Link Real Estate Investment Trust Aktie

On the stage, we have our Chair of the Board, Mr. Duncan Owen; Executive Director and Chief Financial Officer, Mr. Kok Siong Ng; Executive Director and Chief Investment Officer, Mr. John Saunders.

So on the screen, you may found today's agenda. And without further ado, let me hand the floor over to Duncan Owen to give an overview of our results.

Thanks, Christy. Good afternoon, everyone. Whether you're in the room as Ross in the key side here or watching via the webcast. Thank you for taking the time to join this session.

We're here to report the full year end results for Link REIT 2025 year ending 2026. But before we cover the details of our results, I'd like to just start speaking on behalf of the Board and management to say that we've been listening carefully, reflecting on the views of our unitholders and other important stakeholders.

Our response during the final months of 2025, '26, and going into the new financial year has been to go back to basics, focusing on our key competitive advantages as owners and operators of retail miles and car parks in APAC. What that means is focusing on our core assets and our core skills. This is why in January's announcement, we confirm that no less than 80% of Link's balance sheet capital would be invested in core competency. And currently, we indeed have over 90% of our assets in this core area.

Whilst we will continue with partnerships, principally for value-add opportunities with high returns, these activities should not ever be more than 20% of the balance sheet, and they will normally be a lot lower. Our immediate focus is, therefore, now on reinvigorating the existing core portfolio, divesting noncore assets, which means the sale of mainly offices and warehousing and buying back shares where pricing is attractive for unitholder returns.

Back to basics is also about streamlining our management structure and adopting a more disciplined approach to capital allocation. Turning to the headline numbers for our full year results ending 2026. The overall net property income is down 3.7% year-on-year due primarily to negative reversions in our Hong Kong and Chinese Mainland portfolios. Our distributable amount per unit reduced by 6.4% and to HKD 6.5 billion with a final dividend of HKD 2.54 per unit.

In anticipation of the negative reversions in the core retail business, we have undertaken significant cost optimization, which K.S. will update you on in some detail further. It's worth noting that there are encouraging signs that the wider retail sector in Hong Kong is now recovering in consumer confidence and investor interest in returns. Whilst we're seeing rental levels begin to stabilize, negative rental reversions however, will persist at around the same level during the year that we're in now ending '27 as compared to the year-end reporting on now in '26.

This is because the renewals in the current financial year will normally be for leases, which were commenced approximately 3 years ago at higher rental levels due to post-COVID optimism at that time. Our cost optimization efforts will help partially offset the impact of these negative reversions on earnings and distributions.

We also remain watchful and prepare for continued growth in e-commerce. We've taken steps to reposition our offering and capture revenues where possible from the changing environment, and John will speak later about these initiatives. It remains to be seen how deeply e-commerce will penetrate Hong Kong given a relatively compact nature of the city's communities and the convenience of our miles. The ultimate level of penetration of me e-commerce achieves may not reach the same height whoever has seen in the Western economies. Having said that, it is a threat that we are taking very seriously.

It remains just for me to say in the mid to long term, we are confident and passionate about the outlook for Link. We enjoy exposures to Asia's growing consumer markets, and remain a high-quality operating business with a strong balance sheet, an increasingly clear strategy, high levels of corporate governance and capacity to attract high-quality international investors.

Thank you for your continued support. I'll now hand over to K.S. And John to run through our results in some detail.

Thank you, Chair. Good afternoon, everyone. Great to have you with us today. As Duncan has mentioned, we have been managing the challenges in Hong Kong and the Chinese Mainland retail markets. Overall, was down year-on-year, mainly due to negative reversions in our core Hong Kong and Chinese Mainland retail portfolios. Amid continued competition from e-commerce, anemic increases and weak consumer sentiment amid macro volatility.

Paper income remained broadly stable with tariff growth from initiatives such as dynamic pricing, offset by a decline in ticket volumes. Our international retail portfolio saw positive rental reversion and continued strong momentum. While we are seeing market rents are beginning to stabilize, negative retail reversion in the Hong Kong retail portfolio are expected to continue into 2026, '27 at levels similar to 2025 and '26.

On the cost side, we surpassed the original annualized savings target of HKD 200 million in the second half of '25, '26, with the benefits flowing directly to the bottom line to support GPU. We will enjoy the full year benefits in the year ahead as we move forward with our cost base that better fits our expected revenues.

On the portfolio side, we are staying disciplined actively managing our assets and recycling noncore assets. Our recent divestment of the swing by at Thompson Plaza, which we agreed to sell at a premium for [ HKD ] 250 million underscores our commitment to optimize our portfolio. John will talk more about this.

Looking ahead, our priority is to stabilize earnings over '26, '27. I should note, however, the external factors such as the evolving U.S. Iran situation could influence the outlook. Rest assured, our team is monitoring developments closely.

With that context in mind, let me walk you through the key figures. MPI was down by 3.7% year-on-year due to negative reversion in our core Hong Kong and Chinese Mainland retail portfolios. To mitigate this impact, we reduced staff and G&A cost by 14.5% year-on-year through a broad-based organizational streamlining.

As a result, we managed to limit DPU declined to just 6.9% with a final distribution of HKD 0.025 per unit. Total portfolio valuation is to [ HKD 216 billion ] reflecting lower rental assumptions in certain markets, which we will elaborate on later.

We continue to maintain a robust capital position amid the challenging and volatile macro outlook through disciplined capital management, effective interest cost control and maintaining an optimal fixed rate hedge ratio. This enabled us to lower our average all-in borrowing cost to 3.4%. Overall, our financial position is robust with net gearing at 23.9%.

Now moving on into more detail on key operational and financial highlights. We retain high occupancy levels in our retail portfolio. In Singapore and Australia, we achieved near full occupancy and double-digit positive rental reversions during the period. Meanwhile, the office and logistics portfolio remained steady, supported by high occupancy and leasing demand amid competitive supply. We have benefited from a lower HIBOR locally and have prudently managed our interest rate exposure with expectations of diverging monetary policies across APAC. Asset valuations continue to diverge across markets. reflecting lower market rents in Hong Kong and Chinese Mainland for holding up better in Singapore and Australia. I'll now turn to the portfolio breakdown.

As of March 2026, total valuation of the lingering portfolio stood at HKD [ 216 ] billion, down about 4% year-on-year. Core retail and carpark assets continue to form the backbone of the portfolio accounting for 90.4%, with the remaining 9.6% comprising other assets, including offices and logistics. Geographically, Hong Kong and the Chinese Mainland retail remains the key market representing around 82% of the portfolio value, while international retail assets in Australia and Singapore make up around 8%.

Looking more closely, evaluation adjustments, movements or mix across the portfolio. Non-retail asset channel recorded more significant refined. Our international retail assets saw valuation gains, particularly in Singapore and Australia. Ongoing weakness in rental performance across Hong Kong and the Chinese Mainland has weighed on valuations. While stronger rental trends in international markets have supported valuation stability in local currency terms.

We expect valuations to continue to normalize over the coming months, given they are lagging nature relative to underlying performance and market conditions, with changes reflecting the prevailing operating environment. Our capital position remains robust, supported by disciplined capital management, effective interest cost control and a high fixed rate hedge ratio.

As of end March, net gearing remained at a healthy 23.9%, while average borrowing costs improved to 3.4% through proactive interest rate and financing arrangements. During the year, we refinanced around HKD 25 billion at very competitive rates at unprecedented credit margins. including the pricing of USD 600 million senior unsecured notes at a component of 4.875% in February. This extends Link's debt maturity profile and further diversifying our funding sources.

Our fixed debt rate ratio within the prudent range of 50% to 70% at 60%, reflecting our continued careful management of interest rate exposure and heightened uncertainty over future rate movements. Over the past 12 months, total debt increased slightly from RMB 53.5 billion to RMB 56.7 billion, partly due to currency translation effects. Our debt maturity profiles remain healthy with the average tenure lengthened to 3.5 years and well staggered over the next 12 years. Strong A range ratings across all 3 agencies support favorable funding terms and future financing flexibility.

With that, I will now hand over to John for the portfolio highlights. Thank you all.

Thank you very much, K.S. I'll now walk you through the Link REIT portfolio highlights, starting with the performance of our Hong Kong retail segment. Hong Kong retail occupancy remains solid at 97.8%, although revenue declined by 3.9% year-on-year and rental reversion reported a negative 8.2%. Overall tenant sales showed improvement with the decline narrowing to 1%.

Food & Beverage delivered 1.2% growth, while supermarkets and food stuff saw a marginal dip of 0.5%. The overall decline in Link's tenant sales reflected softer performance in the general retail segment amid continued increase of competition from Chinese Mainland e-commerce platforms. But overall occupancy costs stayed at a very healthy 12.7%. So taken together, these metrics do suggest that while challenges persist, resilience remains evident in our core retail portfolio.

We continue to proactively refine our tenant mix to stay ahead of evolving market trends, and we'll share more details on these initiatives in the next slide. I'm very pleased to say that our leasing team signed 207 new brands and 587 new leases during the reporting period and tenant retention remained extremely healthy at more than 80%. We have also been seeing the green shoots for Hong Kong's recovery in its economy and we've been seeing that in our own portfolio in terms of both stabilizing spot rents and also in terms of improving tenant sales.

In response to continued e-commerce disruption, we're actively reshaping our trade mix towards in-person experiences and service-led offerings. These include fitness sensors, learning and interest classes, game and family entertainment but with a reduced emphasis on categories such as fashion and electronics.

At the same time, we're strengthening our focus on health and wellness to better serve our communities including the addition of fitness and elderly care facilities to address Hong Kong's aging population. We have also capitalized on growing demand from Chinese Mainland brands, introducing new operators across key segments whilst refreshing the tenant mix and replacing underperforming tenants.

Meanwhile, our tenants have also been responding at pace by simplifying their own supply chains. As an example, supermarket retailer selling daily needs produce, where a kilo of butcher might have had many intermediaries between farm and shelf a number of years ago, but now today is being directly sourced. Also today, much of the fulfillment of online grocery or food and beverage retail is happening directly from the stores in our own malls.

And I'm pleased to announce that we have launched our own pickup and fulfillment service, Link Collect, which opened in April. The service is all about meeting the needs of our communities, and most importantly, keeping shoppers in our assets. Rather than letting our shoppers leave the malls to go and pick up, particular to pickup centers outside it allows us to retain the footfall and encourage our ancillary spending, perhaps a drink or a bun when people collect their online purchases.

It also enables us to reinvigorate quieter areas of our centers, while providing most importantly, information about e-commerce patterns and trends which will allow us to be better educated and refine our strategy and our mix. Revenue from car parks and related businesses remained broadly stable. While monthly income softened due to lower ticket volumes, the increased hourly income helped offset much of the impact.

We continue to enhance the car parks and overall experience across our malls using real-time analytics at scale. This enables us to further improve car park efficiency while delivering greater flexibility and value for our shoppers. And with rising EV adoption, demand for charging enabled parking continues to grow. And with Link as a leading provider of public EV charging facilities, we are well positioned to benefit from both the longer dwell times, which support parking demand as well as more footfall.

In parallel, we refined our promotional parking arrangements as part of our ongoing optimization efforts transitioning to a nominal $5 per hour charge. We continue to progress asset enhancement with a HKD 600 million pipeline to upgrade and reposition our properties, ensuring that they remain fresh and relevant and well aligned with the needs of the communities we serve.

In the second half of '25, '26, we invested HKD 67 million to revamp Yat Tung Shopping Center, as shown on the slide.

We have upgrades to the facade and common areas, which enhance the community experience while improvements to the trade mix and activation of common areas created additional sales opportunities. and all of this resulted in an expected ROI of around about 10.6%. During the year, we also revamped the coming fresh market, [ Link ] Plaza, and we completed place-making at both [ Temple Mall and TTM ].

Now turning to Chinese mainland retail. The subdued operating environment continues to impact performance across our portfolio with overall rental reversion printing at a negative 14.3%. Performance across Tier 1 cities was mix, Shenzhen and Guangzhou recorded modest growth, while Beijing remained under pressure and Shanghai's recovery was gradual. The Chinese mainland retail portfolio, though maintained strong occupancy supported by solid leasing momentum.

During the year, we signed leases with over 174 brands, driven by demand from lifestyle, retail and casual food and beverage. We continue to make considerable efforts on strengthening the positioning of our Chinese Mainland malls through ongoing tenant remixing, layout reconfiguration asset enhancements and introducing new concept tenants to enhance offerings.

Across Singapore and Australia, our international retail assets achieved near full occupancy and extremely good double-digit rental reversions, underscoring strong leasing demand and the strategic positioning of our malls there. The Singapore retail market supported by recovering tourist arrivals, a resilient labor market and steady income growth. Meanwhile, Australia remains strong, supported by population growth and real wage gains.

However, looking ahead, we are mindful of the impact of increased inflation and rate hike concerns, which could potentially pressure some household budgets and therefore, spending in our malls. Regarding our office and logistics assets, occupancy remained high despite new supply coming to market. This reflects the enhancements we've been made to common areas, which have been well received by tenants.

Now turning to the key side. You'll all be more than well aware that JPMorgan has informed us that it will not be renewing its lease upon expiry in late 2028. However, we've already commenced proactive leasing initiatives to secure replacement tenants. We continue to build the third-party capital partnerships to enhance optionality and drive returns. And now next, we will turn to the outlook and the key focus areas.

So to recap, we're focusing back to the basics on developing our core capabilities in actively owning and managing retail assets across APAC. We will continue to simplify our portfolio through recycling our noncore assets to be in line with our message of being predominantly an Asian mall operator whilst adopting a lean operating model with broader deployment of digitalization and automation to remain cost disciplined where capital is deemed surface to near-term requirements and our unit price is at an attractive valuation we will buy back units to drive unitholder returns.

The recent disposal of Swing By @ Thompson Plaza illustrates this approach, and we intend to deploy proceeds to buying back units upon the completion of the sale. Through these efforts, we are focused on ensuring that our unitholders continue to enjoy strong total returns as well as setting the foundations for a positive next chapter for Link REIT.

So now let me pass the mic back to Duncan for an outlook and closing remarks.

Thank you, everyone. Before we move into Q&A, I sort of just a few words on the macroeconomic environment and the outlook for Link and what it means. Clearly, the macroeconomic environment continues to be turbulent. We see a continuation of trends, including a fundamental reorganization of global trade, more reliance on domestic production and rapid enhancements of AI

The medium-term fundamentals for real estate in Asia Pacific, however, remain resilient, benefiting from urban population growth in the key developed markets, strong intra-Asian trading, growing tourism and rising investments in the technology sector. What is increasingly clear is investors will gravitate towards owners with quality assets and operational strength to actively manage through the cycle.

Focusing on Link, we are therefore encouraged that confidence and investor interest in Hong Kong is improving. Tenant sales continue to recover, and we are seeing rental levels stabilize. We'll also enjoy the full impact of our cost optimization initiatives this year in the following year ending 2027. However, while the market rental level is stabilizing, we do anticipate and would reiterate that the negative reversions in Hong Kong and Chinese Mainland retail for furnace will persist through 2026 to '27 as we finish renewing the final leases that we agreed some 2 to 3 years ago in times of higher optimism post-COVID.

The team continues to drive new revenue initiatives, such as our car part segment, and we will work to sell noncore assets using proceeds to buy back units and reinvest into our existing core portfolio. We're now more confident that we will be able to keep our earnings stable and protect the dividend per unit in the year ahead.

Thank you, and let's open the floor now for some questions and answers.

[Operator Instructions].

I'm Karl Chan from JPMorgan. I have 2 questions. The first one is important. Can you give us an update on the CEO search. So that's the first question. And the second question is probably for John. Can you comment a bit more about the tenant sales trend for the past 2 months? Do you see a further acceleration in the tenant sales compared to, let's say, the first quarter of this year?

Okay. Thank you for the question. The CEO search, I think as we've said before, there's a comprehensive independent seeking proven candidate with international experience and real estate investment experience across order. It continued to take some time, but we have made some significant headway. There have been a high-quality list of candidates, which has been reduced over time.

I think the guidance we gave was it could take several months to identify the right party and the process, and then we could find that have an extended notice period of 12 months before they formally join I think the original timetable is still broadly speaking, one that we would hope to stick to, which is probably at some stage during Q1 or Q2, we would have a new CEO but that mid calendar year next year. So that would mean that we noticed peers, et cetera, we need to be announcing at some stage over the summer period here.

So I don't think there's any change. We have had, I think, 1 or 2 people are aware from our -- rumors, 1 or 2 candidates that would be quite developed. But we're currently at a relatively at some stage, but you can never tell these things. John?

Yes, sure. So I mean, overall, what I would say, if you look at, before I answer the question about the recent point, certainly, F&B has been recovering through the course of the year. So we're now back into positive territory on that. supermarket and food stuff, which in '24, '25, was quite sharply negative. -- is all but flat now. The area that's been challenged still is general retail, which is you -- experts would now includes all sorts of things, including households and also fashion, et cetera. And that's the area this is still showing negative, but it is less negative. So by negative 5.5% was by the end about 3.5%.

I think rather than give a specific number on each of those, maybe I can give you the color in the context to say that yes, it does seem that, that trend of positivity does continue. I think there was quite a lot of the holiday period, there was good tourism here. Generally, sales are improving. We know, of course, that because we don't have such an exposure to things like electronics and iPhones and jewelry and stuff that as much as we were sort of safe and secure lagging into the downturn. It's been a little slower to recovery but there is a trend there. We are seeing green shoots. We are seeing stabilizing rental levels and continued improving sales. So yes, let's say that we're cautiously optimistic, cautiously.

This is Cindy from Citi. I have 2 questions as well. First is on your noncore asset this time so. Can you remind us the -- between your definition of core and noncore assets. Having said any numerical targets for the noncore asset distention, what do you think could be the primary challenges for you to execute this strategy. For instance, do you see sufficient buyer interest? Or what type of pricing are you looking at? And can you also give us an update on the status of 100 Market Street after it listed for sale things in marching?

And the second question is on your buyback. I see as our result announcement that you mentioned accelerating unit buyback. So how should we understand the acceleration? And just now you mentioned 1 condition is when unit price is attractive in terms of valuation what type of valuation metrics do you look at? Is it a yield discount, what type of things will you look at? And have you sit pace on our target for buyback? Or would they be more, say, opportunistic?

There's definitely at least 8 questions in there. Let me different headlines because I will hand to John on the disposals and what color we can give. Very simply, there is the 5% or 10% of the assets that are considered noncore, the majority of those will be obviously anything that's not in APAC and obviously, anything that's not a retail mail. So that was a very simple high level.

At a high level regarding the share buybacks, it might be something that K.S. will add to. My statement, I think you were referring to the right pricing levels, it's simplistically looking at the cost of capital and we're cautious that the share price moved further above where we thought we could get better returns elsewhere. We might not do share buybacks -- but at the moment, we would think that there's a plausible case for it being attractive to unitholders.

It's really key that we would be buying back shares purely for the economic return to the benefit of the shareholders. not to try and get a response in share base going up, not to get any other particular outcomes to do with dividends, et cetera, is what will make economic returns from a total return from a total cost of capital. So it's a pure economic decision. Do you want to sales?

Yes. Sure. I mean, the Chairman put it quite well. There are 2 lenses. There's the lens of geography. So if it's not in Asia, then that means it's noncore. And then there is the asset class lens. So if it's not a mall that potentially means it's noncore. So as the Chairman said, if you look at roughly 5% to 10% of the balance sheet at any one time, which we always look at, because I think it's good capital management and investment management to always look at whether things earn they keep, if you like.

Then, in the focus is on things that aren't walls and things that aren't in Asia. I suppose the 100 markets -- question, yes, there is a process ongoing. It is still ongoing. I don't think it would be right. We're one is in the middle of a process and a commercial negotiation, I think other than to say that it continues as a process and we'll update you as soon as we have further information on that.

I mean, a good question, challenges for sale. I mean, obviously, when we disposed of Thompson Plaza, that's another definition in terms of what so that it's noncore, but if somebody offers you a great price and you think it may be to an average cost of capital going forward, you have to look at that as well. I think the key challenge to disposal, as you say, is making sure there's enough liquidity in the market, and we continue to monitor that. But we're running processes and so far, so good, and we'll continue to update you.

Supplementing Duncan's response on the buyback. I think Cindy per the announcement, we have intention to use the Thompson Plaza proceeds, which will amount to about HKD 1.5 billion. And then we were announced as deal is being concluded to decide to redeploy.

This is Mark Leung from UBS. I have a follow-up question regarding on the buyback. For example, like Thompson Plaza, I think we are using 100% of the proceeds for using buyback. But how should we think about the percentage of the proceeds in the future. For example, when nonmarket being done, will all of the proceed being used for buyback and not undue the different. New, for example, which our cost equity discount valuation level? That's the first question.

And I think the second question is, I see 2 numbers in here. Number one is be identifying around 10% of the noncore. But at the same time, you also mentioned 50% of our assets willing to invest in the non -- in the core areas. So just wanted to gauge what's the difference between the 10% and the remaining 20%.

Okay. Definitely, K.S. can expand on the question about the buybacks. I think the percentages are used in slightly different context. There is a range of 5% to 10% of assets that you might reasonably expect would be sold.

What we're saying to unitholders and investors and funds separately to that, so full stop after that point. Separately to that, no less than 80%, but we can reasonably expect 90% plus at the moment. We'll continue to be invested in retail malls as the core in APAC, of which the majority are in Hong Kong and the Greater Bay Area. So hopefully, that clarifies any confusion on that point. K.S.?

So I think, Mark, you're still trying to, I guess, figure out the difficult questions that we will not be able to disclose. But I think where we want to be honest is, as this deal is being done and as we assess where the capital needs are where the unit prices and where the cost of capital relevance is then I think we will make that announcement. So keeping our fingers costs, I think the implicit understanding them is that only when the deal is done and you don't want to rush to go make something too prematurely and couple the deals. And I think that's where we are in terms of the agreement with the Board.

Okay. Before I go on with those here, maybe riding on the questions that Mark asked just now regarding the buyback. So there's 1 question from Sam Wong -- optimist. Can we come from the process of prioritize for buyback over M&A until it is otherwise more accretive. So this question is addressed to John.

Look, I think we've said we would continue to say there's 1 question about value of shares. But I think that's the basics of the understanding of cost of capital. If you're looking to take your money, do you invest it and return to shareholders, unitholders? Or do you look at new acquisitions? And I think you have to have a strong understanding of that cost of capital. So for now, I think what we would say is that where we are right now, the intention is that we would be putting that money back the Thompson Plaza would be used. I mean, as you might have an additional covers.

I think -- thanks for the question. I think, if we could quantify what that number is in terms of total shareholders return expected for M&A deal that you have potentially funded, then thirdly, the Board will have to decide how to get it at that point and the share price to -- which one is the best returns to shareholders.

Just to clarify, I think you might help to add for Sam, just we're not currently considering particular M&A. And anything that will be considered in the future would have to be absolutely compelling. I think it would be fair to say we would consider it a high bar.

Karl from Bank of America. I have a few questions. First, I just wanted to get a little more color about -- from Duncan about your comments on what confidence is about seeing stable earnings in fiscal '27. And I think -- reversion sounds like it's still going to be somewhat quite negative. And so do you expect cost savings to be much more than expected to get to more of a flattish kind of earnings or maybe you have aggressively broad range for stable?

And second question is just a quick one on core market. Just wondering if you have seen any negative impact from -- in terms of carbon usage from higher gas prices recently.

And third one is a very technical one. I think in the past, if I'm not mistaken, you only executed share buyback when you have completed your script dividend program. Is that still the case here?

Let me be -- I'll deal with the first. I'll let John do with the car parking and I'll let K.S. with the script. The first was broadly directed at me. And if I could just make sure, can you just repeat the first -- apologies, I know you've lost the microphone.

When you mentioned stable earnings since rental reversions are likely to be similar to 2026 levels, -- so that would seem to suggest that the earnings -- everything else being equal, would be down somewhat maybe mid-single-digit rate of operating leverage and financial leverage. Just wondering if noticing anything perhaps on the cost side, will be a lot maybe you see some more cost savings coming through in fiscal '27. At least you anniversary the [ HKD 20 million ] plus savings, but anything beyond that? Or what you mentioned, stable earnings is relatively sort of broad range?

Okay. So we can't be too specific about the earnings. So there is a range, but there are a number of levers that the team will use to save costs. It depends on how many shares are in circulation at the time. It depends on the cost savings. Cost savings alone will never match top-level rental income moving down and revenues moving down. They're one of a number of levers that management would use to try and protect earnings and maintain them as close to stable as possible. So there is a little bit of a range in that. But clearly, if you've got a circa 2.5% dividend this year, there'll be a range around that and costs and levers and how many shares what else has done in terms of elsewhere, where income might be going up in other regions, we'll counterbalance that and mitigate it to a degree. So it's a real balance.

I think the only point, I'd make for -- the car parking is I absolutely -- I think most people understand that there is some sensitivity whilst market rents are stable. So if your market rent is 100 today, pretty stable. If a rent 3 years ago was delta at 105, then the reversion is back down to 100. But that's only from one part of the portfolio, of course, it's not a simple set its third year, but it's only for one part. But we expect we're moving towards the end of that period of declines. If you think of this is of typically 3, 2 or 3-year leases, you would work out that lag impact on rents on revenue stabilizing is that sort of time zone. And we've obviously incurred it a little bit for a year or so now already.

Yes. I can give you a very simple or very complicated answer. Basically, the simple answer is no, there's been no effect in the near term. Obviously, we'll continue to monitor it. But obviously, what I would also say is there are other things going on in the parking business as well. On the positives, metered parking in Hong Kong has basically doubled in price. The illegal parking penalty has also gone up. And the other very interesting development, of course, is the number of EVs because with over 70% of new cars being EVs, our public housing estate tenants who are primarily the users of our car parks -- most of our car parks. They're the buyers have cheaper secondhand cars. So roll the clock forward 2, 3, 4 years, suddenly having that big concentration and network of EV starts to look like quite interesting optionality.

And then the final point is about parking to take the opportunity to raise is the $5 privilege parking, which replaces the free parking. And I would say so far, it's early days, but the result of that seems to be positive and sticky. So I'm pleased that we've done that.

So on the question on buyback doing the DIS window, it's usually not recommended because you start to mess with the outstanding shares and then, of course, optimal DPU and you got to do a lot of announcements. So I think by practice, most companies will not touch the outstanding units in the DIS period. And then after that we were consider ourselves out of blackout.

This is Jeff Yau from DBS. I have 2 questions. In the call, before COVID, rental sales based of could be as high as 14%, 15%. Now it has already improved to -- 7% with the rental capital. At what level of when to sell rate so would the rental reversion turn positive in your opinion?

And second question is also relating to the share buyback. On one hand, you'll find by some share with the proceeds from the asset disposal. Will you consider or we will continue to also provide the unit holder with the script dividend option because -- it seems to be the opposite of the share buyback.

Yes, sure. I mean, look, I'm not sure there is a magic number that you say right, if we hit this, then definitely we get positive reversions. But -- and obviously, positive reversions are really a combination of the leases that are expiring, some of which this year are expiring from that period immediately post-COVID, where you had quite a lot of optimism, not all of which came through, combined with the spot rent the market rent.

I think the way I would answer it because there is no magic number in the same way, there's no magic number with the office market. But if you're at 15%, you're not going to get rent increases, but if you're at 2%, you definitely will. But where the crossover is in a way who knows.

But I think the right way to look at it is we are seeing stabilization of the market rent. And we are in the zone where there aren't really any impediments to that carrying on. So long as the general economic growth in Hong Kong carries on so long as the general retail sales trend in Hong Kong carries on. And obviously, the magic question is, well, exactly when the reversions turn positive. Again, that's hard to answer because it depends how quickly what the delta of change is basically in that market rent.

But what I would say that in recap, what I would say is I think we're in the zone now. We're seeing the rents stabilizing. And we just need to see that Hong Kong's economy and Hong Kong's retail sales continuing that positive part. We are heavily, heavily focused on the Hong Kong portfolio. So whether that trajectory is, we intend to be on the absolute front foot of it. But it require some help from the continued help from the economy.

On the share buyback and the DIS, I think over the years at most AGMs before we reactivated DRS unique holders and to us, please leave that option there. It's a service to unit holders convenience that every one they can reinvest. And I think we have kept it there and the feedback from the investors depending on different levels of discount has generated a different amount of subscription.

I don't think it's in huge conflict, the buyback because the DIS in itself is a very small number. And I'd say it's purely an option and a convenience to unitholders. If we take it away, it put it back, I think it's very noisy and then we will echo on the discount to reflect the capital needs at the time.

Okay. Maybe let's address 1 question, online first. So [ John Lam ] from UBS. This question says, how do you see the impact of e-commerce penetration? Do you see it as a structural trend that may last for a few years until it is similar to Mainland China in terms of the e-commerce penetration level.

John, do you want to take that?

Yes, sure. I mean, I think e-commerce isn't going away, and I don't think we've reached full penetration yet. That's certainly the case. So we continue to evaluate the impact in the implications. But I think our strategy is to embrace not to avoid. That's one of the reasons prime reasons why we've done Link Collect. Link Collect allows us to keep the footfall. We should never be -- we have this unique situation with many of our malls where the customers of our tenants live above the shopping center. They should -- we should never allow them to leave because within reason, because obviously, that's been losing footfall and losing the ability to generate sales.

But the most important thing about Link Connect is, it gives us just a much, much better insight into what part of the basket is being affected. And I think if you're armed with better knowledge allows you to make better decisions, so there will be a change. So there's been a change already. We've made -- if you think about where the more mix was and the kind of tenants we had somebody like Japan Home stores you look how their footprint has shrunk within our malls and how other things have come in to take over. So having that knowledge gives you the ability to mix better because there will continue to be penetration.

There's a question, of course, how -- what number it gets to? And what percentage it gets to? Will it be the same as China, because Hong Kong is a little bit different and the distances are so small, Will it be less. But in some respects, I think that's the wrong question to try and figure out because I think we just don't know. The real question to figure out is make yourself a subject matter expert through things like Link Connect. And then you've got better equipped to make decisions to protect and optimizing.

Okay. Another question is from online Goldman Sachs, Simon. Two questions. One is on general retail. The other one is on cost savings. On general retail, you mentioned more focus to diversify to other experienced categories. Can you provide further breakdown of the general retail categories? And the second question is on the cost savings, which is in excess of HKD 200 million. How much further cost savings expected ahead?

So maybe a question one for John and question for K.S.

Yes. Look, I think if you're going to alter the mix in that way, and it's not just general retail, although general retailers departments been hit the hardest. You're going to alter the mix, then you've got to have things basically that experiential, you've got to have things that can't be done online. So -- as we know, if you're ordering bulk dry goods or if you're ordering homewares and things like that, frankly, that's pretty easy to just go on and -- just do that. I think for -- and it covers other areas like supermarkets and stuff. But if you're going to eat it, then I think a lot of people will actually want to sort of go and have a look at it or by produce from Hong Kong, especially if it's fresh.

But the rest of it is really to do with the experiential stuff. So education, gymnasiums and experiential food and beverage. It has to be something that you need to do or you want to do in person. That's basically the name and the trick to it, but we'll continue to evolve that.

So if we look at the cost savings achieved. We set a target of HKD 200 million. We delivered slightly beyond that, and we are starting to see the annualized savings that will come through this year. I think that said, that's quite the act of all of us having to meet year-to-date and saving hotels cost. And you get to see us in reform our working environment. I think at this moment, whereby we are looking at all possible places to be able to save and we can, I guess, put in a DNA of being a proven high -- owner of a company. That's where we are in this stage of trying to cut costs.

I think some of this is slightly inconvenient, but you get a sense of what we are trying to do. I think the head count and streamlining continues over time as we start to look forward -- there are ways whereby some of these cost-focused AI tools like Copilot that all of us are starting to use can get our team to do more with less, and we will continue to look at that. But I think I'll shy away from giving a big target number. The easy part of the last 2 years has been done, and we are now -- we're not looking at a staff to say if we do something, there will be a trade-off, and we have to decide whether that benefit makes sense.

Next question is from [ Radisan of Coach ]. So he is asking, what is your expectations on the trend of the rental in your Chinese mainland portfolio in the upcoming year?

Yes. I mean, obviously, there was a strong negative reversion, but a lot of that was to do with [ Jotun ] churn. And we know there's been competition there, and we've had to significantly re-leasing remix that mall. So actually, if you took out the effect of that single property, the reversions would be more like minus 3.3%, but minus 14.3%. And there are still challenges. So I think hopefully, if we've got through the impact of that specific asset, then that's already from a reversion point of view going to make a big difference. Closing the rest of the gap that perhaps is a little bit more challenging. The retail market is still a little weak in China. So we'll have to see. But I think the key message is an awful lot of that was down to one property that we have now largely relet and remixed.

Any more questions from the floor?

Patrick Wang from -- Intelligence. So my question is about the credit rating. So if you look at that, I think, past years, we observed the NAV per share is coming down, right? And the overall revenue coming down a bit. So which means that the buffer, right, in terms of the -- your credit rating is also levering a bit. How we see the potential risk of that? Is this anything we can do in addition to like the cost-saving exercise and also how do you figure out the potential risk with the potential credit rating downgrade could happen at some point that we're having -- coming down in the future.

So thanks, Patrick. I think this is something that we watch very closely with the Board as far as this credit rating, which is key to our capital management. I think what you've seen us and maybe we're a bit lucky is that we have been able to refinance in a band to bring ABC down, and that bring interest average up. And that then why isn't up the buffer again.

So the other metric clearly is the LTV. I think today at about 25%, 24% on a net basis, there's still enough buffer for us to be comfortable to say we still have a strong balance sheet and credit ratings at risk.

So I don't think that is a major concern today unless you say things continue to get worse interest rate getting up value than keeps coming down. I think there is one part in absolute that everybody gets it, then you say across Hong Kong, all the developers and where am I competitively other than 1 or 2 guys with net cash. I think at SMTA, we are probably in the upper quarter. So again, from a competitive pressure, then the banks and the credit provider has the same effect who else is still competitively better credit. And so I think that game is both absolute and relative.

So at this stage, I think, we are still pretty comfortable. So I don't think we are today with where we are seeing the stabilizing of the rents in the market that we -- like what we -- where we were 2 years ago. So I think it's okay. Let's see how. In terms of -- if resale rates move, I think we model it out because of the hedge because I think we are quite comfortable. We are up pretty much prepared in the worst case of excessive rate type that might affect us having hedged 60% now.

Any other questions from the floor?

[indiscernible]. I got maybe 2 more questions. I think the first one is for Duncan. You mentioned you want to provide a pretty good unitholder return, right? Do you internally have you maybe on your mind, you have any targets or total shareholder return want to deliver to her annually. I think that's the first question.

And second question is regarding on the reversion FY '27, we basically guided the reversion will be largely flattish for the rated. So how about in it, do you think under the current condition, we should able to actuate neutral rental reversion for Hong Kong hotel.

Okay. We'll have a second to John. The first is it's a moving target. It depends on cycles, the cost of our own capital and what happens through time -- what we want to do most of all is create a sustainable pattern of economic down to unitholders, of which a significant path through time can be a distributions. So I think it's a moving target that do we have what I could give you one today and it might be different next year and it would have been different last year. So I don't think you would expect any fixed target the closest that we would get as a guide is pre-leveraging. We'll often look as we work -- have high single-digit returns. And so it all depends on what the capital upside or downside is from that in the term of the cycle on what the positive carriers on the debt or not, if that hopefully gives you some color.

Yes. I mean, look, I can tell you what I do know. I know that the reversions for the rest of this year are probably going to be fairly similar to where they are, which I know you know already. The challenge we're trying to predict next year is for the for this year, a lot of the leases are written and a lot of it's already written in stone. But actually, we're -- a lot of the future is not written for next year. So we're reliant -- some of it is because you have a certain embedded rent level. It will certain -- the things I can tell you, it will certainly help that we get over this hump of the big reversions from the post-COVID leases.

And I can reiterate that rental stock rentals do seem to be stable. And therefore, it really comes down, quite frankly, to how much growth you get in the spot rent. You all run the model, you know the math. That's what's going to determine exactly what point we get positive. But as I said before, it is encouraging that spot rent levels are stabilizing. It is encouraging that we've seen continued growth in both Hong Kong's economy and sales.

Any further questions from the floor?

This is Karl from JP Morgan. Maybe just 1 follow-up question on the cost savings. So we're expecting around $200 million of cost savings at this financial year. That includes a salary for the new CEO and then for the next financial year because the new CEO will be onboarded. So should we expect the cost to be roughly stable? Or actually, there may be a bit of increase in terms of cost when the CEO is onboarded?

I don't think we'd want to second guess what the cost of running cost of the CEO would be, but it would be what you might respect for a company of our size and what the previous CEO earned in the last stage of his tenure. We business plans for all things -- so there's normally been an allowance for that, but KSA want to make a wider comment on costs moving forward.

So the answer is that -- I mean, clearly, this year, next year's numbers, we have included the full cost we've budgeted half year or something in our plan. Then -- Duncan depending on the quality of candidate the numbers might be real. And I see, I think there is this small moving part in the scheme of things, but I don't think that's going to be material in the scheme of the DPU.

Okay. This is Raymond Liu from HSBC. I just actually first quarter similar question, which is about the fund management business under the -- strategy. So we're going to see that like the new strategy is actually focused on factor basics. Should we think of like Sun management business is now of a much lower priority or no priority in the next 12 months or 24 months? Or there will be new strategy going forward for this new growth in diseases?

Again, one for John. But the key the core competence and what we do is own and operate our own mills. We've said 80%, maybe 90% of that. So I mean that's quite a good indication, and that must be a priority. We do see all sorts of benefits in having investment partnerships, as I said in my entry and it can be a very effective way of aligning ourselves over long-term investors to get access for our balance sheet to investments we might otherwise not be able to do.

Yes. So there are clear benefits to having third-party capital. I think the way we describe it and have for a little while now is good optionality. But sort of as somebody mentioned earlier on about buying things and other stuff. The what I'm -- what the Chairman asked me how I'm getting on with a lot is divesting noncore and focusing on the Hong Kong portfolio. He does ask about third party, and there are options on the -- but I get a lot more questions. The majority of your questions are about the investments in pro-core and focus on the Hong Kong portfolio.

Maybe I will after the last questions online then. So there's another question from -- is asking about how we're going to handle the assets in [ Jun Tang ].

Yes. Well, look, we're continuing to work on it. We've done a lot of leasing and a lot of the -- there was significant competition and it did lead to vacancy. And now we've closed up a decent amount of that vacancy. And so we're continuing to sort of push hard. I mean, I'm not going to say it's been easy. It's been hard work, but we're going to continue doing what we do, which is maximize occupancy and maximize rents where we can. But I think A lot of work has been done at that asset and then a lot of releasing has been done.

Thank you. So that comes to the end of our briefing. Thanks, everyone, for coming, and thanks management for the sharing.

Good afternoon, ladies and gentlemen. Welcome to Link REIT's 2025 and 2026 9 Months Operational Update. This is Christy Lam, Director of Investor Relations. Today, we have Group CFO, Mr. Kok Siong Ng; Group CIO, Mr. John Saunders; Group Managing Director, Asset Management, Mr. Emmanuel Farcis. On the screen, you may find today's agenda.

Now let me hand the floor over to K.S.

Thanks, Christy, and good afternoon, everyone. On the geopolitical front, recent tensions in Iran have driven a surge in energy price, creating renewed inflationary pressures with the potential for this to feed through stagflation or recessionary scenarios. Global growth outlook remains divergent across markets while most major central banks are currently maintaining a whole stance on interest rates. Although the trajectory of geopolitical developments remain uncertain, we are closely monitoring the situation and assessing its impact on the company. Our business focusing predominantly on nondiscretionary retail continues to exhibit relative resilience, supported by stable underlying consumer demand as we continue to improve on our tenant mix. And our gearing level remains low and our liabilities remain manageable.

On operations, occupancy has remained at healthy levels despite a challenging retail backdrop in Hong Kong and China Mainland, with Hong Kong rental reversions standing at negative 7.5% for the 9 months and expected to stay in the high negative single-digit range for the full year. In contrast, operating conditions in Singapore and Australia remain robust with assets close to full occupancy. From a capital perspective, we completed prefinancing of around HKD 15 billion of FY '25'/'26 debt at competitive rates and remain focused on cost and efficiencies to protect margins. Next FY, we have only HKD 12 billion of refinancing needs. Finally, on focus areas. We continue to work on our core assets of malls and car parks to deliver sustainable returns, advance asset recycling opportunities on noncore and mature assets and plan to return excess capital where appropriate.

With that, I'll hand over to John for the portfolio review.

Thanks, K.S. As of September 2025, the valuation of the Link REIT portfolio stood at HKD 223 billion. That's down about 1.3% from 6 months ago. Core retail and car park assets continue to form the backbone of the portfolio, accounting for just over 90% of the total with the remaining 9.6% comprising other assets. Geographically, Hong Kong and the Chinese Mainland remain the key markets, representing around 88% of portfolio value, while international assets, primarily in Australia and Singapore make up the balance. As market conditions evolve, valuation adjustments are expected to reflect negative rental reversions.

And next, Emmanuel will go through our operational performance.

Thank you, John. Turning to our retail assets. Here is a snapshot of performance across the portfolio. Overall, while near-term conditions remain mixed, our proactive asset management efforts continue to strengthen portfolio fundamentals, enhance resilience against market volatility and position us to benefit from recovery over time. In Hong Kong, retail conditions remain challenging, but selected trades have shown early signs of recovery. We are further embracing the e-commerce trend through piloting new pickup services and seeking to ensure the continued attractiveness of our assets through trade mix optimization, asset enhancement and targeted leasing, particularly from Chinese Mainland tenants.

On the Chinese Mainland front, sales momentum has improved across selected categories. Tenant remixing, refreshed layout and new concept remain a key part of our leasing strategy. As for the international business, Singapore and Australia continue to deliver steady performance, underpinned by high occupancy, positive double-digit rental reversions and constructive leasing outcomes. In a nutshell, the continued relevance of our assets across markets is anchored by proactive asset management and resilient fundamentals.

In Hong Kong, leasing conditions have remained resilient with occupancy sustained at a high level, also rental reversions continue to sit in the high negative single-digit range. Against this backdrop, tenant sales and occupancy costs have shown early signs of stabilization. We remain well aware of the structural shift driven by cross-border e-commerce. And in response, and as mentioned in the prior slide, we are piloting a new pickup service, starting with a small number of self-operated pickup points. This initiative is designed to reinforce footfall, enhance last mile relevance and deepen community engagement while engaging shopper circulation across the wider mall system.

Moving on to car parks. We continue to further optimize the revenue model to strengthen the resilience of our earnings from the segment. Dynamic pricing continued to provide support, while adjustments to utilization and pricing structures are aimed at enhancing income sustainability. Looking at other assets, overall occupancy remained largely sound with Hong Kong office near full occupancy, while Chinese Mainland offices and logistics remain healthy. In Hong Kong offices, market sentiment has shown some improvement, supported by demand from the banking and finance sectors with vacancy pressure in Kowloon East easing.

Chinese Mainland offices continue to demonstrate resilient take-up following asset upgrades, although leasing terms remain under pressure amid elevated supply. Chinese Mainland logistics remained well leased amid heightened competition with demand supported by domestic e-commerce growth and third-party logistics providers. Finally, with the international office portfolio, leasing traction has improved with core assets showing greater resilience amid an ongoing flight to quality trend.

I will now hand to K.S. to walk through capital management and cost optimization.

Thanks, Emmanuel. On capital management, Link is well positioned amid the challenging macro outlook, thanks to its strong financial position, underpinned by a healthy balance sheet as reflected in the key metrics shown. Strong access to capital markets is supported by disciplined capital management, effective interest cost control and a high hedge ratio, providing earnings stability amid market volatility. Funding sources remain well diversified, spanning bonds, bank facilities and convertible instruments with well-established banking relationship across the Asia Pac region. Key credit metrics reflect a strong and healthy position with conservative gearing and low funding costs. Active refinancing execution during FY '25/'26 secured funding across multiple tenors at competitive rates, extending debt maturity and optimizing the funding profile. Refinancing execution has also been proactive with HKD 15 billion refinanced as at February 2026, leaving only HKD 12 billion for the coming financial year.

This slide outlines the progress of our cost optimization efforts with an emphasis on strengthening the operating platform in a sustainable way rather than delivering one-off savings. At the organizational level, we have adjusted the management structure to better align with our strategic priorities and the external environment. By reducing layer and strengthening our mid-level management, we have improved agility and decision-making while maintaining appropriate oversight. Taken together, these actions underpin annualized savings that are now expected to exceed our previously communicated HKD 200 million target from the next financial year onwards. In parallel, we are improving efficiency across daily operations. Increased use of technology and automation is helping to enhance productivity and consistency, while the consolidation of facilities management arrangements supports cost control amid ongoing inflationary pressures and regulated wage increases. Overall, these initiatives contribute to a leaner and more resilient operating model, providing capacity to support stable and sustainable returns over time for our unitholders.

I'll now hand over to John to walk through our focus areas. Thank you.

Turning to our focus areas. Our priority is to sustain unitholder value delivered through harnessing our core strength in retail malls, selective capital recycling and cost discipline. We continue to leverage our core capabilities by actively managing and optimizing our retail and car park assets across Asia Pacific with a clear focus on protecting occupancy and reinforcing portfolio fundamentals.

Beyond day-to-day management, we're also introducing targeted initiatives to address structural retail challenges such as rolling out our collection point initiative to respond to community needs and improve footfall and refining our car park revenue strategy as part of a broader approach to asset optimization. Secondly, we will continue to advance capital recycling, focused on noncore assets, including selected office exposures, whilst maintaining flexibility around timing and potential returns of excess capital. Thirdly, cost optimization remains a key management focus. Meaningful actions have been taken to mitigate business pressures with enhanced operating efficiency, including the consolidation of our integrated facilities management arrangements, which is delivering tangible savings and supporting margin resilience.

As K.S. mentioned earlier, we've also simplified and streamlined the executive structure, enabling the organization to operate more effectively while continuing to generate cost savings. Lastly, against the backdrop of ongoing geopolitical uncertainty, we continue to closely monitor developments and maintain a prudent, measured approach to both cost management and portfolio positioning. While market conditions remain challenging, our focus on nondiscretionary retail continues to provide a degree of resilience to the business.

With that, we thank you all for your time and participation today.

So now let's start. For the first question, we have 2 questions from Karl from JPMorgan. First question is, can you comment on the tenant sales trend so far year-to-date? Has this improved versus the last quarter, in particular, year-to-date? Have our tenant sales outperformed in line or underperformed the Hong Kong overall average?

And there's another question. What's your latest guidance on rental reversion for the next 6 months or so? Do you expect the negative rental reversions to be similar or there may be improvement?

I suppose I'll take that one. So on the sales, I think, generally speaking, our sales do not perfectly correlate with the market. But what we've been seeing is a slight improvement on some of our core categories. The market, as you know, has been driven by sales on luxury goods, electronics and where we do have these categories in our larger malls, these have been performing very well. On our core categories of F&Bs and supermarkets, we've been seeing some improvement compared to last year. So that's an overall trend of gradual improvement that we've been seeing, but we are still cautiously optimistic about this. What it means is that basically our tenants have been working on improving their sales through promotions, through pricing, through regearing their supply chains. And we do see some of that starting to pay off.

So next, we have questions from Citi, Cindy. The first question from Cindy is also about tenant sales and impression. So I believe Emmanuel has just addressed it already. And then second question is, how would management interpret the escalated decline in supermarket? Any plan to downside or repurpose some supermarket area? And then -- so maybe we have Emmanuel to address this question or before maybe we go to the next.

So I think on the supermarket, what we are seeing is really the supermarket operators have been investing again into their pricing into their shop presentation, the stock presentation, reducing the price differential between Hong Kong and the Mainland investing in promotion. And from -- when we look at the performance of supermarkets in our portfolio, we do see a slight improvement year-on-year. Every quarter has been seeing some better sales. At the moment, we don't see any consolidation from our supermarkets. We do work on some aspects on their online sales as well. So while there was a footprint, the physical footprint might be the same, the SKUs that might be delivered at a given supermarket through online is expected to increase. So that generate more sales through the same footprint.

So we continue to see supermarket as a very important element of our trade mix and the proximity that it provides and how it serves the community living abroad -- living above, sorry. One thing going back also to the question on reversion. I think when we look at the outlook, we do expect reversion to remain negative at around the same level as the one we had for '25/'26. And that is really because of we are continuing to see the wash through the leasing cycle that started about 3 years ago, and that was reflected in higher rents and based on the optimism about the recovery from COVID and the exit -- the reopening of the market in Hong Kong.

Thank you. Next one still is from Citi, Cindy. How is the management thought on buyback? Given your current valuation, buying back your own shares seems to be more attractive than most investments outside. And the fourth question is, may we have an update on fund management business. November, we mentioned initial USD 1 billion raise. When do you target to officially launch the fund? And does it hinge on acquisition pace in Australia?

Yes. Let me take that. Look, at any time, we always maintain portfolio discipline. So I would say the bottom 5% of what we own is always being assessed for potential disposal and recycling. Some of you will have seen because it's in the public domain that we're involved in the sale of an asset in -- office asset in Australia at the moment, 100 Market Street, and we should be able to bring you more news of that going forward. So I think that portfolio discipline is important. And then when it comes to looking at purchases, yes, you're absolutely right. I mean we're trading at a little more than a 7% yield at the moment.

So therefore, what was already a high bar to purchase becomes even more telling, I think, when you're trading at that level of yield. So the answer is yes, where we have excess capital, we would, as we've said, expect to be recycling that excess capital back to shareholders. In terms of the third-party side, we've talked about the $1 billion that we have under management at the moment. That does actually include the fund. I would say roughly 2/3 of it is in separate accounts and the rest is in the fund. It doesn't -- it's not contingent on any specific Australian asset per se. We're committed to the journey. I think it's fair to say that with all the Middle East political uncertainty that's ongoing at the moment that it's quite hard work raising capital, but we are at $1 billion spread between the separate accounts and the fund business.

And then we have questions from Goldman, Simon. You talked about signs of stabilization in retail sales and rent. When exactly have you observed? And also, he asked about if there is any update regarding the Link REIT 3.0 strategy and fund management business.

I think when you look at gross sales in Hong Kong, the past 8 or 9 months, we were showing positive signs. And again, I mean, for us, there is a slight disconnection between the sales in the overall market that have been mostly driven by electronics, valuable goods. And again, when we have these categories in our mall, they've been performing quite well, but they are a small proportion. Then when we look at certain categories, along some of the F&Bs, along supermarkets, we've been noticing that for the past 2, 3 quarters. This is still a little bit patchy. And what we are doing is basically focusing on the management of the portfolio in terms of maintaining very strong discipline in terms of cost and efficiency, supporting our tenants as much as possible.

We are piloting new initiatives in terms of e-commerce and embracing e-commerce with the launch of a new initiative called link collect, where we will be running our own pickup points. And the idea with this is really to ensure that we consolidate, solidify our role in the community, bring in footfall and bring ancillary sales. So whenever somebody is coming to our pickup point, which we want to be of the highest quality in the neighborhood, they will also spend on the nearby shops. We are also looking at the car park income on that front. So we are doing everything we can in our power to really focus on the performance of the portfolio while retail sales improve gradually. Again, faced with this uncertainty, we control what we can control. So that's the gist of it.

So for the next question, just now regarding the Link 3.0, I think we have already -- John already addressed on the update on the fund management business. And then next, we have -- so we also have [ KF ] asking about the progress of fund management, which we addressed. And then Karl Choi asking about are there any criteria for returning capital to shareholders? For example, certain percentage of proceeds, would Link only sell assets at book or above book value?

Yes. Look, I think, as I said, the book or above book, I think the real focus is whether it's core and whether the asset is fully mature. I think we'll always try and maximize the price that we can get in the market, of course. But then we also need to have thought and look as to what the future outlook is of the asset as well. I think in terms of recycling into -- or recycling capital back to shareholders, I think we have to look at it on a case-by-case basis. We have to be cognizant also of that we are a dividend stock. But we are, I think it's fair to say, very committed to recycling the areas of the balance sheet that we don't see as core and that we've assessed for potential disposals, if that answers the question, I hope.

Thank you. And then we have questions from Mark, UBS. This time you separate retail and car park from other assets, should we expect we want to sell the offices and logistics on hand first? And on the car park, should we expect a full year decline in revenue? And how do we see the retail occupancy for Hong Kong as of today?

Let me start with the second question.

The car park...

On the car park, so there are 2 things. One thing is we've been launching this year a number of new products. So for instance, the one link pass where monthly parkers, if they pop up a certain amount, can have access to a number of car parks outside of their home car park, if you will. We've also been launching initiatives such as differentiated parking rates so that during peak season, during festivals like Chinese New Year. And this has been quite successful in terms of bringing additional revenue and somehow that offsets the decline that we've seen last year in the number of parking tickets, which was an element of the economic situation and the fact that there were fewer cars on the road. Now we are continuing with this type of initiative. So we are looking at structuring our pricing differently in the coming future. At the same time, where we could be cautiously optimistic is the cost of ownership of the car has dropped significantly because of the import of EV from China.

And therefore, we do see the number of car registration stabilizing, not yet increasing again. But again, what we are doing is against the market situation is to come up with new products and new pricing structures that can counteract the drop in ticket. If we look at the occupancy in the portfolio, this is a key focus for us. And we do see the occupancy staying at the same level of around 97-ish type of band. And this is very, very important because that maintains cash flow that maintains activity. And it's a result also of the dynamic leasing and reletting that we are doing when we are replacing tenants that are not performing, we are bringing in new tenants as quickly as possible. We are expanding the range of some of our key categories. So for instance, bringing F&Bs from the Mainland, we are keeping a very high retention rate at around 80%. So again, the occupancy, we do expect it to remain within the same level.

And yes. And then just now also Mark asked about would we expect to sell the office or logistics on [indiscernible]?

Yes. Look, I mean, core for Link is being an Asian retail mall operator with car parks in Asia. So I think office, we have to look at as potentially noncore. I think any assets outside of Asia, we have to look at as potentially noncore. We said before that the bulk of what we want to do is going to be an Asian mall and car park operator. So that's the focus. So office, logistics, I think all of those we would deem as noncore. It doesn't mean they'll necessarily all be transacted at the same time or in highly short order. But as I said to you, we're always looking at the 5% of the balance sheet that may need recycling or repurposing, and that is how we would categorize it.

And then CLSA, Alvin also asked about the noncore disposal. So I guess I believe John already addressed on that. And he also asked about if there is any new assets to [ traffic ] or category mix targets for us.

John, do you want to address that as well? Like will we target any new regions or category?

No. I think we're focused on predominantly on what we have. As I said to you before, when you're trading at a 7% yield, there's a very high bar for any asset that's going to outperform that as it were. So I think for now, we're happy with the geographical exposures that we have. Overlaid, as I mentioned to you, with the fact that -- I'll reiterate again, core for us is retail and car parking. We're an Asian mall operator. And if we have excess capital, then we'll return and recycle that to shareholders as appropriate.

And then we have questions from Mark. What does China retail rental reversions and the outlook?

Well, the outlook for China is if we look at Northern China, Beijing is still being challenged by 2 things. One thing is weak consumer demand and a number of competition. So we also had in China, in Northern China rentals that were at elevated and unsustainable level. And so we are fleshing this out. So we would expect reversion to remain slightly to remain negative, but to improve from -- in Northern China to improve from where it was. That said, when we look at some of our malls in Northern China, we are -- some of the rebate is being done, but also a focus in terms of positioning and in terms of trade mix that brings in -- that has seen positive results in terms of footfall, in terms of sales. Southern China is faring better overall with positive reversion, positive outcome on the back of some of the reposition and change of that we've been doing in the past 12 months.

Okay. Thank you. So we've got a few questions regarding the disposal. So I believe we have already addressed it. And then we have these questions regarding [indiscernible] Do you have any update for the search for the next CEO? And should we expect a new CEO will be onboarded?

Maybe for these questions, I will answer because our management here is not involved in the search. So we are still doing -- running the comprehensive search at the moment, seeking the proven candidate for the -- with international experience and then also it will be a proven real estate investor and business manager for a listed company. It will take time. And if there's any update, then we will update very timely to you all. And meanwhile, we have this interim structure backed by the very strong team, which some of them you're seeing here.

So we have our group CFO and CIO to cover the group CEO responsibilities at the moment, reporting to the Chair and the Board. And the Chair has also agreed to commit more time in this point of time as the independent Nonexecutive Chair for Link under the new arrangement running from Jan 1 until the end of May 2027. So I believe that at the moment, we are still in a very -- covered by the very strong team, and we'll update very soon.

And next, let me see if there is any further questions. Okay. We got this question from Goldman, Simon. To make sure I understand correctly, given your stock is trading at relatively [indiscernible], undemanding valuation, is it hard for you to find value-accretive acquisition opportunities?

Yes. As I said, when your own stock is trading at that sort of level, we always have a very high bar for acquisitions anyway. It has to be a strategic fit. So again, that for us is malls in Asia. But in very simple terms, when you can buy your own stock at over 7%, that raises the bar even higher and then focuses one's mind in terms of excess capital recycling.

Okay. So we have time for maybe 1 or 2 more questions. So let me see. So we have one question regarding about the fund management. Why do you want to remain committed to the fund management business when global operating environment is so uncertain and private market going through some stress?

I think that's a fair question. I mean the -- I think in reality, it's a very small cost for a significant amount of optionality, I think, is the best way to describe it. We've achieved some success with the fund and with third-party capital. So as I say, we're close to $1 billion, very close to $1 billion in total third-party capital AUM. And we are committed to the journey. But I think these capital raising environments, they ebb and flow. It certainly doesn't help what's going on in the Middle East in a general risk sense. Then again, having said that, some investors globally are more wary of investing into the U.S. and some of the benefits of that capital flow can be into Asia. So it's a long journey. I won't describe it as anything else but the cost is relatively small and is already baked into our numbers. And the optionality remains very significant. So we'll continue to push ahead with it.

So okay. Another question from Karl Choi. How should we think about interest expense in the second half of '26 versus the first half?

Thanks, Karl. I think if you just track our fixed rate at about 2/3 of our loan books, and the fact that first half, clearly, there was a nice HIBOR dip in March, April. Second half, we'll probably see financing costs increase slightly. But I don't think you are going to see it go a lot more beyond what we announced for the last set of results at 3.2%, largely because of the huge component of the fixed and we have no incremental significant debt under management over the last 6 months.

Another one, Australia. Any update for the land lease Australia mall deals?

Yes, I have -- I don't think it's necessarily public information, but I think our involvement in that particular deal is unlikely. I refocus you back on to the question of high bars and recycling of capital.

And then for the fund, so there are some follow-up questions on the management -- on the fund. Regarding the fund, how sticky are they? What's the expectations by the third parties for capital deployment?

Yes. So the answer is they're pretty sticky. The fund investors are stickier than the separate accounts, but both are sticky. If you have a separate account, then it's dependent on the desire for both parties basically to continue with the investment of that asset. With the fund, typically, people are locked in from between 7 and 10 years, and the deployment schedule is typically 4 years. So both sides of that equation are sticky. And the deployment schedule deliberately has a long runway to deal with bumps in the road like we're seeing in the Middle East at the moment, et cetera.

So any more questions from the floor? If not, so we will be looking forward to the upcoming final results in May. Okay. We've got one more. Maybe we can address that as well. Thanks, Cindy. Since you have increased the priority of capital recycling, what makes you change your mind?

Yes, I'm not sure it's a change of mind. Maybe I was doing a less effective job of communicating the desire previously. As I say, we -- I'm very keen -- the whole management team is very keen on having very strong portfolio discipline. So we will -- we're always looking at what are our keepers and what are the ones that aren't performing so much. So I don't think it's -- I think there is very much a priority. I think that is a correct assumption and statement. And we'll hopefully bring you some good news on that in -- at a future time.

Thank you. So with that, as if there is no more questions, we've come to the end of this quarterly update, and we look forward to see you again in our final results. The date of the final results announcement will be told very soon. Thank you.

Thank you.

Thank you very much.

Good afternoon, ladies and gentlemen. Welcome to our Link REIT 2025-2026 Interim Results Presentation. Now on the stage, we have our Chair, Mr. Duncan Owen, and our Group CEO, George Hongchoy; our CFO, Kok Siong Ng; and our group CIO, John Saunders. So on the screen, you can see our agenda today. And without further ado, let me hand the floor over to Duncan.

Thank you. Thank you. Good afternoon, ladies and gentlemen, and welcome to the 2025-2026 interim results presentation for Link REIT. As today's meeting is being webcast live, I also extend a warm welcome to those joining us online. It's my pleasure to open proceedings, and I will provide a few brief remarks now.

With regards to the interim results period, despite a range of macroeconomic and market challenges, Link has continued to deliver resilient results during the first half of this year. We saw a modest decline of 3.4% in net property income compared with the same period last year. This is mainly due to market challenges in Hong Kong and the Chinese mainland.

Our distributable amount and distribution per unit are down 5.6% and 5.9% respectively compared with the first half of last year. Before inviting our management team to run through the details, I want to start with an overview of how global trends are shaping our business and the execution of our strategy. While capital markets continue to rally on the back of optimism about AI and interest rates look to be trending downwards, the global business landscape remains as complex as ever. Wars, geopolitical tensions and shifting trade dynamics continue to create uncertainty. The recent shifts in U.S. policy are leading to fundamental structural changes in how investors view the world, which will continue to take shape over the months and years ahead.

Whilst we're starting to see some encouraging signs of stabilization in terms of the environment, our business, many of our tenants are still suffering from a prolonged period of challenge, particularly in Hong Kong. Therefore, it will take time before the improvement in consumer sentiment translates into higher rental income for Link. In anticipation of these challenges ahead at the beginning of the year -- of this calendar year, we launched a wide-ranging operational efficiency drive and have already made significant progress in reducing costs.

On an annualized basis, we're on course to make savings of more than HKD 200 million to our ongoing people and general and administrative costs. These efforts, together with our ongoing asset enhancement, are all part of our commitment to protect unitholder returns in future. Regarding strategy, Link's primary current strength is still owning and managing shopping malls in Hong Kong, the Greater Bay Area and other locations in APAC such as Australia and Singapore.

We are continuing to focus on the strength. As we evolve and refine our strategy alongside the active management and optimization of the Link portfolio, we are also expanding our real estate investment capabilities. This includes some new capital partnerships as well as advancing investment opportunities. As a consequence, we're now managing close to USD 1 billion in third-party capital already. This part of the group's business will continue to focus on value-add strategies and higher returns, providing diversification away from single market and sector dependency, enhancing unitholder value. We recently announced the planned retirement of our Group CEO, George Hongchoy, and this will take effect by the end of this year.

Before inviting him to run through the interim results, I'd like to convey gratitude to George on behalf of the Board and myself for his significant contribution and leadership. During his tenure, Link has grown and transformed the benefit of unitholders, tenants, employees and the wider communities it serves, of course. The interim leadership team is on stage today. We look forward to welcoming John Saunders, our Group Chief Investment Officer to the Board. We're excited to continue to work with Kok Siong Ng and John Saunders alongside the newly formed chairs committee, which is there to provide support and provide strategic guidance to the management.

We are currently running a comprehensive search for a new CEO. We're seeking a proven real estate investor with international experience who can lead the next phase of the company's strategy. Given the seniority of the role, the search will continue to take time and it's reasonable to expect a lengthy notice period as possible for an incoming candidate. Hence, our decision to put in place the robust interim management solution I was describing earlier. Thank you. I'd like to invite George now to take us through the presentation. George?

Thank you, Duncan. While our business continues to navigate and feel the effects of various macro and local market level challenges, I'm pleased to report that we have achieved a resilient set of results for the first half of '25, '26. And I would like to express my sincere thanks and gratitude for the hard work and effort of all our colleagues who have made this possible. As we approach the 20th anniversary of Link's IPO, I believe that this is also a moment for us to reflect with pride. Together, we have delivered strong financial results and make positive impact on our communities, even as we face many challenges along the way.

The achievements we have realized over the past 20 years give us every reason to be confident that Link's ability to successfully navigate the path ahead. Back to results, negative rental reversions in Hong Kong and China Mainland will have impacted to our overall performance with NPI down and DPU declining. Despite the tough conditions, we remain committed to deliver strong returns to our unitholders and we have launched multiple efficiency initiatives aimed at reducing costs and preserving margins.

On the balance sheet front, our capital position remained robust, supported by credit markets flight to quality and our blue-chip reputation. Net gearing stood at 22.5%, and our cost of borrowing has declined to 3.2%, and we have also retained A rating from S&P, Moody's and Finch. This strong foundation enabled us to pursue inorganic growth and portfolio diversification. Our expansion into Australia and Singapore demonstrate this strategy with retail assets in both markets achieving near full occupancy and strong double-digit reversion. Kok Siong Ng will now give more details.

Thank you, George. Good afternoon to everyone. Despite the ongoing macroeconomic headwinds, we have taken the strategic decision to retain high occupancy levels at the expense of rental revenue. Our continued focus on cost restructuring will involve certain one-off charges. Meanwhile, we expect operating conditions in the second half to slightly worsen before stabilizing.

We believe our nondiscretionary retail and car park assets will remain resilient nonetheless. Our international business is a highlight. As George mentioned, our retail assets in Singapore and Australia achieved near full occupancy and double-digit positive rental reversions during the period. On the financing side, we have benefited from the temporary dip in HIBOR and our borrowing costs dropped to 3.2%. We have prudently managed our interest rate exposure with expectations of longer-term rates easing, and I'll share more details in the next few slides. Valuation of the Link REIT portfolio stood at HKD 223 billion as of end September 2025, down about 1.3% from 6 months ago.

Hong Kong and the Chinese Mainland still hold the majority part of our portfolio at around 88%. Our international with the majority in Australia and Singapore took up the rest. Cap rates have been relatively stable compared to 6 months ago. Breaking down by geographies, ongoing weakness in rental performance across Hong Kong and the Chinese Mainland has led to decline in valuations. For our international portfolio, valuations have remained stable in local currency terms. However, the depreciation of Hong Kong dollar gave a slight uplift in reported valuations overall.

Lastly, on capital management, our strong financial position is underpinned by healthy balance sheet as reflected in the key metrics shown below. As of September 30, net gearing remained at a healthy level. The average borrowing cost declined to 3.2%, supported by the temporary dip in HIBOR during the first half as discussed.

Our fixed debt ratio remained within the prudent range of 50% to 70% at 66%, reflecting our continued careful management of interest rate exposure and heightened uncertainty over future rate movements. Financial stability is further reinforced through competitive credit margins and effective FX risk management. Over the past 6 months, we successfully refinanced more than HKD 10 billion of debt at highly competitive rates, achieving a lower overall margin compared to previous year.

Total debt increased slightly from HKD 53.5 billion to HKD 55 billion primarily due to currency translation effects. Our debt maturity profiles remain healthy with an average tenure of 2.9 years and a well-staggered schedule extending over the next 13 years. Strong A rating from all 3 agencies secure favorable funding terms supporting our future financing needs. We also remain well below covenant thresholds, providing ample headroom for acquisition and strategic opportunities.

With that, I'll now hand over to John for the portfolio highlights. Thank you.

Thank you very much, K.S., and welcome to all of you. Thank you for coming. I'll now walk you through the Link REIT portfolio highlights, starting, of course, with the performance of our Hong Kong Retail segment. Despite market challenges, occupancy remained very solid at well over 97%, although revenue declined by 3.1% year-over-year, mainly due to negative 6-plus percent reversions.

But pleasingly, tenant sales showed improvement, narrowing the decline to just over 2%, and I'll now break that down by category for you. Supermarket & Foodstuff segment actually returned to positive growth, which is both encouraging and it marks the first increase since 2023. And in that sector, we outperformed the Hong Kong market in the first half.

F&B for the first half was flat, and that was broadly in line with the overall Hong Kong market trends. But the overall decline in Link tenant sales was dragged down by the general retail segment, which includes, of course, only a small proportion of valuable goods as opposed to our main tenancy focus on nondiscretionary. Overall, occupancy costs stayed very healthy at around 13%. And I would say that together, these metrics do suggest that while some challenges do still persist, resilience within the portfolio remains very strong and evident across our entire range of portfolio.

That said, retail businesses in Hong Kong do continue to face some near-term pressure from heightened e-commerce competition, and that has weighed on some nondiscretionary trades. But to cope with the challenges, we continue to proactively refine our tenant mix to stay ahead of evolving market trends, and we'll share more details on these initiatives in the forthcoming slides. Also as a testament to our extremely capable leasing team, we've secured a little over 345 new leases during the reporting period, which is a very strong result indeed.

Leasing activity was shaped in large part by emerging trends, including specialty F&B, learning and interest classes and also game and family entertainment. We also capitalized on growing demand from Chinese Mainland brands, and that's further diversifying our tenant mix beyond specialty F&B to include new operators in fashion, services and entertainment. Meanwhile, tenant retention remained extremely healthy at around 80%, which underscores our focus on engagement and long-term partnerships.

Revenue from car parks and related business was broadly stable. Monthly income softened a little due to fewer tickets, but upward tariff adjustments helped offset much of that impact. In addition, we've rolled out smart parking systems to streamline operations and introduced dynamic pricing and diversified services. Leveraging real-time analytics, this approach aligns rates with demand patterns, and that helps us maximize utilization and also deliver greater flexibility and value for our customers.

Moreover, with the rising popularity of EVs, the growing demand for parking spaces equipped with charging facilities will provide additional support for our business performance. As part of our defensive strategy, we've continued with our asset enhancement projects with a current HKD 2.3 billion pipeline. And during the reporting period, we invested HKD 59 million at Lei Yue Mun and HKD 21 million at TKO Spot. These efforts reflect our vision to future-proof our assets, and those 2 projects are expected to respectively deliver ROIs of 14.5% and in [indiscernible] at just over 29%. Alongside these major upgrades, we also made smaller improvements, including reconfiguring spaces to better meet tenant needs and to optimize product layout for better productivity.

Now let's shift our focus to the Chinese Mainland retail portfolio. In the first half of the financial year, there were still market headwinds, which were exerting pressure across that Mainland portfolio. Despite the challenges, though, the retail portfolio continues to show very strong occupancy of 95.9% amidst the prolonged tough conditions. Rental reversion was soft due to subdued sales sentiment primarily in Beijing. And indeed, if you include Link Plaza Zhongguancun and the retail portion of Link Square, rental reversions actually quite pleasingly were positive at plus 2.5%.

We continue to optimize asset quality to drive sustainable growth and significant AEIs were successfully completed at Tianhe and Tongzhou with a combined capital expenditure exceeding RMB 440 million. Both projects achieved outstanding double-digit ROIs even in the current more challenging market environment, and I'll give you more details on the asset enhancement at Tianhe now. We also completed, just before I get to that, several small-scale projects at CentralWalk, Liwan, Qibao and as I mentioned before, Zhongguancun with an average ROI of around 9%.

Combined with the strategic tenant remixing efforts, we've attracted more innovative and competitive brands. So let me walk you through an example from Link Plaza Tianhe that I think really highlights our asset enhancement capabilities. So down in the basement here, we strategically downsized an anchor supermarket tenant and introduced “Foodie+, which is Link's own food court concept, and we applied that to the freed-up space. We also took an underutilized area and turned it into leasable space, which further maximizes the value of the property.

This approach isn't unique to Tianhe, of course. In fact, we implemented a similar concept at select assets in our Chinese Mainland portfolio. This included Link CentralWalk, Link Plaza Liwan and Link Plaza Tonggzhu, and it's proven to be really quite successful.

Now I want to move on to our international retail portfolio. In Singapore, we had near full occupancy and very pleasingly, double-digit rental reversion. And I think that demonstrates strong leasing demand from tenants and underscores the dominant and strategic locations of our malls there. Thanks to SG60 promotions and the rollout of government vouchers, we saw solid support for tenant sales. That said, retail sentiment is still a little cautious, and we need to monitor any signs for any slowdown in discretionary spending there.

In Australia, occupancy across our retail centers remained very solid at over 98%. And the rental reversion was an extremely strong and quite impressive 16-plus percent. Tenant sales were also up by over 15%. So looking ahead, we remain optimistic about the retail sector, thanks to rising household incomes, lower interest rates and improving consumer sentiment.

Let me just share with you now, if I may, some updates on our strategy. We've continued to actively manage and optimize the existing Link portfolio, but we're also expanding Link's real estate investment management capabilities, as you've heard, to some degree of success, as mentioned by the Chairman earlier. In the first half, our focus on active management, operational efficiency and streamlining has helped us reduce operating costs, preserve margins, and this, of course, will be a constant ongoing effort.

I'm also pleased to report that we've recently completed the streamlining of our integrated facilities management, the IFM contracts, and this should yield significant savings, both for now and in the long term. We're also actively exploring new investment opportunities with a particular focus, as we've mentioned before, in Singapore and Australia, while we continue to look for ways to divest and recycle assets, but only where appropriate.

On the investment management front, as I said, you've heard from the Chairman, Link Real Estate Partners is making very solid, very pleasing progress in forming partnerships with third-party capital partners. And we've already received commitments from new investors, which is extremely pleasing after a cold start 18 months ago.

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

Thank you, John, for running through the details. Before Q&A, I want to take a moment to express my heartfelt thanks for the trust and support that I've received over the past 16 years. I'm truly grateful for -- to our many stakeholders and colleagues and partners. And of course, I want to especially thank so many of you here in the room today, our unitholders and research analysts for all your ongoing support, the buy recommendations from time to time and not too often sell recommendations.

Over the -- it's truly a pleasure to serve as a group CEO and have played a part in this remarkable Hong Kong success story. So over the past 20 years, Link has grown and thrived through many market cycles, overcome many challenges such as financial crisis, social unrest and even the global pandemic. So all thanks to the dedication of our team. The success that we've achieved both financially and in terms of the impact that we have made to the communities has always been guided by a simple vision that we launched in November 2010 to be a world-class real estate investor and manager, serving and improving the lives of those around us.

So I want to extend my best wishes to Link and all my colleagues. Together, we have built a strong and resilient platform and one that will be well prepared to meet any challenges that lies ahead. So thank you very much. I look forward to seeing how this truly exceptional organization will continue to evolve as I start my garden leave in the 1st of January. Thank you.

Thank you, George. We all hope you have all the best and happy retirement. So now it comes to the Q&A session. [Operator Instructions] I have Karl first.

First of all, thank you, George, for your leadership. We will miss you and just wish you all the best. So this is Karl Chan from JPMorgan, and I have 3 questions. My first question is probably more for Duncan. So as we know, we are trying to identify a new CEO, right? Just curious from your perspective, what kind of qualities or track record do you most look forward to in the new CEO? And then when the new CEO is on board, what kind of KPI you will give him or her? And just curious if there's any tentative time line on when the new CEO will be on board. So that's my first question on the new CEO.

And the second question is on the potential asset acquisition in Australia. So just curious if you can give us a bit more thoughts on the process behind. Number one, why are we interested in those 3 shopping malls in Australia? How value accretive do you think it will be? And how do we plan to fund the acquisition? And will this be a pure acquisition or will this be part of the fund management that we have been talking about? So that's my second question on the Australia potential acquisition.

And my third question is on Hong Kong retail sales because if we just look at the tenant sales for the last quarter, it seems like the year-on-year decline actually widened a little bit. So just curious for, let's say, October and November so far, do we see some marginal improvement? And what's our latest guidance on the rental reversion for the second half of the year?

3 questions, but 3 or 4 questions in each of the questions. So let me -- I'll try and deal with point one, and I'll hand to George, but I'll give a couple of headlines on point 2 and 3, actually before I hand to John. The CEO process, there's a high degree of transparency on it. It's a comprehensive search. It's an international search, and there is a process ongoing. So I won't comment in too much detail, but I'll give you a little bit of guidance. We are looking for a real estate investor with a proven track record who has worked across border and in an international environment.

We are looking for someone who has done that in a public as well as a private environment. And we want someone who, of course, will continue to uphold the brand of -- and the integrity of the brand in Link and bring a good degree of humility to how Link and it's in keeping with its brand operates. I think those things are a given in some ways, but I think it's very important that we focus on those as key criteria moving forward.

In terms of timing, it's a proper process that is taking some time. It's began as a global search. It has been gone from a long list to a long medium list to a medium, medium list to a medium list to a long short list. But there will be a prolonged period of time probably before we can agree terms with the final candidate. And it is likely a number of the candidates have extended notice periods because of the seniority in the existing organizations.

And the part that you didn't ask that I'll add is for that reason, it's key that we put in the interim management arrangements that we did, promoting John Saunders to the Board. So there were 2 executive directors, and we have the Chair's Committee for oversight and support of the strategy with a real focus on ensuring we don't take a break or a pause in execution of the strategy going forward during that interim period. So that's the real focus.

In terms of the other two, I don't think we'll comment on specific acquisitions. What I think I would say is acquisitions of retail malls in Australia would be very much in line with our publicly declared strategy. John Saunders often describes this as the company's superpower in management of malls. And as I said in my part of the presentation at the start, our core competence is management of retail malls in Hong Kong, the Greater Bay Area as well as other locations in APAC, such as Australia and Singapore. So it should come as no surprise to analysts or investors that we might be seeking opportunities in those markets.

In terms of the third question and the headline about Hong Kong retail sales, well, the reversions have gone down 6.4% this half. The only thing I'll add and I'll avoid stealing more of John's thunder, is there is an obvious lag effect. There is an average lease length -- a normal lease length of 3 years in Hong Kong.

If a property was let 3 years ago at the market rent, we're the best one in the world, most of those market rents are lower today. And when those leases renew, they will be at the market rent, which will be lower. So although we are genuinely seeing increased footfall, all sorts of positive signs of recovery, the real world may be recovering positively, but the impact on our numbers and seeing it come through in the numbers will have a time lag. John?

Yes, sure. So specifically on the Australia thing, I think we've said for quite some time that we are interested in doing more Australia. Clearly, the Australia portfolio is -- existing portfolio is treating us very well. I think the retail is very much center and core to what we do. So this is not at all opportunistic, it's very much strategic in nature. And it's an extremely good fit, I think, with what we already have down there as a portfolio and what we're very comfortable managing and operating.

There was a question about funding, et cetera. We have plenty of capacity on the balance sheet to fund a transaction like that. And I think that allows us to bring to bear a fast liquidity solution for that particular situation. So I think we -- they're good assets. I think we can do more with them, and we'll see what happens as we go from here.

Cindy?

This is Cindy from Citi. I also have three questions. The first one, I want to follow up on your Link Real Estate Partners. So just now we mentioned there has been some initial success and commitment. So can you walk us through the current structure of the third-party capital with you? And is there any target for AUM? How should we think about your pace, say, in 3 years or 5 years? What will it be? And in terms of the potential investment target for the real asset platform, is it similarly with a priority for Australia followed by Singapore or any difference with your own platform? This is the first question.

And the second question, I want to touch a little bit on your own portfolio reconstruction. So just now we heard you want to increase your Australia portfolio. So is there, say, a target of increasing Australia portfolio to what percentage within the overall portfolio? And is it fair to say that you are thinking -- it's getting more confident and interested to buy in today than, say, 3 months or 6 months ago? And why are you getting a little bit more interested? And in terms of, say, divestment, is there any asset within your portfolio that you think can be well interested to sell it and recycle capital?

And the third question is actually on your cost control initiatives. So we heard a lot of good news that you just shared on cost controls, but that has yet to reflect in the financial results. And if I hear correctly, I think K.S. mentioned that it could worsen in the second half before things getting better. So can you share with us a little bit on how cost control has been doing? How would it affect our overall performance? And when they stabilize? What type of margin levels are we targeting at?

Thank you. I'll give some headline answers again, particularly around question one. And question 2, I'll pass to John and then to K.S., respectively, for question 3. First of all, the overriding principles of the strategy for third party or for balance sheet are to buy the right assets that enhance returns and the quality of earnings for the group and the unitholders of the group. We do not have a fixed AUM target.

The target is to buy the right assets on balance sheet and to buy the right assets in partnership where we're co-investing to get the right returns from the assets. There will naturally be some management enhancing and there may well be some management fees that come with managing other partners' money alongside ours, which is aligned and is long term. But we're essentially a REIT that is looking, first and foremost, to maximize the value of its capital invested by its balance sheet.

In terms of the target returns, I think this is relevant. It's self-evident that the balance sheet returns have tended to be high single digit. Where we allocate 10% or 20% of the balance sheet towards the funds business or special situations, we would reasonably expect those returns to be higher and to be more enhancing to provide diversification. So you could look at a value-add style REIT type of return that would be 15% plus.

In terms of, I think, the second question, which was very much focused, I think I've got some detailed notes here, on timing and then we moved on to a degree to recycling. Yes, we'll always look to recycle, but what we would not want to do was hold on to assets, follow the market down and sell at the bottom of the market, especially where there are assets that we have conviction on.

So I think there may, however, be some noncore assets that don't fit the criteria I've said in the past that might not be retail malls and might not be in the obvious target geographies that are obviously adjacent to us and we know and can operate in. So you could pick any number of offices as an example in the U.K. or warehousing in the Mainland.

In terms of the cost control, before I hand to John on question 2, this year has a lot of noise in the cost control because when you make cost controls with targets, there are some exceptional items that go with that. So again, the benefits will come through in the full annualized, if you like, normalized cost controls that we would be making. There are some one-offs this year, but essentially, the current annualized savings for the running and operating costs are a little bit in excess of HKD 200 million. John?

Yes, certainly. So just adding a little to the third-party side. Obviously, it's private capital for a reason, the clues in the name. But what I can say is that the clients who've trusted us as fiduciaries to manage capital on their behalf so far, they are all very well-known names and are all institutional capital.

And I think the Chairman said it very well when he said, we don't have a specific target per se, but I think our style has been to do things and then tell you that we've done them rather than perhaps tell you that we're going to do lots of things, and it takes some time. So I detected a couple of slightly widened eyes that after 18 months, we do have [ HKD 1 billion ] effectively under management, and I'd expect that to grow, and we'll continue to give you updates as time goes by.

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

It's helpful, of course, that Australia has some fantastic demographics behind it, and that affects all areas of society, including property, but it's particularly powerful for retail and retail catchment. So that's fundamentally, I think, a lot of what's driving it. And I think it makes very good use of the balance sheet because we are clearly able to invest at rates which significantly beat our cost of capital.

I think on the point that Chair articulated on cost savings, I think if you look at the business, there's probably about from the revenue line down 10% of revenue that is controllable, whereas whether it's staff costs at the property level or staff costs outside the property level at the regional centers. And I think where we have come in the first round is that with some of the staff headcount optimization or restructuring, there will be one-off separation costs, no difference from a lot of companies as they go through restructuring of costs. And this year, we will see a bit more kicking in as the, I guess, the senior departures or some of these departures will come in the second half of the year. And then like what Chairman has said, on a structured basis into the next financial year, the aim is to shoot for about HKD 200 million of savings every year.

Karl?

Karl Choi from Bank of America. Three quick questions. First, on the third-party capital question. Just want to find out if there are any limitations to the capital that you have raised in terms of, for example, geographies where you can make the investment? And going forward, how should -- is there any guiding principle between acquisitions that you've been making based on your own balance sheet and where you will be tapping third-party capital to make those acquisitions?

And second question is, any more color on Mainland China, especially Zhongguancun Mall. It looks like the negative rental reversion was quite severe in the first half because it dragged down the whole portfolio. Should we see some stabilization half-on-half?

And the third question is regarding -- a quick one housekeeping is regarding the headcount-related reduction charges. Should I clarify that you'll be making your distributable income after absorbing those charges, so you won't be isolating them out separately?

Thank you. Again, I'm going to hand over to my colleagues. But in very simple terms, where we're working with third parties in partnership or in a fund structure, yes, the returns are higher. There's typically value-add style returns. And yes, the strategies are relatively unencumbered, albeit they would be very focused in the region of APAC. So the geographies could be wider, the sectors could be wider as opposed to balance sheet where there's a big focus on the particular 4 APAC markets I've mentioned and retail malls and our super strength.

In terms of the reversion, I'll hand to John on this point. But I think the key factor for all of the reversions, whether they're upwards or downwards, whether they're Beijing malls in the Mainland or elsewhere is there's always a lag indicator. So what's happening on the ground is always ahead of what you see in the financial numbers that come through because of that lag effect. And I think it's really important to note that as you do your modeling for the numbers, et cetera. John?

Yes. So on the third-party capital side versus the balance sheet, I think the balance sheet is very clear. It continues to be very committed to Hong Kong and the Greater China area, the Greater Bay Area, particularly. It's also very much a retail and to some degree an office-focused business. And it's fundamentally outside of Greater China, it's focused on Australia and Singapore. So that takes care of the balance sheet. In some respects, that's relatively straightforward.

But again, as you can see from some of the results, when you get the right assets with the right operational management, you can produce very good returns from those. The fund -- or the fund, the third-party business, the capital business, that is capable of operating on a wider scope, taking in some other jurisdictions and investment classes. So it has a wider remit. But having said that, it's still fundamentally operating in the same developed Asian markets.

So I think that probably covers the third-party capital side. In Zhongguancun and the sort of reversions generally speaking, in China, I think in that asset, particularly, there were some challenges. There was a new mall that was down the road that came into existence. So we had some weaknesses in occupancy, which is highly unusual for us because normally, we pride ourselves on having very full buildings, as you can see from the results. So we had to deal with that.

And in order to deal with that, that meant that there were steeper than normal reversions because suddenly we were competing, as I say, with a new offering. But they've increased occupancy there or we've done lettings for around about 35-plus percent of the building overall. So I don't want to be too confident in predicting, but I do feel that, that is largely shored up. And could there be some more weakness that comes from the general market? Yes, potentially.

But I think we're now on a level playing field in terms of that asset. And by the way, that asset is a perfectly good asset. It just suddenly faced some competition, and we've dealt with that. And as I say, when -- as I said earlier, when you take out the impact of that particular property from the overall results in China, what's very encouraging is that we actually saw growth in reversions in China overall. So I think it's -- with some cautiousness going forward, I think it's not a bad picture.

On the headcount reduction, I guess, the way it's done is between a redundancy or retirement, there are statutory as well as contractor payments that we are obligated to fulfill. And the accounting treatment is such that the expense of these payments needs to be all front-loaded to the last day of the employment.

So that's why I said a lot of this will then be surfacing as we cross into the end of the financial year into the new year. And I guess when the exercise was conducted in the first half and the execution of this stuff is being done with this period, quite a fair bit of this one-off will then be expensed into the second half of the financial year.

Mark?

This is Mark Leung from UBS. I got about three questions. I think the first one is regarding on the retail sales on the ground. I think in first half, our tenant sales was mainly dragged by the general retail, which underperformed the overall Hong Kong market. Just want to share what kind of category we underperform.

You also mentioned about the e-commerce penetration. So that's linked to the second question. Because I think in last week, one of the local e-commerce operator, they said they want to eliminate the brick-and-mortar retails in Hong Kong. So I just want to see your view and what's our strategy in defending our position for the local neighborhood mall in regard on the e-commerce spread.

Number three is regarding on the occupancy cost ratio. I think currently is about 13%. But if you look on the [indiscernible] across, it seems the tenants margin is squeezing and also maybe some of the supermarkets are cutting the price. Do you think that the occupancy cost ratio may need to further trend down in the future in order to retain the talent. If that's the case, what is the sustainable level?

Last but not least is about the Hong Kong car park. We have a slight decline in the car park. Just want to check with management what is our future growth outlook for the Hong Kong car park because it seems the number of cars continue to -- did not rebound despite the population increase.

I think most of these are for John. But just to recap, I think there's a retail drag impact is your question. The occupancy costs, of which I'll just reiterate what's been said before in that we've focused on a strategy to maintain high levels of occupancy rather than to hold out the last dollar in rent. And that's because it positions the company better for a recovery in rent out of the bottom of the cycle when there's high occupancy.

I think your third question is related to that because it's about occupancy costs. And I think there is a fourth question, which is about car parking, which may be a fourth that K.S. may want to comment on. But if I can hand to John now on the retail drag.

Yes, sure. So yes, I guess when you look at the Hong Kong retail sales, the first thing to say is that it's encouraging. When we were speaking a few months ago, obviously, we had a few data points. And I suppose we were all hoping that a few data points might become a few more and that we might be okay to start calling it a trend.

But obviously, those figures capture luxury, particularly they capture gold and jewelry. And there was also the impact of the latest sort of iPhone offerings, whatever number we've got up to next. No doubt my children will tell me on their Christmas list. But -- and we don't really have much exposure to that. So I think that's why our figures lag a little just in a pure number sense.

But I think the positive to take away from this is not per se that nondiscretionary lags slightly, but more that this trend of retail sales data points does start to resemble a trend as opposed to an individual set. So I'm not going to make any forward predictions, but let's all hope that, that continues because that will be good for us. It will be good for Hong Kong.

I suppose e-commerce, yes, you get individual data points or individual announcements. But I mean, e-commerce is something that's been on our radar for a very, very long time. It's not something we've suddenly started reacting to because of one particular retailer saying they're getting out of bricks and mortar.

And I guess balanced against that, there have also been lots of reports, not so much in Hong Kong in the near term, but there have been lots of reports of retailers saying, actually we've realized we need to have a combination of physical and online. But as I say, it's something we've been reacting to for quite some time, which is why you see the constant evolution of our portfolio to deal with that, whether it be the fact that on the plus side, when people come and do collections, they may be actually coming into the mall to do collections.

So how do we activate those people into doing a collection plus maybe staying a little longer and frequenting some of our tenant shop. So it's not all a one-way street, but it's something we're hypervigilant on and we've been working on for quite some time. On the occupancy cost side, I think our occupancy costs are very good, around about 13%. But again, it's something that the team, Emmanuel, the team, they focus on constantly and the level of detail that they go into and the level of partnership that they have with our tenants in respect of things like this is phenomenal. And yes, there are still some headwinds out there in terms of minimum wage and other things. But I would say, again, I think we feel fairly confident that a number around 13% is a good result. And I think we feel fairly confident that we should be able to keep that number roughly where it is.

In terms of car parks, I think you have seen declining, or you have seen a reduction in the number of car registrations in Hong Kong. I think that reduction has flattened out to some degree. And yes, we've seen a reduction in the number of ticket sales, but we've also seen some of that reduction added back in terms of the fact that we were able to push through some higher pricing, partly in terms of the fixed-term contracts, the monthly and the longer terms, but also through the dynamic pricing that we've put into the malls as well.

But I think if you -- again, not looking to give you any sort of full forecast, but more if you look back at the history of this business, it is broadly a relatively flattish business. So I don't think you expect to see there being big negatives and I don't think you expect equally there to be big positives. It's a good stabilizing income and cash flow that does an awful lot of the heavy lifting without taking much glamor when it comes to having a resilient DPU.

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

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

Simon Cheung from Goldman Sachs. Just a follow-up on the retail questions. John, you mentioned that you have seen some improvement of green shoots across your different mall. Is there anything that you can call out? And secondly, I think on your point about lagging rent being lagging the retail sales performance, can you give us a sense how long the lagging typically be?

We understand that it's a 3-year cycle, but if you can share with us some color, that would be helpful. And then -- and also on the cost, this year, I think the annualized cost saving is HKD 200 million, whether you have any maybe longer-term target for the cost saving?

Yes. Look, I'd say the bright spots, the things that are encouraging, supermarkets and F&B, which have both been sectors that have had some challenging times over the last few years. So seeing those actually sort of flatten out and even show in the supermarket sense a little bit of growth, I think, is really encouraging.

I mean at the end of the day, I think the best -- the simple thing to always remember is that very roughly, we work on a 3-year leasing cycle. So we're dealing in 1/3, 1/3, 1/3, and that should give you good clues as to how to deal with the reversionary lag. We are defense -- we've been very defensive in nature during the difficult times. And we will have recovery, but it takes time to wash through all of those leases. So again, it comes back to the point about retail sales hopefully becoming a continuing trend. You can't do anything about the math.

It is 1/3, 1/3, 1/3. What will change the trajectory, and I can't predict it, is how much growth you continue to get in the overall retail sales. Does it accelerate? Does it stay the same? Does it taper off? The bigger the growth, the quicker you get out of your -- the tail end of your reversion relag cycle. But I think you know how to calculate that cleverer than I do.

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

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

Thank you.

Thank you.

Well, good afternoon, everyone. So welcome to our Link's Annual Report -- Annual Results Presentation. I'm Christy, Director of Investor Relationships. So let me introduce what we have on the stage today. So we have our Group CEO, George Hongchoy; our CFO, Kok Siong Ng; our COO, Greg Chubb, and our CCDO, Ronald Tham.

So here is our agendas today. So if you want to download our presentation or our announcement, you can scan the QR code here. So I'll give you a few second if you want to. Okay. When you all got ready, let's start. So let me hand the floor to George. Thank you.

Thank you, Christy. Let me start with this slide, which gives you a highlight of the presentation that we'll be giving today. Amidst a very challenging macroeconomic environment and serious business challenges in Hong Kong and Mainland China, I'm happy to report that Link managed to deliver a very solid set of results, which are credit to the whole Link team. We have seen valuations come under pressure, and we expect the environment to continue to be very challenging in the year ahead.

Given this, we have initiated a number of efforts aimed at reinforcing our resilience and to protect our DPU. Central to this is a long-term diversification strategy, which has helped us to protect our earnings in recent years, and we'll continue to move forward with this.

As mentioned at the start, Link REIT's results for the financial year are solid, and that reinforce our resilience and -- in face of this uncertain macro condition and diversified -- intensified challenges for our business. While we are pleased to be able to deliver another year of growth in distributable income to our unitholders with an increase of 4.6% year-on-year, we should stress that some of the positive contributions are one-off items.

We achieved a DPU growth of 3.7% year-on-year. However, the NAV per unit declined 9.6% year-on-year, largely on decreasing asset valuation from cap rate expansion in most markets. We've retained a strong financial position with net gearing at a healthy 21.2% (sic) [ 21.5% ]. And this, in addition to robust credit ratings and competitive financing costs, provides a solid foundation to navigate the challenges ahead and enable us to capitalize on potential opportunities.

We move into business and strategy. Link has evolved over the past 20 years with active management and asset recycling to drive growth. Since 2015, we expanded into Mainland China, Australia, and Singapore, reinforcing our diversification strategy and solidified our position as one of Asia's leading property investors and manager. A lot has been achieved in these 20 years, but it's only the beginning. And we are at an important and exciting pivotal point in Link's development under Link 3.0.

You can see from here how the Link REIT portfolio has undergone significant transformation over the years. From the IPO time, our portfolio consisted of 81% retail and 19% car parked only in Hong Kong. And throughout all these years, we have now transformed into a more diversified portfolio across different geographies and property types.

We have consistently shown that we are able to unlock value for our unitholders even during challenging periods such as the global financial crisis, the COVID-19 pandemic and social unrest in Hong Kong. Since 2005, we have delivered annualized total return of 10.9%, which outperformed the Hang Seng Index and the Hang Seng Properties Index.

Our portfolio value has also grown more than fivefold since IPO. The chart shows how the diversification we initiated 10 years ago has enabled us to continue to grow these past few years and become an increasingly sizable portion of our NPI.

Looking forward, we'll continue to pursue further portfolio optimization through Link 3.0 strategy, and we will be updating on this in the presentation. Our commitment to value creation is reflected across all aspects of our business, including our asset management capabilities, supported by operational efficiency, community engagement and innovation. Our proven exit track record and diversified -- and diverse Link REIT portfolio are key drivers for our success. And for further detail, we will refer to the annual report where we will disclose further.

During the year, we undertook several key strategic initiatives to enhance our resilience, and let me highlight a few of these. It was another busy year of portfolio optimization, and we continue to improve operational efficiency. Greg will provide more details in his section. As for the investment management business, we put in place a pan-regional team and infrastructure. The foundations are now fully set for the business. And lastly, through the Nomination Committee, our appointments to the Board were made, including the Chair and INEDs.

Let me first pass to K.S. to share with us the financial updates.

Thank you, George. Good afternoon to everyone. Thank you for coming. We have seen a steady growth across our portfolio during the last financial year. In Hong Kong, we achieved total growth in revenue and NPI. This was driven by relatively better retail sales and savings in utility expenses. In Mainland China, both total revenue and NPI are also up. This was mainly boosted by the full year contribution of Link Plaza Qibao.

On the overseas front, our retail assets in Singapore and Australia recorded nearly full occupancies and positive rental reversions. Our low gearing helped us to keep borrowing costs competitive and weather the storm of valuation declines. I'll come back with more details on capital management and valuation in a while.

In this slide, we are showing a simplified version of our P&L. Despite our G&A going up 19.5% year-on-year, a large part was due to LTI scheme adjustment, legal and consultant fees and uncapitalized expenses from exploring M&A deals. Excluding these items, G&A would have been up 6.9%. Another item to take note would be the net finance cost. The increase was due to the acquisition of Link Plaza Qibao. Excluding such costs, net finance costs decreased by 1.4% due to effective interest rate hedging.

Back to valuation. Total portfolio value as of 31st March 2025 declined by 4.7% half-on-half, mainly due to, firstly, cap rate expansion in Hong Kong and Mainland China and FX depreciation against Hong Kong dollar for the overseas. Our robust FX hedging strategy effectively mitigated the extent of the decline in the total value of investment properties in Hong Kong dollar terms.

Lastly, capital management. Our robust financial position is well supported by a healthy balance sheet as shown by the key metrics here. As of 31st March 2025, net gearing remained low, while the average borrowing costs remained competitive. Fixed debt ratio is in the upper range of 50% to 70%, and we'll continue to closely monitor the movement of interest rates.

Our financial stability is reinforced through FX risk management, which includes extensive hedging of non-Hong Kong dollar distributable income and overseas assets. Over the financial year, we have been repaying our debt. Debt balance as of 31st March 2025 is reduced to HKD 54 billion from HKD 60 billion a year ago.

Our A ratings from all three credit agencies enable us to secure favorable terms for future funding needs, and we have achieved a lower overall margin in refinancing this year. Furthermore, we remain well below the key covenant thresholds set by the rating agencies. This gives us headroom to capture acquisitions and other opportunities when needed.

Let me pass over to Greg for operational highlights. Thank you.

Thanks, K.S., and good afternoon, everyone. And I'll start with our Hong Kong Retail segment performance first, where retail businesses in Hong Kong continued to face market-wide challenges amid intensifying competition, rising costs and cross-border travel. This has seen total Hong Kong retail sales decline 7% over the period. Portfolio sales for us at Link have declined at a lower rate over the same period at negative 3%, and this is given our focus on food and nondiscretionary trades.

Leasing reversions over the period have turned slightly negative for the full year at negative 2.2% with ongoing pressures, in particular, in supermarket and Chinese restaurant categories. Occupancy across our portfolio has remained stable and has been preserved at a very solid 97.8%, and this ensures a stable and predictable income stream. All of this has seen revenue growth of 1.5% year-on-year, and such results demonstrate the ongoing relevance and resilience of our portfolio with the primary purpose of servicing Hong Kong people for their essential daily needs.

In response to the evolving market landscape, we continue our leasing efforts to service emerging demand and continue to optimize our tenancy mix. For the financial year, we successfully signed over 600 new leases, including the introduction of over 200 new businesses to our portfolio, whilst maintaining a healthy 80% retention rate on leases that expired over the period.

Additionally, we continue to focus on emerging trends. particularly across fast food and food and beverage categories, as well as family entertainment and traditional Chinese medicine clinics to enrich our offerings and continue to drive improved footfall. By strategically managing our deep tenant customer relationships with brands across Hong Kong, Mainland China and our international portfolios, we aim to enhance the attractiveness of our retail assets and stay relevant with consumer preferences.

Now turning to our Hong Kong car park and related businesses, where we achieved 1.7% year-on-year revenue increases, mainly due to higher tariffs. During the year, we introduced a new car park management system designed to enhance our operational efficiencies and also maximize the utilization. This AI-powered system enables us to pilot systems such as dynamic pricing schemes as well as the introduction of new products and services.

One of those new products is the One-Link Pass, which offers a flat monthly rate and allows pass holders to park at hourly bays in designated car parks across Hong Kong. This product has proven to be very popular amongst customers since its recent launch. We'll continue to develop innovative products to enhance revenue, utilization and increase car parking traffic.

Now we'll move to Mainland China retail. And over the year, we've seen that Chinese consumer spending has remained relatively subdued with portfolio performance differing between North and South. Our Southern assets continued to deliver strong results, while assets in the North faced headwinds amid softer market environment. Occupancy, however, remained solid at just under 96% and rental reversion improved from negative 3.2% at the half to [ 0.7% ] for the full year. If we excluded Link Plaza Zhongguancun in Beijing, where we're undertaking significant refurbishment and asset enhancement works, rental reversion across the balance of our shopping centers in Mainland China is strong at 7.6%.

In February last year, as you all know, we acquired the remaining 50% interest in Link Plaza Qibao in Shanghai. And I'm pleased to confirm that we've successfully integrated the assets and the very experienced center-based team to Link. We continue to enhance our Mainland portfolio's performance through active asset management and significant strategic enhancements across our portfolio.

Now we'll move on to our international retail portfolio, where in Singapore, the 99.6% high occupancy rate shows that there is robust leasing demand from tenants, including new-to-market overseas retailers, and particularly F&B operators. Overall, sustained demand for suburban Singapore retail, in addition to the dominant strategic location of our malls, has delivered strong 17.8% reversion over the period.

In Australia, our retail centers there have also sustained near-full occupancy at 99%, and productivity was driven by the ongoing introduction of new brands to optimize our trade mix as well as higher overall footfall and general positive activity in the Sydney CBD, where our three properties are located. As a result, tenant sales grew at 7.7% year-on-year, whilst we achieved solid reversion rate on expiring leases at 4.3%. I'll point out in addition to these positive trends in Australia, it's important to note the income growth is underpinned by the annual increases contracted in our leases there. And this sees us at a weighted average 4.7% per annum on those leases.

Now we'll move on to our International Office portfolio, where we have a relatively long WALE of 4.4 years, which underpins the resilience of that portfolio. Speculative fit-outs continued to be well received by small to midsized office tenants in the Australian office market to help speed up the leasing process and reduce friction, which supports leasing outcomes and portfolio occupancy. Favorable supply and demand dynamics in the Sydney office market, in particular, are also expected to be supportive of leasing activities and further positive net absorption there. This is given the limited new supply of floor space in the short to medium term.

As for Mainland China Logistics, thanks to the efforts of our leasing team, the portfolio continued to maintain a high occupancy of 97.4%, with three of our five assets then nearly fully let. I will point out, however, that demand for new space remains relatively mixed. Our project pipelines sit in Hong Kong at HKD 2.3 billion for retail projects and RMB 180 million in Mainland China for retail projects there. We're always looking to proactively unlock asset value through these programs. And currently, our asset enhancement projects are predominantly tenant-led and are well supported by tenants and are smaller in scale.

This year, we also hit a major milestone now with over 3,000 public EV charging points across Hong Kong and now 58 solar power systems across Hong Kong. This makes Link the city's largest private provider of public EV charging points and the leading private solar power operator. We're planning to continue to expand our reach and network with further EV locations and solar PV arrays across Hong Kong in the near term. Our active approach to sustainability ensures all initiatives align closely with our business priorities and deliver operational efficiencies.

On decarbonization, our ongoing investment in energy saving initiatives has reduced carbon intensity by 21% compared to our 2018/'19 baseline. And this has also delivered some HKD 8.8 million in energy savings this year alone. On climate resilience, we went beyond protecting our assets to create financial value. Proactively communicating our flood protection efforts to insurers resulted in an 11.7% reduction in Hong Kong's property all risk premiums. With this renewal, we also became the first real estate company in APAC to have sustainability-linked insurance.

Next, I'll pass on to George for outlook. Thanks, George.

Thank you, Greg. And here are some of the macro factors from both global and local context that impact our business. We expect conditions in Hong Kong and Mainland China, where reversions turned negative this year to be challenging. And nonetheless, I would like to emphasize that there are still some positive developments in our key markets. For instance, the automatic land lease extension in Hong Kong removes uncertainty for landowners, while the mega events in Hong Kong and Singapore are expected to boost tourism and foot traffic.

In Mainland China, the central government has introduced a series of measures to stabilize financial markets and stimulate consumption aiming to support economic outlooks. These favorable developments provide some cause for optimism amidst the complex macro outlook.

In response to these challenges, we are focused on what is within our control. In order to protect unitholders' return, management has implemented several countermeasures, including operating -- operational efficiency and cost reduction efforts. At the same time, we are keeping a broad vision to identify opportunities for diversification into new assets and geographies. In the longer term, we are cautiously executing our strategy to set the foundation for longer-term growth, and we'll continue to invest with caution into future growth drivers, in particular, portfolio optimization and the real estate investment business.

Let's revisit our Link 3.0 strategy with a brief update. We previously mentioned that through Link 3.0, we aim to offer a REIT plus investment case to be achieved through portfolio optimization and real estate investment management business growth. These two key drivers under Link 3.0, firstly, to actively manage and diversify our portfolio. We've been proactively looking at recycling and acquisition opportunities in our focus markets of Australia, Singapore and Japan. At the same time, we continue to exercise prudence. Secondly, we continue to expand the real estate investment management capability under Link Asset Management Limited to work with and provide services to different capital sources. We are delighted to have officially launched our fund business, Link Real Estate Partners. We will continue to explore a variety of other ways to diversify our source of income and to collaborate with different capital partners, including reviewing opportunities to accelerate the expansion of the real estate investment management business through both organic and inorganic initiatives.

I want to touch on remuneration. During the year, led by the Remuneration Committee, we've engaged an independent consultant to review our remuneration strategy. And the central emphasis has been to support Link's strategy and further increase the alignment between executive compensation and unitholder interest. Through this process, the Chair and the committee consulted several long-term unitholders, some in this room with us. We are grateful for the constructive feedback, and we are committed to enhance the transparency of our remuneration scheme. You will see further disclosure taking effect of this new plan from '25/'26 in our annual report.

Let me pass to Ronald for the distribution calendar.

Thanks, George. Moving on to our distribution calendar. Last day of the cum final dividend is 17th June, record date is 25th of June. And the final date for scrip election is 18th July and the distribution date is 4th of August. As a reminder, we will be moving to providing quarterly operational updates, which will be uploaded to the stock exchange website. And the next update is expected to be in August.

Now we will now open the floor for Q&A.

[Operator Instructions] I think I can see the first one here. Karl? Yes.

I am Karl Chan from JPMorgan. So I have two questions. The first question is more on the Hong Kong retail. So just curious, in terms of tenant sales, I think last year, it was down by around 3% for the full year, right? If we just compare the fourth quarter and the third quarter, how was the trend? Is it better? Or is it weakening or similar? So that's on the quarterly tenant sales trend.

And then in terms of rental reversion for the full year last year, it was down by around 2.2% because we recall that in the first half, it was up a bit. So it implies that in the second half, it might be down by around like 4% to 5%. So just curious for the next financial year, what's our expectation on the rental reversion? If it's negative, would the magnitude be slightly better than 4% or 5%? Or would it be similar? So that's my first question on Hong Kong retail sales.

And then a second question is more for Mr. George Hongchoy. So you have been with the company for around 15 years, right? And obviously, under your leadership, the company has grown a lot. Just curious, what's your plan in the next few years within the company? How do you foresee your role in the company?

All right. We will get Greg to answer the first question, give me time to think about how to answer this. But thanks for being the first off the mark on publishing the report on our results earlier today. Greg?

So Karl, just on tenant sales first. We have seen an improvement from the third quarter and the fourth quarter. So the worst was last year, and it's progressively improved over the year. I will say that there is a lag in terms of what then happens with leasing outcomes. So the leasing for us has got progressively worse over the year with regards to the reversion. I think in the current environment with Hong Kong retail sales declining by 7% for us to deliver negative 2%, there or thereabouts on reversions is a pretty credible outcome. If you dig a bit deeper, for our shops, the negative reversion was about 1%. For our markets, it was negative 9.5% there or thereabouts.

So quite a bit of pressure in the fresh market. But probably the most pleasing thing in all of that and the strategy that Gary and Emmanuel, who run our leasing and asset management teams are in the room today is preserving occupancy. So we've been able to preserve our occupancy at around 98%, which is very, very good and an absolute sharp focus for us as a management team. And it feels like retail sales are starting to improve, albeit we're comping very poor timing last year. So we've got to put it into perspective.

In terms of retail reversion, I don't have my crystal ball with me, but I think it just comes back to the purpose of our portfolio, and that remains unchanged here in Hong Kong. So focusing on food and beverage service and trades that Hong Kong has relied for their daily needs, puts us in a pretty enviable position in the strategic locations of our assets is the same thing.

So I'm not avoiding your question, but I would suggest that reversions won't turn positive this year, they will be negative this year. And I would suggest they would be low to mid-single digits negative. That would be my best assessment at this point in time. We've started off the year reasonably well, albeit it's still very early days. And the focus for us is retaining tenants. That retention rate that we delivered last year of 80% is a focus, preserving portfolio occupancy is a focus. And if that comes with some negative reversion, we're prepared for that.

I hope Christy have prepared my answers already. So well, time flies when you're having fun. So I think that's the quickest answer that I can give to you. As any -- in terms of good corporate governance, any CEO and the Board should be planning succession from the day the CEO has been appointed. And so we've been talking about succession every year. The Board has a practice of annually doing a CEO mapping. We just completed one recently. So that's something that we want to make sure that we understand who are the candidates available externally whenever something happens. And we used to say since we're in Hong Kong rather than saying the bus, what if the tram run over me and I couldn't come to work. So that's something that we do on a regular basis.

Having said that, I think the other part, which is actually very important for part of this discussion, regardless of whether it is me or not, at the end of the day, it's teamwork. So what you have seen is an upgrade in the management team that we have done over the last few years. I used to be -- we joke about this when we met, I used to be CEO, CIO, COO and CXO. And now you have a COO sitting here, you have CIO sitting on the floor and -- not literally on the floor, but we have an expanded team. So I think that alone provides a lot of options for the Board.

And when the time comes, it's not a decision by any one party, it's the Board, myself, my family, all of that. So they might come. But the key issue is in terms of governance. This is a business as usual event that we do every year. We just completed it recently and reported to the Nomination Committee. We'll do that as a matter of course anyway. So, so far, having a lot of fun now.

Next question. To be fair, why don't I take one from the right, Cindy.

This is Cindy from Citi. Three questions from me, if I may. The first question is on future distribution sustainability. So I think at the presentation, you mentioned trying all measures to protect future distribution amid challenges and negative reversion. Just trying to get more color on exactly what measures we are taking for, say, full year '26 and '27 next 2 years. Given all the challenges you have mentioned, will you be more actively looking for organic measures? I remember last time you mentioned looking for non-rental income. Or will you be more actively looking for, say, inorganic growth? So this is the first question.

Second question is on tenant remixing. So just trying to wonder if there's further room to optimize tenant mix in order to cushion the reversion pressure. I think last year, education was actually posting a positive reversion. So is there any consideration to maybe downside some underperforming trades and improve some outperforming ones and introduce more, say, overseas brands into the portfolio? This is the second question.

And the third question is on your 20 years anniversary. So just trying to think about if there's more of a long-term new strategic thinking after 20 years of operations. And also, will you consider any celebration and share the joy with your unitholders?

Greg, go ahead.

I have the first two. Yes, I can talk to just some of the operational efficiency measures that we're talking to. So pleasingly, for the period that we've just spoken to today in Hong Kong, we've seen our NPI margin improve from 75.3% to 76.3%. So that's come with a combination, I should say, of factors to try and enhance our operational efficiency. We're very fortunate to have a business with significant scale here in Hong Kong, and we're continuing with a number of things that I won't talk about today to try and enhance that operating margin. So that's a real focus for us.

In terms of tenant remixing, what we're finding is that, one, we're retaining about 80% of the tenants that have expiring leases. That gives us an opportunity to introduce new retailers to our portfolio. So we've spoken about the 600 new leases that we've written over the period and 200 of them are tenants that haven't had shops with us before. I think that's a pretty good ratio.

I will say, however, that leasing to new tenants comes at a more -- a bigger negative reversion than it does from us retaining tenants. So what we're seeing is that quite clearly in Hong Kong, when we retain tenants, we get a better outcome on balance than when we're having to lease to new tenants. That doesn't mean that we won't take steps to continue to evolve our tenancy mix and offering. And I think with the 200-odd new leases that we've been able to bring in, it allows us to do that.

And your other question around overseas retailers, we are seeing a reasonable introduction of new overseas businesses to our portfolio, and most of them are from Mainland China. I will say in other markets like Singapore, for example, we're seeing a significant number of Mainland retailers entering Singapore, and we're benefiting from that.

I don't know if there's anything else you want to add on the distribution piece, George, but probably the most important thing that we're really focused on are those operational efficiencies. And I think a big step for us over the last 12 months is enhancing the operating margin here in Hong Kong.

On Slide 7, a lot of history, a lot of things that we've done over 20 years from 1.0, 2.0 to what we talk about 3.0. These particular description is not really the matter that I think one should focus on, but we've dealt with a lot of cycles. I think we've built a business where the corporate culture, the resilience of the business, the team have been able to deal with a lot of these cycles. Every time when we go through each of these, in the middle of it, we are faced with immense uncertainty. We didn't know when we got out of the protest, we don't know when we got out of GFC or COVID.

Again, now we're facing a time where people are saying that there's a lot of uncertainty because of politics and other reasons. So I think one of the good things that Link have done over the years is built a very resilient set of assets, very strong balance sheet that can withstand some degree of financial stress. We will see if there's a significant market crash, we also need to handle that, but we've done a lot of stress tests and scenario planning.

And then looking ahead on Page -- on Slide 30, we talk about as part of Link 3.0, how we optimize the current portfolio further. Recycling in Hong Kong may be a little bit challenging. But in Mainland China and elsewhere, we'll continue to do that. So actively managing it to try and improve the productivity of the balance sheet, at the same time, growing the real estate investment business, and that's something that we can talk about in a bit more detail later on.

And yes, we will celebrate. It is on November 25 when we were listed 20 years ago. So we managed to find a venue that is free, luckily. So in a mode of cost cutting, that's quite important. So mark your calendar afternoon of 25th of November, come and have a drink. And it is free for you to come to drink, we'll pay for the drink. But the venue luckily is free, and we hope to really celebrate the past success. The past is not less important, except as a reference for us to really think about how we're going to manage the next cycle. And we're in the midst of that. There's a lot of things that we already talked about. And operating efficiency, cost control and all those are extremely important for us to deal with this.

We are in a high-margin business. So when revenue comes down, there's only so much we can do. But there need to be a discipline in terms of controlling costs, so that when we rebound, we are a strong business. We need to make sure that the team is in place for us to handle when the new opportunity comes. So how can we, at the same time, do that, build a team that take care of new opportunities and at the same time, be efficient and be resilient through this cycle. So the team is focused on quite a lot of those ideas. We're happy to discuss more later.

Okay, Mark?

This is Mark Leung from UBS. I got about, I think, three questions. I think the first one will be more like a housekeeping one. I think management, you mentioned in this year, we got certain one-off items. Just not sure if you could elaborate what kind of key one-off items and amounts we should be aware. I think that's the first question.

And then the second question is regarding on the recent logo changes. So could you walk us through what was the rationale for the logo -- company logo changes? And [indiscernible] recently launched the Link Real Estate Partners. In the long run, how should we think about on the corporate structure? Because I think there's some, I think, news reporting that we may do some spin-off maybe in Singapore. I would like to hear your thoughts.

And last but not least, I think George also mentioned about the cost control. From which areas you would mostly pay attention to in terms of cost cutting?

So I think if you think about it in our business across so many geography and the, I guess, the complexity that we are in now, we do have quite a fair bit of one-off items year-to-year. Specifically to last year, I think what we have mentioned publicly is that we have been going through some, I guess, tax clarification in Mainland, and we ended up in a, I guess, a favorable tax resolution this year.

On top of those one-off items included will be things like deal expenses as we look at deals throughout the year. As an accounting practice, if you consummate the deal, it gets capitalized in the balance sheet. If not, the deal gets deported, then the expenses needs to be expensed out into the P&L. So put together, I mean, we wanted to highlight that this year, if anything, when you put all the numbers together, plus and minuses, is a significant number that we want to mention to you guys. And it's probably in the range of about $100 million this year.

Perhaps just a little bit more -- elaborating a little bit more that the in fact the G&A costs, which includes some of the staff costs, each year, if we do well in unit price, then staff cost goes up because the LTI accrual actually goes up. So it's a good thing. While that goes up, our investors are actually making more money, but there is that alignment. And so this year, our unit price has gone up 20-odd percent year-to-date. So that is reflected in the staff cost increase as well. And let's hope that will keep going up partly because we do want unit price to go up.

We have looked at a number of inorganic transactions. And we haven't done any. Otherwise, we would have announced them. And by not doing them, we have to write off the cost. And that's what K.S. was mentioning, the consultancy and the legal costs relating to certain M&A transaction that has not materialized.

And I want to just expand on that, because some of you have asked about the G&A costs going up again on staff costs and the staff costs relating to the number of people that we have hired under Link Real Estate Partners. And there is this choice of building organically where the staff costs will go up as you build the team in order to come up with the revenue from the fund business or we do an inorganic transaction where the staff costs will not be seen so much because it will actually be capitalized as goodwill when we buy a platform, right? So obviously, afterwards, we will have the staff costs, but we will have a much higher income.

And now by growing it from scratch, we'll probably have a bigger J curve for a period of time in order to deliver that business. So there's always this strategic discussion whether we do it organically, where there's a higher hit on the P&L and deliver that business or do it inorganic where you have a goodwill hit, but not a P&L hit to deliver that.

The reason why I want to mention that is in order to -- for our unitholder to protect our bottom line, while we have this hit to our P&L with the increased staff cost for the Link Real Estate Partners staff, we also want to look at efficiency that we can gain by being -- rationalizing the team, improving processes and delayering, et cetera and those things to save staff costs from the organic business, so that we can actually fund partly, if not wholly, the building up of the fund management team. So those are some of the trade-offs that we're looking at. And I think so far, that's something that we will continue to need to do as we build this business in the coming years.

The local change actually, firstly, I think it's worth saying that it's almost costs us nothing. We've done most of it in-house. So we didn't pay $5 million to change the name back to the same alphabet. So that's important. But the key is we actually really haven't changed. For 20 years, we are employees of Link Asset Management Limited. But we put a local Link REIT, which is the REIT that we manage, but we're actually employee of Link Asset Management Limited.

So what we would like to do is actually to tell people that we are employee of Link Asset Management Limited. This is the part of the business -- part of the functions that we perform. We manage Link REIT for 20 years. We will go through -- we will, in the future, through Link Real Estate Partners, which is a 100% subsidiary of Link Asset Management Limited, manage other funds. And so we will have multiple vehicles to attract different capital sources to manage and to deliver fee income, deliver different investment opportunities to our unitholders.

And so there's a slight shift of focus. But at the end of the day, hopefully, that shift allow people to -- when they read our report, when they try to understand us, realize that we are as much a fund manager as much as a REIT since we are stable together, unlike some of our peers in this part of the world.

You mentioned spin-offs and all that. We study all sorts of options, CREITs, SREIT, A-REITs buying some platforms, selling assets in portfolio, individual. As we responded in the past, until the deal was done, there's really not much we can talk about because there's so many variations of timing and opportunity. So not much to share. I know you've read an article in Singapore, but there's one author coming up with one idea.

So the rationalization that we are doing, hopefully, will help us to mitigate some of the challenges in terms of cost increase as well and make us a little bit more efficient as we move into the next phase. The focus continue for the portfolio to invest in Asia Pacific. And hopefully, the market return for some of the location for us to do more diversification and recycling.

This is Raymond from HSBC. I have got also three questions. The first question is regarding to the Link 3.0 strategy. Can management provide us the latest update? And say, for example, what should we expect the AUM scale of your fund management business in the next 12 months or sometimes, say, by 2030, so we can have more sense about the scale going forward?

And the second question is about financing cost. So like the company did a very good job in managing financing costs. Should we expect further optimization improvement in financing costs in the next 12 months' time given the easing or global environment here?

And the third question is about the asset value. We did see some changes in the asset value recently. Can management comment about the changes or trend of the capitalization rate? Or will there be any further compression in value of your asset?

I'll talk about the financing costs. I think we have done well in the last financial year. I think it's part process, part the market driving the CNH cross-currency swap that gave us a premium. And the fact that we were not fully hedged on RMB was a lever that we could play with.

As of today, we are broadly and largely hedged across all our overseas assets. That said, I guess, the last 2, 3 weeks was a surprise for all of us considering most of you are working in the banks, how fast the HIBOR has plunged. And it all started from, I guess, the U.S. Tariff Liberation Day, everybody start focusing on U.S. fiscal positions, trade deficits and suddenly, the capital start flowing into Hong Kong. And also because there was a CATL IPO that everybody is watching and the flow suddenly has picked up very quickly and HIBOR has dipped to 0.5% and bouncing back up to 0.6% for 1 month.

That said, clearly, in the short term, and I echo HKMA's warning that it's going to be temporary that HIBOR will be so low and SOFR rate is still hanging at about 2.8%, 2.9% for 3 years. We will benefit because 1/3 of our $55 billion debt is actually floating. And largely, the floating is pegged to 1-month of HIBOR. So I think we have an opportunity as far as I can see now that given the structural geopolitics that potentially HIBOR will continue to stay low, but not as low as today. And I think that gives Hong Kong itself a great chance.

And if you look at some of the peers who are highly geared, clearly, the stress level is not so high. And that also has given a boost to the capital markets, equity markets and equity options starts to be opening up again. So I think overall, it's going to be a year that as of now, hopefully, we can continue to manage risk, on the financing.

As for the credit margin, I think what we do clearly is run a tight process as usual, and we have continued to see credit margin tightening between a good credit and average credit and a not so good credit borrower. And we are probably on the, I guess, good to better credit borrower. So we have seen credit margins continue to be very competitive for us. But that said, there's only so much it can compress. We are probably at the marginal end of that credit margin compression.

On the valuation and cap rates, Greg, you can supplement. But I think what we are seeing is across the office and logistics portfolio, rentals are not expected to be going up. If anything, we are still managing a negative rental reversion. So on NPI rental basis determining valuation, I think we will continue to see stress or cap rate expansion for office and logistics.

For retail, for Singapore, Australia, we expect things to be flattish. I think things are doing okay. Singapore rental reversion, as you have seen, it's almost 18%. Australia is coming to mid-single digits. So I think that's okay. Hong Kong, a bit of stress. I think from the cash flow basis, again, Greg has articulated that rents continue to be slightly on the negative side. But if you look at cap rates, I think Hong Kong, Singapore, Australia, possibly we are not expecting interest rates to be jumping that fast, and that then supports the cap rate from not expanding. And hopefully, there is a chance of compression.

The fund management business, Link Real Estate Partners up and running. I think that's one point that we can't say. There's a lot of legal restriction for us to say a lot more. Let us underpromise and overdeliver. But what I can say is compared to past meetings that we have, we have completed totally all the infrastructure setup, from documents, to fund accounting systems, to reporting, setting up the Board, having the investment committee constituted, everything is done. And so we're ready, and it is in progress. But I don't think we can say a lot more than that.

I think we continue on that theme of manage your expectation and underpromise, overdeliver. We won't give you an AUM target yet. Sorry, you can't more the word yet. But I think once we get to a point where if we are successful in launching the first fund and you see the momentum, the type of investor who come with us and the confidence that we will then be able to displace to you rather than just talk about it without a concrete result, I think you'll be a lot more confidence in the path that we are going. But I mean, for today, I would rather reserve sharing with you too much detail.

Okay. Any more questions? Percy?

This is Percy from DBS. I have three questions, if I may. First one is mainly on operational in China. I understand that the China rental reversion is still under a bit pressure, mainly dragged by Link Zhongguancun. Just wondering when are we expecting the end of the drag for this property in particular, and in general, for the rental reversion for other properties in terms of the outlook.

And secondly is on REIT Connect. We saw that the CSRC, they recently reiterated REIT Connect again. Just wondering if management can share any colors or insights regarding the time line or implementation details for us.

And thirdly, it's regarding the share buyback. We've seen that Link has done some share buyback and those shares has been put in as treasury shares. Just want to know what's management view regarding how would you manage these shares in the longer term or if you would even consider to sell out these shares.

I'll talk to the Mainland question first, Percy. So at Zhongguancun, we're a fairway through the repositioning of that asset, and it's predominantly leasing activity. We've seen a new competitor right next door open up its first stage in the last few weeks. Pleasingly -- and again, it's very early days, but the impact that we're anticipating from that has been less than we first thought, given the first stage of this project is predominantly food and beverage. So we've perversely seen an increase in our footfall since the property opened next door, and the team there is making good progress. So I'm hopeful over the course of this year, we will have been able to work through all of the strategies that we've anticipated there at Zhongguancun.

But I will also say that Beijing as a market is very challenging of all the markets that we operate in. It is very, very challenging at a consumer level, where Shanghai is pretty stable. And certainly, in Shenzhen and Guangzhou, we're seeing much better outlook. Probably the most pleasing thing for me more broadly is ongoing tenant demand in Mainland China remains strong from local brands. Particularly for leisure sports brands are growing like crazy in Mainland China, and we're getting our fair share of that, which is pleasing.

And I will just close off by saying, again, as we said during the prepared remarks, if we exclude Zhongguancun, we printed positive reversions through the shopping center portfolio for this year. And again, the same strategy that we're embarking on here in Hong Kong about preserving occupancy remains consistent for us in Mainland China as well.

I think Zhongguancun, when we first invested in it, was extremely attractive. It's a district with footfall that doesn't grow at all right, unlike any other shopping mall that we have, partly because it's all universities, students, young people, tech companies all around that area. And then since then, you have tech company layoff. You have New Orient being attacked by the government. So they shrunk the business, they are very close to our mall.

We have a competitor next door that didn't perform at all and now renovating and upgrading. The good thing is there is no new supply. The government is not allowing new supply within the [ 5 Ring row ], and this is within that area. So there is really no new supply, except that the mall next door, which was fully run, that's now being upgraded. So that gives the competition that Greg mentioned. But I think there is some stabilization in the tech sector.

People are -- hiring will come back. And that's where a lot of the software companies are. And the university continue to -- the attendance hasn't really dropped and may be helped by politics that maybe there will be more students at Chinese universities. And so I think the market have changed since we invested. And hopefully, we can manage through this cycle and see it rebound.

REIT Connect wise, it has been talked about for a long time. We have no insight when the timing is. But I think what we are encouraged by the comment by CSRC is that they started to talk about it for the longest time with SFC Stock Exchange, Hong Kong Stock Exchange talking about it. China have remained silent. And then recently, even the head of CSRC talking about. So I think the timing is sooner.

I think that will increase liquidity to our stock because I think we trade relatively better than a lot of the C-REITs. I think we are an attractive proposition. As a result, the IR team actually have done a lot of road show in China. We will actually, after this round of result announcement going to China as well. So we hope that when it eventually comes, it will -- we will be benefiting from it.

Share buyback?

On the share buyback, I think as a background, the last financial year, we bought back about 17 million shares at about $33 per unit, and that amounts to about $550 million, $570 million. And according to the new stock exchange rules, you have the ability to either leave it in treasury or you can cancel it, which was the past. And clearly, leaving in treasury by accounting is eliminated anyway. But that gives us the opportunity to hold that in future if we want. Say, for example, today, there's an acquisition and we want to have a mix of equity option and that clearly, this can be taken up because there's actually a gain.

So I think it's a good thing. It's not new. I think many exchanges have this toolkit for issuers and Hong Kong is probably a bit late into this. But having this does give us the flexibility. So clearly, we will leave it there for now. It's not a big number considering the overall scheme of things, but it does give a bit of flexibility for us.

Okay. Thanks. Shall we take just last two questions. Karl here and front here.

Karl Choi from Bank of America, two questions. First, can you give a little bit more color on the new executive management plan? You mentioned there's going to be a new plan to be implemented. Any major changes compared to the old plan?

And then second, going back to the cost optimization program, I just want to ask if there is any quantitative target that you're willing to share, whether it's the cost savings sort of amount or whether it's in terms of holding the cost increase to a certain percentage?

As I've mentioned, the review that's done, which we've done on a regular basis, I think the last major review was done almost 10 years ago with some minor changes during the last 10 years. So we just completed a more comprehensive review recently led by the Remuneration Committee with external consultants, a number of meetings with unitholders. So I think what I'll report, probably not fair to just highlight a few key points and miss out others at this forum, but you can see a lot more detail in the annual report. So I urge you to just wait and look at that in more detail.

Suffice to say, there are a few key points and the key principle listed here. One is that we want to ensure that there is a clear alignment of interest between the executive team and our unitholder. And we want to increase the disclosure so that, that alignment is clear. I don't think that it was not aligned properly in the past, but I think disclosure have distorted the picture. And I think the disclosure that you will see this year will help you to understand the alignment a lot better. So that hopefully is an improvement.

Some of the targets have changed. Some of the KPIs have changed and the change really to make sure that they are indeed more aligned. The long-term incentive plan, we will actually disclose the exact KPIs, and they are absolute total unit return and relative total unit return and carbon intensity reduction. And so adding a sustainability target is important for us as a business because obviously, we have always been a leader in this area, and we have a carbon reduction target that we announced many years ago, and we continue to be on that path.

And then on the short-term incentive, again, various measurable targets from both financial results and the nonfinancial result based on, say, reversion, occupancies and all that. And obviously, we have a target to launch a fund despite not talking about too much about it. So that's also one of the targets that we need to achieve. But you'll see more details in there and a lot more disclosure. And the disclosure that we also have added includes both the numbers relating to grant and numbers relating to the final award at vesting.

And the confusion in the past is we focus a lot more on at the grant, and it's a little bit difficult for you to find the number at the final vesting, although it is somewhere in the report, and we just want to make it easier for you by putting it all in two pages rather than all over the report. So hopefully, that will create a little bit more transparency, which we thought we had, but it's a little bit difficult to find, and we want to make it easier for our reader. So that's something that you will see.

So look at the report first. And if there's any question and feedback to come back to us. But it's something that the Remuneration Committee, and you see in the report that they've met over 10 times over the last year, a lot of work in order to achieve this result, hopefully, also with the consultation of some of our unitholders allow us to have a scheme that will be acceptable to the market and we'll talk more after you read it.

Okay. I think we have run out of time unless there's a really burning question. Otherwise, thank you for all your questions, and thank you for coming.

Thank you very much.