Kong and the mainland.
Tim Blackburn: In accordance with the HKD 100 billion plan, we've continued to invest in the asset reinforcement of our office and retail portfolios in Hong Kong and the mainland. In Guangzhou, our first Taikoo Li in the Greater Bay Area is progressing well. Beijing, we've successfully opened five luxury flagship Maisons, which has transformed Taikoo Li Sanlitun into culture and fashion landmark in the capital. In Hong Kong, we successfully completed the sales order for two prime sites in Quarry Bay, which we redeveloped into the next generation of high-quality office and commercial space in Taikoo Place. We're seeing strong demand for residential properties across all markets.
Tim Blackburn: In accordance with the HKD 100 billion plan, we've continued to invest in the asset reinforcement of our office and retail portfolios in Hong Kong and the mainland. In Guangzhou, our first Taikoo Li in the Greater Bay Area is progressing well. Beijing, we've successfully opened five luxury flagship Maisons, which has transformed Taikoo Li Sanlitun into culture and fashion landmark in the capital. In Hong Kong, we successfully completed the sales order for two prime sites in Quarry Bay, which we redeveloped into the next generation of high-quality office and commercial space in Taikoo Place. We're seeing strong demand for residential properties across all markets.
Speaker #2: In Guangzhou, our first Taikouli in the Great Tibet area is progressing well. Beijing, we've successfully opened 5 luxury flagship maisons, which has transformed Taikouli Sanlitun into culture and fashion landmark in the capital.
Speaker #2: In Guangzhou, our first Taikouli in the Greater Bay Area is progressing well. In Beijing, we've successfully opened five luxury flagship maisons, which has transformed Taikouli Sanlitun into a culture and fashion landmark in the capital.
Speaker #2: And in Hong Kong, we successfully completed the sales order for two prime sites in Quarry Bay, which we redeveloped into the next generation of high-quality office and commercial space in Taikouli Place.
Speaker #2: And in Hong Kong, we successfully completed the sales order for two prime sites in Quarry Bay, which will be redeveloped into the next generation of high-quality office and commercial space in Taikoo Place.
Speaker #2: We're seeing strong demand for residential properties across all markets, pleased with the market response, to the Lujiazui Taikoyuan Residences in Shanghai, where we've now completed all 6 stages of the pre-sales, and achieving proceeds of over $16 billion renminbi.
Speaker #2: We're seeing strong demand for residential properties across all markets. We're pleased with the market response to the Lujiazui Taikouli Yuan Residences in Shanghai, where we've now completed all six stages of the pre-sales, achieving proceeds of over RMB 16 billion.
Tim Blackburn: Pleased with the market response to the Lujiazui Taikoo Yuan Residences in Shanghai, where we've now completed all 6 stages of the pre-sales, achieving proceeds of over RMB 16 billion Q1. As I mentioned, we completed the sale of the two luxury houses in Deep Water Bay for HKD 2.2 billion. We're seeing good momentum at Headland Residences on Hong Kong Island. We recently commenced the VIP pre-sales for Upper House Residences in Bangkok, and the pre-sales for Mandarin Oriental Residences in Miami, which have now exceeded 60% prior to the groundbreaking in October. Finally, on the capital recycling front, we've continued to divest of non-core properties in Hong Kong, and we expect to complete the sale of 44th floor of One Island East to the SFC by the end of this year.
Tim Blackburn: Pleased with the market response to the Lujiazui Taikoo Yuan Residences in Shanghai, where we've now completed all 6 stages of the pre-sales, achieving proceeds of over RMB 16 billion Q1. As I mentioned, we completed the sale of the two luxury houses in Deep Water Bay for HKD 2.2 billion. We're seeing good momentum at Headland Residences on Hong Kong Island. We recently commenced the VIP pre-sales for Upper House Residences in Bangkok, and the pre-sales for Mandarin Oriental Residences in Miami, which have now exceeded 60% prior to the groundbreaking in October. Finally, on the capital recycling front, we've continued to divest of non-core properties in Hong Kong, and we expect to complete the sale of 44th floor of One Island East to the SFC by the end of this year.
Speaker #2: Q1, as I mentioned, we completed the sale of the two luxury houses in Deepwater Bay for 2.2 billion Hong Kong dollars, and we're seeing good momentum at the Headland Residences on Hong Kong Island.
Speaker #2: Q1, as I mentioned, we completed the sale of the two luxury houses in Deepwater Bay for HK$2.2 billion, and we're seeing good momentum at the Headland Residences on Hong Kong Island.
Speaker #2: We recently commenced the VIP pre-sales for Upper House Residences in Bangkok, and the pre-sales for Mandarin Oriental Residences in Miami, which have now exceeded 60% prior to the groundbreaking in October.
Speaker #2: We recently commenced the VIP pre-sales for Upper House Residences in Bangkok and the pre-sales for Mandarin Oriental Residences in Miami, which have now exceeded 60% prior to the groundbreaking in October.
Speaker #2: And finally, on the capital recycling front, we've continued to divest of non-core properties in Hong Kong, and we expect to complete the sale of 44th Floor of One Island East of the SFC by the end of this year.
Speaker #2: And finally, on the capital recycling front, we've continued to divest non-core properties in Hong Kong, and we expect to complete the sale of the 44th floor of One Island East to the SFC by the end of this year.
Speaker #2: So in terms of active capital recycling, I think this chart shows that we've got a good record, a good track record of active capital recycling over the past 5 years, after a busy period in 2025, primarily with a divestment of the commercial portfolio in Miami cumulative proceeds are now approaching $60 billion Hong Kong dollars, which provides liquidity to support the $100 billion investment plan, to improve our return to drive long-term growth and support the progressive dividend policy.
Speaker #2: So in terms of active capital recycling, I think this chart shows that we've got a good record—a good track record—of active capital recycling over the past five years.
Tim Blackburn: In terms of active capital recycling, I think this chart shows that we've got a good track record of active capital recycling over the past five years. After a busy period in 2025, primarily with the divestment of the commercial portfolio in Miami, cumulative proceeds are now approaching HKD 60 billion, which provides liquidity support, HKD 100 billion investment plan to improve our return to drive long-term growth and support the progressive dividend policy. Since announcing the HKD 100 billion investment plan in Q2 2021, we've made solid progress, with 69% committed across the three core markets. In the Chinese mainland, we're on track to double our GFA, and we're focused on preparing for handover to tenants and multiple new openings are scheduled over the next six to 12 months.
Tim Blackburn: In terms of active capital recycling, I think this chart shows that we've got a good track record of active capital recycling over the past five years. After a busy period in 2025, primarily with the divestment of the commercial portfolio in Miami, cumulative proceeds are now approaching HKD 60 billion, which provides liquidity support, HKD 100 billion investment plan to improve our return to drive long-term growth and support the progressive dividend policy. Since announcing the HKD 100 billion investment plan in Q2 2021, we've made solid progress, with 69% committed across the three core markets. In the Chinese mainland, we're on track to double our GFA, and we're focused on preparing for handover to tenants and multiple new openings are scheduled over the next six to 12 months.
Speaker #2: After a busy period in 2025, primarily with a divestment of the commercial portfolio in Miami, cumulative proceeds are now approaching HK$60 billion, which provides liquidity to support our HK$100 billion investment plan to improve our return, drive long-term growth, and support the progressive dividend policy.
Speaker #2: Since announcing announcing the $100 billion investment plan in the second quarter of 2021, we've made solid progress with 69% committed across the three core markets, in the Chinese mainland we're on track to double our GFA, and we're focused on preparing for handover to tenants and multiple new openings over the scheduled over the next 6 to 12 months.
Speaker #2: Since announcing the $100 billion investment plan in the second quarter of '21, we've made solid progress, with 69% committed across the three core markets. In the Chinese mainland, we're on track to double our GFA, and we're focused on preparing for handover to tenants and multiple new openings scheduled over the next 6 to 12 months.
Speaker #2: In Hong Kong, we continue to evaluate long-term asset reinforcement opportunities, at Pacific Place and Taikouli Place, on the trading front we continue to develop a diverse pipeline of premium residential developments across all core markets, including in Southeast Asia.
Speaker #2: In Hong Kong, we continue to evaluate long-term asset reinforcement opportunities at Pacific Place and Taikoo Li Place. On the trading front, we continue to develop a diverse pipeline of premium residential developments across all core markets, including in Southeast Asia.
Tim Blackburn: In Hong Kong, we continue to evaluate long-term asset reinforcement opportunities at Pacific Place and Taikoo Place. On the trading front, we continue to develop a diverse pipeline of premium residential developments across all core markets, including in Southeast Asia. This slide just provides a bit more detail on the completion schedule for over 15 million square feet GFA of new projects over the next few years. As we enter what we refer to as the harvest phase, our immediate focus will be on the disciplined execution of the retail strategy in the Chinese mainland. Execution of the retail strategy in the Chinese mainland.
Tim Blackburn: In Hong Kong, we continue to evaluate long-term asset reinforcement opportunities at Pacific Place and Taikoo Place. On the trading front, we continue to develop a diverse pipeline of premium residential developments across all core markets, including in Southeast Asia. This slide just provides a bit more detail on the completion schedule for over 15 million square feet GFA of new projects over the next few years. As we enter what we refer to as the harvest phase, our immediate focus will be on the disciplined execution of the retail strategy in the Chinese mainland. Execution of the retail strategy in the Chinese mainland.
Speaker #2: This slide just provides a bit more detail on the completion schedule for over 15 million square feet GFA of new projects, over the next few years, as we enter what we refer to as the harvest phase, our immediate focus will be on the discipline execution of the retail strategy in the Chinese mainland, with new projects due to complete in Shanghai, Sanyang, and Beijing in 2026, and in Guangzhou, Xi'an, and Hong Kong in 2027.
Speaker #2: And looking further ahead down the line, we've got a diverse pipeline of residential projects in Hong Kong, in Southeast Asia, and in Miami, which will complete post-2028.
Speaker #2: So moving to the investment portfolio, despite the improving sentiment due to the strong IPO pipeline, the Hong Kong office market remains oversupplied. Our portfolio has been resilient, which reflects the flight to quality trend, and the overall occupancy has increased to 92%.
Speaker #2: I think we continue to outperform the relevant sub-markets, thanks to our commitment to placemaking and our industry-leading ESG credentials. Encouragingly, occupancy at Pacific Place has improved to 98%, on reversions are still negative, we are seeing rising rents in the first half, and in Taikouli Place occupancy at One Island East and One Taikouli Place has remained stable at 91%.
Speaker #2: Occupancy at two Taikouli Place, our newest triple-grade A office building, has increased to 80% for the first time since completion. The attributable gross rental income was stable year on year, and the attributable valuation of the office office portfolio was unchanged.
Speaker #2: The rental levels continue to reflect the prevailing soft market environment, but we are seeing evidence of a central-led recovery, and as occupancy and central improves, we expect to be in positive reversion territory again as we head into the new year.
Speaker #2: The retail portfolio in Hong Kong continues to perform very well, overall occupancy remains at 100%, and retail sales were positive. Most notably, at Pacific Place and Citycare Outlets, which both achieved strong growth year on year, but attributable gross rental income improved, and the attributable valuation for the overall portfolio also increased.
Speaker #2: Contribution of our Chinese mainland portfolio has now increased to 46%, where our attributable gross rental income and notably, you can see from the pie chart here, the contributions the rental contributions from the Chinese mainland retail portfolio now exceed those from the Hong Kong office portfolio.
Speaker #2: And over the past 10 years, in terms of attributable gross rental income, we've delivered steady CAGR, year-to-date it's up 13% year on year, and we anticipate an increasing contribution from our Chinese mainland portfolios as we bring 5 new projects online over the next few years to double our GFA in the Chinese mainland.
Speaker #2: So working in partnership with the core luxury brands, we've embarked on a significant phase of transformation and trade mix upgrading across all our existing malls, Shanghai and Beijing, for example, and together with an exciting pipeline of new Taikouli-style open-lane retail developments in Shanghai, in Guangzhou, Sanyang, and Xi'an, embracing cultural heritage, elevating local brands, and reflecting local context.
Speaker #2: Across the Chinese mainland, I think this chart is is an important one, but across the Chinese mainland, the malls have been extremely busy with exciting upgrades to improve the tenant mix and enhance the overall retail experience.
Speaker #2: We see positive signs of recovery overall retail sales have grown by 23% year on year, on an attributable basis. All our malls in the Chinese mainland have reported high occupancy, and strong sales growth.
Speaker #2: You can see from the chart HKR Taikouli Hui, 82%, Taikouli Sanli Tune in Beijing, at 63%, significantly outperforming attributable gross rental income was up 14%, and the valuation up 4%.
Speaker #2: For the office, the performance of our Chinese mainland office portfolio is resilient, despite the market oversupply, occupancy has been improving, particularly in Beijing, and gross attributable gross rental income was up 3%.
Speaker #2: We're focused on the synergies with our mixed-use developments, focusing exclusively on core locations in Tier 1 cities in Guangzhou, Beijing, and in Shanghai. So I mentioned a little earlier the entering this period we refer to as the harvest phase.
Speaker #2: Several of our new developments will be completed in 2026, and thanks to the 100 billion investment plan, we've laid these solid foundations for growth across the Chinese mainland, for premium retail-led mixed-use developments in Beijing and Shanghai, and we're looking forward to the opening in December of Taikouli in Sanyang, which will be our first Taikouli in a tropical resort destination in in Hainan.
Speaker #2: Moving to our residential trading portfolio, across the core markets in Hong Kong, Chinese mainland, and Southeast Asia, we now have a very diverse pipeline of 9 projects under development, representing over 3.5 million square feet on attributable basis, with FAIF's completions over the next 4 years.
Speaker #2: At pre-sales for a 10th project, the Mandarin Oriental Residences in Miami are also progressing well. With commitments proceeds exceeding 1.6 billion US dollars. There's a little bit more detail on this slide about the trading portfolio.
Speaker #2: With regards to pricing and and sales velocity, but just to highlight a few in Hong Kong, we're delighted with the sale of 6 Deepwater Bay in March for 2.2 billion dollars, I think that at the time that reflected close to a record at 150,000 Hong Kong dollars a square foot.
Speaker #2: In Shanghai, the two tower the the the the developments at Century Summit and Century Heights in Qiantan achieved pre-sales of 98%, while Lujiazui Taikouli Yuan achieved record pricing for the 6th batch, our final batch, at nearly 192,000 per square meter.
Speaker #2: And cumulative pre-sales, as I mentioned, of over 16 billion. In Hong Kong, headland residences were over 350 units pre-sold, so momentum is picking up, reflecting the improving market sentiment.
Speaker #2: And in late July, we launched the pre-sales of Upper Howell Residences in Bangkok, which is our first branded residence development for SwireTel's globally. Lastly, this slide provides an overview of the diverse pipeline of trading properties across those markets.
Speaker #2: Which will provide consistent trading profits from 2026 onwards. The performance of the hotel portfolio has been improving over the last 6 months, reflecting higher occupancy and improving rev pars.
Speaker #2: Following the decision to unify all properties under the Upper House brand. And the SwireTel's team continues to explore third-party hotel management agreements, and we look forward to the opening of the Upper House Shenzhen in the middle of next year, followed by 4 new houses in the Chinese mainland and Shibuya in Tokyo.
Speaker #2: As well as the Upper House Residences in Bangkok. So on that note, I will hand over to Roy.
Speaker #1: Thank you, Tim. So I will start with the financial highlights. So as you heard from Tim, in the first half of 2026, underlying profit increased 11% to 4.9 billion.
Speaker #1: And recurring underlying profit increased 36% to 4.7 billion. This was largely due to the sale of the 2 residential properties at Deepwater Bay Road, and higher rental income from the retail portfolio.
Speaker #1: The underlying profit growth was partially offset by the non-recurring gain recognized in 2025, following the disposal of the earned trust in Brickell City Centre.
Speaker #1: In hotels, performance improved across all markets. Turning to rental income, our investment property portfolio delivered a solid performance, attributable gross rental income increased 3% year on year, but if you take out the impact of the Miami disposal, then like for like, we're actually up 6%.
Speaker #1: Hong Kong office income remained stable despite negative reg negative rental reversions, supported by high occupancy and increased leasing activity. Hong Kong retail income increased 3%, driven by the continued recovery of the mall at Pacific Place.
Speaker #1: All Hong Kong malls maintained 100% occupancy. In the Chinese mainland, retail rental income grew 14%, driven by sales growth across all malls, with 4 out of 6 malls delivering double-digit sales growth.
Speaker #1: We remain committed to creating long-term shareholder value through sustainable dividend growth. The first interim dividend has increased 6% to 37 cents per share. This puts us on track to achieve 10 consecutive years of dividend growth, and reflects both the strength of our underlying business and our confidence in its long-term prospects.
Speaker #1: Our dividend policy remains unchanged, our objective is to deliver sustainable annual dividend growth with a payout of approximately half of underlying profit over time.
Speaker #1: Turning to valuations, our our our investment portfolio is valued at 272 billion, which is an increase of 1% from the start of the year.
Speaker #1: This increase mainly reflects capex on the portfolio, and favorable FX translation gains from our Chinese mainland assets. We also booked a fair value gain of 578 million this year, this half compared with the first a fair value loss last year of 6.1 billion for the full year 2025.
Speaker #1: So this change in fair value, together with some cap rate reductions, in the Hong Kong office portfolio is an encouraging sign of improving market conditions, and demonstrates the resilience of our assets.
Speaker #1: Our balance sheet remains strong, net debt increased 2% to 40 billion, while gearing increased slightly from 14.6 to 14.8%. Importantly, leverage remains low, and comfortably within the target range.
Speaker #1: Our weighted average cost of debt continued to decline, falling by 20 basis points to 3.3%, reflecting refinancing at lower funding costs, and a general drop in interest rates.
Speaker #1: We continue to maintain a healthy liquidity position, available committed facilities, total 60 billion, with cash and undrawn committed facilities of around 20 billion. Our debt maturity profile remains well spread, and our funding base is also well balanced, with around 2/3 of debt at fixed rates and 45% denominated in renminbi.
Speaker #1: Our credit rating remains unchanged, with A2 for Moody's and single A from Fitch. And finally, capital commitment stand at 28.6 billion, including 9.3 billion relating to joint ventures and associated companies, these are phased over several years, with the bulk of the Hong Kong commitments after 2029.
Speaker #1: So to wrap up on the financials, overall our financial position remains very strong, we continue to deliver earnings and dividend growth, maintain a highly resilient balance sheet, and preserve considerable financial flexibility for future investments.
Speaker #1: I will now turn to our progress on sustainability. So you saw in the video at the start that we've launched our SD2050 vision and strategy earlier this year.
Speaker #1: And this advances our long-term commitment to put sustainability at the heart of our business, and set a bold path to our new 2050 vision, to build the world's most sustainable communities.
Speaker #1: At its core, we have 4 long-term commitments to zero, zero harm, net zero carbon, zero waste to landfill and water neutrality. These commitments are supported by 140 targets, over the next decade, organized across 5 strategic pillars, people, places, partners, planets, and performance.
Speaker #1: In the next 2 slides, I'll highlight some selected commitments and progress across 3 of these pillars. Under the planet pillar, we have made strong progress in both carbon and nature, and we're proud to be the first real estate company in Hong Kong and the Chinese mainland to have a near-term long-term and net zero targets validated under the new SBTI building criteria.
Speaker #1: We have also established targets covering whole building and use carbon, and embodied carbon. For nature and biodiversity, we have developed a nature transition plan, which aims to stop and reverse biodiversity loss, while supporting our placemaking approach.
Speaker #1: We're also the first company in Hong Kong and the Chinese mainland to have a nature strategy recognized by its Now For Nature. Under the partners pillar, we're extending our impact beyond our own operations, through working closely with both tenants and suppliers, our green performance pledge continues to be well received by our office tenants.
Speaker #1: We now have 256 tenants signed up, which brings us very close to our 2030 KPI of 70%. On the retail side, our green retail partnership is also expanding, with a target of 100 retail tenants, and we already have commitments secured from global leaders, including LVMH and Kering.
Speaker #1: And finally, turning to the performance pillar, green financing remains our preferred funding strategy, and we're making good progress, 75% of our current financing already comes from green bonds and sustainability-linked loan, and we're targeting 90% by 2035.
Speaker #1: This shows how sustainability is increasingly embedded in how we allocate capital, how we maintain funding discipline, and how we deliver long-term business performance. With that, I will hand back to Tim to cover the outlook.
Speaker #2: Okay, thank you. Thanks, Roy. So just a few comments on on the outlook. We're seeing clearly we're seeing positive momentum across the portfolios, and our first half performance just demonstrates that resilience.
Speaker #2: The office portfolio has been very resilient, enjoying higher occupancy, and narrowing reversions, especially at Pacific Place. So as market rents stabilize, we see a gradual improving outlook for premium office space on Hong Kong Island.
Speaker #2: Thanks to the differentiated positioning in Hong Kong, our malls have maintained 100% occupancy, with strong retail sales, and we will continue to upgrade the trade mix, and invest in major events, loyalty programs, and premium customer lounges to improve the overall experience for our retail customers.
Speaker #2: Our retail performance in the Chinese mainland has been strong, and the outlook is positive as consumer sentiment continues to improve. And the positive impact of our trade mix upgrading is further realized.
Speaker #2: As we look ahead into the second half of the year, we'll be focusing on discipline execution, as several new projects approach completion milestones, and we enter the harvest phase.
Speaker #2: On the resi front, market sentiment in Hong Kong and Shanghai remains positive, we're seeing strong demand for high-quality prime residential development across the portfolio.
Speaker #2: We'll continue to evaluate opportunities for active capital recycling and for continuous investment in our core markets to deliver enhanced shareholder returns. So in summary, we're making good press good progress with our 100 billion investment plan, we have a balanced and diversified portfolio with strong fundamentals, our new SD2050 vision provides a clear roadmap to improve our industry-leading ESG performance, and we are committed to delivering progressive mid-single-digit dividend for our shareholders.
