Swire Properties Aktie

Good afternoon, ladies and gentlemen. Welcome to Swire Properties' 2025 Annual Results Analyst Briefing.

Joining us at today's briefing are Mr. Tim Blackburn, Chief Executive of Swire Properties; and Ms. Fanny Lung, Chief Financial Officer of Swire Properties.

Tim and Fanny will first take us through the 2025 annual results, then we'll proceed to a Q&A session.

Before we start the presentation, may we first take a look at a short video on the company's key developments and milestones last year. Please enjoy.

[Presentation]

May I now invite Tim and Fanny to take us through the presentation. Tim, please?

Great. Well, good afternoon and a very warm welcome. I hope you enjoyed that sort of summary video of what's been a very busy 6 months. Welcome to the Swire Properties' 2025 Annual Results Briefing.

I'll take you through the results highlights for the full year, touching on some key developments and progress we've made with our strategy across our 3 core markets and some of the portfolio updates. And Fanny will take you through the financial highlights, our ESG performance and our sustainability achievements over the past 12 months. And then I'll close with some brief comments and outlook for the year ahead.

Okay. So, we're pleased to report the underlying profit of $8.62 billion, an increase of 27% year-on-year, due primarily to the sale of several non-core assets in Miami and in Hong Kong, which is directly in accordance with our active capital recycling strategy. Despite the loss of rental income from Brickell City Centre, The Mall, after disposal and lower office rental income in Hong Kong, we've achieved a recurring underlying profit of $6.3 billion, a testament to the resilience of the office portfolio and the positive momentum in the retail portfolios in Hong Kong and in the Chinese Mainland. This is all underpinned by the successful portfolio upgrades and the HKD 100 billion investment plan.

The company has declared a second interim dividend of $0.80 per share in '25 for a full-year dividend of $1.15 per share, an increase of 5% year-on-year, which is consistent with our commitment to enhancing shareholder returns and our aim to deliver mid-single-digit annual dividend growth and to paying out approximately 50% of our underlying profit in ordinary dividends over time.

I'm also pleased to highlight that this represents a mid-single-digit annual dividend growth for 9 consecutive years. So, with a strong balance sheet and a healthy gearing ratio, the business remains on a solid financial footing. We're well placed to achieve our long-term growth targets, thanks to an active capital recycling strategy, a diverse development pipeline across all core markets, combined with a proven track record and strong execution capabilities in Hong Kong and in the Chinese Mainland.

So, this slide shows some of the highlights of what was a very busy year, another busy year for Swire Properties. And I'll touch on a few of them. On the capital recycling front, in Miami, we successfully completed the divestment of our commercial interest in Brickell City Centre in July. In Hong Kong, we completed the sale of non-core industrial site in Tsing Yi, and the remaining Taikoo Shing car parking spaces in October and November. And in December, we completed the sale of the 43rd floor of One Island East to the SFC as planned.

We also celebrated some landmark events on the retail front in the Chinese Mainland. And following the hugely successful launch of LOUIS VUITTON's The Louis on Nanjing Xi Lu, in June, we opened several flagship luxury maisons in Taikoo Li Sanlitun in December. And these have fundamentally transformed the North Block.

Over the Christmas holiday period, we opened the first phase of Taikoo Li Julong Wan in Guangzhou, and this is the first of our new retail-led centers as part of our HKD 100 billion plan. The market's response has been very positive, reaffirming our commitment to the increasing demand for experiential retail.

2025 was also a significant period for our residential portfolio. And over the last 6 months, we've launched pre-sales at The Headland Residences in Hong Kong. We've sold the fourth batch of residential pre-sales at Taikoo Yuan Residences in Shanghai. We've announced the VIP pre-sales for Upper House Residences and Wireless Residences in Bangkok. And we successfully completed the sale of 2 luxury houses at Deep Water Bay Road for $2.2 billion, which is one of the highest priced luxury residential transactions in Hong Kong in recent years.

This is an important slide, which you've seen before, it highlights our track record of active capital recycling. And thanks to the divestment of the non-core assets in Miami, we recycled $7.3 billion in the second half of 2025, increasing our cumulative disposal proceeds to $58.7 billion and providing the liquidity for a HKD 100 billion investment plan to drive growth for the next decade and to support the progressive dividend policy.

So on the HKD 100 billion investment plan, as previously reported, we're making solid progress over the last few years across all markets, with 67% now committed. And in the Chinese Mainland, we remain focused on retail-led mixed-use projects in Tier 1 and emerging Tier 1 cities.

We're on track to double our GFA in the Chinese Mainland by 2032. In Hong Kong, we're pacing our plans for future expansion opportunities at Pacific Place and at Taikoo Place, reflecting the challenging market conditions. And on the residential front, we're continuing to build a diverse pipeline of trading projects in all markets.

For those projects, this is the completion schedule for over 12 million square foot GFA of new projects over the next few years. And clearly, our focus will be on disciplined execution of our retail-led strategy in the Chinese Mainland, with new Taikoo Li and Taikoo Hui branded projects opening in Beijing, in Sanya, in Shanghai, in Guangzhou and in Xi'an. And we also have a diverse pipeline of premium residential projects across all markets, which are well placed with improving market conditions.

I'll move briefly to the investment portfolio. Clearly, the office market in Hong Kong remains challenging due to the supply overhang. Nevertheless, we see a pickup in the level of inquiries and in take-up. Overall occupancy of 91% across our office portfolio, we're outperforming the relevant submarkets, consistent with the flight to quality trend in core locations and thanks to our commitment to placemaking and our industry-leading ESG credentials.

At Pacific Place, occupancy has improved to 96%. Taikoo Place occupancy at One Island East, One Taikoo Place, has remained stable at 91% and occupancy across the other Taikoo Place Towers is at 88%. And encouragingly, occupancy at Two Taikoo Place, our newest triple grade-A office, has increased by 5% to 73%. Attributable gross rental income was down 5%. Attributable valuation in the office portfolio declined by 3%. So overall, negative rental reversions are narrowing, while rental levels are stabilizing in Central. They continue to reflect the prevailing soft market environment. And our strategy will be to continue to focus on tenant retention given the current market outlook.

On the retail front, Hong Kong has been very resilient in 2025. Occupancy at Pacific Place, Cityplaza and Citygate Outlets was maintained at 100%. And encouragingly, retail sales growth was positive across all our malls in Hong Kong, outperforming the Hong Kong market overall. Attributable gross rental income was flat year-on-year. Attributable valuation for the overall retail portfolio declined slightly by 3%.

So, this slide shows our combined Chinese Mainland portfolio now contributes 43% of our attributable gross rental income. And notably, the rental contributions from the Chinese Mainland retail portfolio now exceed those from the Hong Kong office portfolio. Over the past 10 years, in terms of attributable gross rental income, we've delivered steady CAGR of 10%. And over the medium term, we anticipate an increasing contribution from our Chinese Mainland portfolios as we bring some exciting new projects online.

So in terms of exciting new projects, I've mentioned some of these earlier and key developments. But together with our core luxury brand partners, we're embarking on a significant phase of transformational upgrading across our existing malls in Shanghai and in Beijing, for example, together with an exciting pipeline of new Taikoo Li style open-lane retail developments in Guangzhou, Sanya and Xi'an, which embrace cultural heritage and reflect the local context.

Across the Chinese Mainland, all our existing malls have been busy with strategic upgrades, improving the overall retail experience. We've seen positive signs of recovery. Overall retail sales were up 7% year-on-year on an attributable basis and significantly ahead of sales in 2019 on a like-for-like basis as a benchmark. All of our malls in the Chinese Mainland reported positive sales growth with HKRI Taikoo Hui in Shanghai and Taikoo Li Sanlitun in Beijing outperforming. Attributable gross rental income was positive. Occupancy remains high across the whole portfolio and valuation was up by 9%.

Office in China -- in the Chinese Mainland, the portfolio was stable, resilient despite market oversupply, and we remain focused on integrated mixed-use developments and core locations in Tier 1 cities; Guangzhou, Beijing and in Shanghai. So, many of our retail-led mixed-use developments will be launched this year in 2026. We've got an extremely busy program ahead. But thanks to the HKD 100 billion investment plan, we have laid solid foundations for growth in the Chinese Mainland, especially for premium retail-led portfolio with GFA, as I mentioned, almost doubling over the next 5 years.

Moving to the residential trading portfolio. We have an interesting and diverse pipeline of 11 projects currently under development, representing nearly 4 million square feet on an attributable basis across core markets in Hong Kong, Shanghai and in Southeast Asia, with phased completions equally over the next 5 years.

A little bit more detail of that trading portfolio with regards to increased trading profits anticipated from 2026. And as I mentioned earlier, Hong Kong, we recently had the sale of the 2 luxury houses, 6 Deep Water Bay Road, reflecting an average sale price of close to $150 a square foot. With approximately 150 units now pre-sold, The Headland Residences look well placed to capture the improving market sentiment. And in Shanghai, Century Summit and Century Heights almost 98% pre-sold and Taikoo Yuan Residences approximately 90% pre-sold across the first 4 batches, and we are planning to launch the remaining 2 batches this year. And in Jakarta, over 50% pre-sold at Savyavasa. We're now handing over units at our premium residential development in South Jakarta.

This slide just illustrates the diverse pipeline of trading properties in Hong Kong and Southeast Asia, which will generate that increased contribution from trading profits in the next few years.

And then finally, moving to our hotel portfolio. The performance of the hotel portfolio has been improving, reflecting higher occupancy and RevPAR. And importantly, in October, we announced the decision to adopt The Upper House brand for all properties. We continue to explore third-party hotel management agreements, and we're looking forward to 5 new houses opening over the next few years in the Chinese Mainland and in Tokyo, as well as the Upper House Residences in Bangkok, our first branded residences globally.

So on that note, I'll hand over to Fanny.

Thank you, Tim.

Let's look at the underlying profit. In 2025, the underlying profit increased by 27% to $8.62 billion. The strong performance was mainly driven by gains from the disposal of non-core assets, reflecting our successful execution of capital recycling strategy. Recurring underlying profit declined by 3% to $6.26 billion, largely due to the loss of rental income following the disposal of Brickell City Centre retail mall and lower Hong Kong office rental income.

The underlying loss from property trading was due to increased sales and marketing expenses, while hotel performance improved in both Hong Kong and the Chinese Mainland. Our investment property portfolio delivered a resilient performance, with attributable gross rental income down 2% year-on-year. Disregarding the impact of Miami disposal, attributable gross rental income reduced slightly by 1%. Hong Kong office sector saw a 5% decline, reflecting negative rental reversions under the adverse market condition of high vacancy rates and new supply. However, our office leasing activity improved since Q4 2025, supported by better market sentiment and continued flight-to-quality demand.

Our retail malls in Hong Kong remained fully let throughout the year with signs of stabilization emerging in the second half, resulting in accelerated retail sales and rental growth in the second half of the year. In the Chinese Mainland, retail rental income increased by 2%. Foot traffic and retail sales increased, reflecting transformational upgrades and continued enhancement of the tenant mix at our malls. Both retail sales and rental growth accelerated in the second half of the year.

The Board remains committed to create long-term shareholder value by delivering sustainable dividend growth. For 2025, dividend per share increased by 5% to $1.15, marking the ninth consecutive year of mid-single-digit dividend growth. Our dividend strategy aims to deliver mid-single-digit annual growth in dividends and a payout of approximately half of the underlying profit over time.

As of December 2025, valuation of our investment property portfolio stood at $268.3 billion, representing a 1% decrease from December 2024. The decrease mainly reflected fair value losses, primarily from the investment properties in Hong Kong office and the disposal of certain non-core assets, partly offset by portfolio additions and foreign exchange translation gains from the Chinese Mainland. Additions principally reflected capital expenditure on Taikoo Place redevelopment in Hong Kong, Taikoo Li Sanlitun in Beijing and Taikoo Li Xi'an. There was a reduction of 12.5 basis points in the cap rates for certain Hong Kong office properties.

At the end of December 2025, net debt decreased by 10% year-on-year to $39.5 billion, with gearing improving to 14.6%. This was driven by strong cash inflows generated from the disposal of non-cash, non-core assets and sales of residential trading properties. Weighted average cost of debt declined from 4% to 3.5%, reflecting lower interest rate and an increased proportion of renminbi bonds and loans at a lower funding cost.

Our liquidity position remains strong. As at December 2025, available committed facilities increased to $62.6 billion, with cash and undrawn committed facilities totaling $23.4 billion. Our debt maturing profile remains well spread. We continue to increase renminbi borrowings to support expansion in the Chinese Mainland. As at December 2025, renminbi funding proportion increased to 49%.

Our credit rating remains unchanged at A2 under Moody's and single A under Fitch. Total capital commitments amounted to $29.5 billion as at December 2025, including $9.8 billion relating to joint ventures and associated companies. Majority of the capital commitments for the Hong Kong portfolio are expected to be deployed after 2029.

So, now I move on to sustainability highlights. We continue to be highly recognized by many global and regional sustainability indices and benchmarks. We are pleased to continue to rank #1 in the Hang Seng Corporate Sustainability Index for the eighth consecutive year. We have also maintained our Global Sector Leader title under the mixed-use category for the GRESB for the ninth consecutive year. We also received a Pioneer Award in the Green Building Leadership in the developer category at the Green Building Award 2025 of Hong Kong GPC.

2025 was a defining year for our sustainable development strategy. I'm pleased to report that we have achieved most of our 2025 sustainability targets across our pillars as highlighted here. Reaching this milestone demonstrates our strength of our long-term planning, effective execution and successful integration of sustainability into our business strategy and operations.

For climate change, attaining net-zero emissions by 2050 remains one of our highest sustainability priorities, and we are well on track. We achieved an absolute reduction of 52% in our Scope 1 and Scope 2 emissions, surpassing both our 2025 and 2030 science-based targets. Carbon intensity associated with tenants operations also decreased by 63%, exceeding our 2030 target.

We continue to ramp up our renewable energy adoption. Hong Kong RI Taikoo Hui and Taikoo Li Qiantan have secured off-site renewable electricity in Q2 and Q3 of 2025, respectively. Meanwhile, Taikoo Li Sanlitun, INDIGO, Taikoo Hui Guangzhou and Taikoo Li Chengdu continued to secure 100% off-site renewable electricity.

Moving on to tenant engagement. The Green Performance Pledge continued to gain momentum. The overall sign-up rate has exceeded our 2025 target, with more than 180 office tenants, representing 66% of our occupied lettable floor area had signed up. Thanks to the unwavering support from our office tenants in Hong Kong, we have achieved a collective reduction of approximately 436,000 kilowatts of electricity consumption and diverted over 200 tons of waste.

Our Green Kitchen Initiative also achieved a significant milestone by solicitating over 140 F&B tenants across our Hong Kong and Chinese Mainland portfolios committed to the initiative. In 2025, we made significant progress on our Green Retail Partnership with LVMH and Kering Group to enhance ESG performance across their stores.

We remain committed to zero harm. Through the successful implementation of our health and safety road map, supported by our investment in technology, training and awareness programs, we achieved a record best performance this year with our lost-time injury rate achieving a 53.6% year-on-year improvement. This year also marks the 25th anniversary of our community ambassador program, a milestone that reflects our long-standing commitment to community investment.

Our decarbonization and Green Building investment are supported by green financing. As of December 2025, approximately 70% of our current bond and loan facilities are from green financing, surpassing our 2025 target of 50%. In 2025, Swire Properties was awarded Best Issuer for Sustainable Finance Hong Kong, as well as Best Green Bond Real Estate Hong Kong at The Asset Triple A Awards.

Last but not the least, we undertook a comprehensive review of our SD 2030 Strategy. Reimagining our long-term sustainability ambitions to ensure they support our growth plan, we unveiled our new SD 2050 vision, building the world's most sustainable communities. Anchored by our 4 commitments to zero, zero harm, net-zero carbon, zero waste to landfill and water neutrality, SD 2050 is structured around 27 focus areas, with 140 KPIs established across 5 strategic pillars. Please stay tuned for the launch of this SD 2050 strategy in our sustainability report, which will be published in early April.

With that, I'm going to pass it back to Tim to talk about the outlook. Thank you.

Great. Thank you, Fanny.

We'll look to -- I'll try and summarize and then a few comments on the outlook. I think suffice to say, our strong performance in 2025 demonstrates the resilience of the business. And notwithstanding the current and fast-evolving events in the Gulf and the near-term volatility, we're well positioned to meet future challenges, thanks to the strength of the balance sheet, the quality of the portfolios and the diversity of the investment pipeline.

In Hong Kong, thanks to their differentiated positioning, our 3 malls have maintained 100% occupancy, retail sales outperforming the market. And in the Chinese Mainland, retail performance has also been strong. The outlook is positive as consumer sentiment improves and the positive impact of our trade mix upgrading is bearing fruit. Given the high vacancy rates, we expect the office sector to remain subdued in the Chinese Mainland, but we're confident that our portfolio will continue to benefit from the flight-to-quality trend.

In Hong Kong, our prime office portfolio has proven to be resilient and enjoying higher occupancy rates, reflecting that flight-to-quality, our successful placemaking efforts and industry-leading ESG performance. Leasing momentum is improving, thanks to the recovery in capital markets and the robust IPO pipeline. And as market rents stabilize, we expect negative reversions to narrow. We'll focus on tenant retention in anticipation of the gradually improving outlook for premium office stock in core locations.

On the resi front, market sentiment, as I said, in Hong Kong is more positive, and we're seeing healthy demand for our quality prime residential developments in Shanghai and in Southeast Asia. And our hotel business has got off to a good start in 2026.

So in summary, nearly 4 years in, and we're making good progress with the HKD 100 billion investment plan. We have a balanced and diversified portfolio, strong fundamentals supported by the transformative placemaking strategy and a commitment to global sustainability leadership. We remain focused on disciplined execution as these new projects approach completion, and we remain committed to enhancing shareholder returns and delivering mid-single-digit annual dividend growth.

So, just leaves me with one sort of final comment. Chairman has left me with an unenviable task. And importantly, it's to extend my thanks to Fanny as our Chief Financial Officer and our retiring CFO. I wasn't going to mention the years, but I think you can say over 30 years of working with the group -- with the Swire Group across all sectors, Fanny has had a truly diverse and international career with the group, a very successful career with the group.

Fanny has -- she had a huge impact on, I think, all colleagues and the businesses she's worked in way beyond her role as a CFO and an FD. We'll miss her good counsel. We'll miss her good humor, and we'll certainly miss her dedication and we wish her well in her retirement. I know she's preparing well. She's handing over to Roy and that handover has started early. And I think Roy is still smiling, still looking forward to the challenge. I think Fanny leaves the desk and her office in excellent shape. And anyway, if you could just maybe join me in thanking Fanny and wishing her well in her retirement.

Thank you.

I think on that note, we may have time for a couple of quick questions.

Yes. Thank you, Tim and Fanny. We'll open the floor to questions. As the briefing is currently on webcast, please wait for the mic before your questions. Please let us know your name and organization and please ask no more than 2 questions at a time.

Lady in the front in the middle?

Tim and Fanny, this is Cindy from Citi. So, 2 questions from me. First is on China retail. So do management expect to carry forward accelerating momentum into '26? How is the sentiment in the first 2 months and especially during the Chinese New Year? Apart from jewelry, what other trades that actually outperformed? And how much of such retail streams are actually translating into rents?

The second question is actually on CFO succession. So first is, shall we expect further continuity in Swire's capital allocation priority? And second, specifically for Fanny, I want to understand if there's anything you wish you could have accomplished during your tenure and will now pending to be due by the new CFO to carry on?

Yes, I'll take the first question. Fanny, you can take the second question. Thanks, Cindy. Well, in terms of Chinese Mainland retail, I mean, the answer is yes. We've seen that positive momentum and that acceleration carry forward into the first quarter of this year. As I mentioned, with a lot of the trade mix upgrading and certainly in Sanlitun, for example, those very substantial luxury boutiques only opened in December. So, we're seeing the benefits come through in effective rent, certainly in improved turnover rent in the first couple of months of the year.

What I would say is that the first 2 months have been very encouraging. We've seen double-digit improvements in retail sales, and we expect that to continue through into the second quarter as well. Footfall is extremely strong in all of our centers. And I think this experiential -- this interest in experiential retail is really driving footfall, and we are outperforming in our -- in the cities in which we operate.

In terms of which brands are doing well, I mean, the luxury brands are performing well in our centers, and that's testament to the investment and the quality of those new stores. You're right, I mean, jewelry is going well, and we're seeing some emerging domestic brands as well, which are performing extremely well in Guangzhou, in Sanlitun and in Shanghai. So, we think the domestic brands are very complementary to what we're doing with the international brands and with the investments that the luxury brands are making as well.

Thank you very much for your good questions, Cindy. First of all, there shouldn't be any change in our strategy overall. We have a clear strategy, HKD 100 billion plan. And in terms of our treasury policy, we also clearly laid down that in relation to our expansion in Chinese Mainland. Our preference is to continue our renminbi funding so that we can match the risk. And we continue to aim for mid-single-digit dividend growth going forward, riding on the recurring underlying income generated from the new projects. So, that shouldn't be a surprise at all then.

Your most difficult question as to what I haven't accomplished, I think this one is, I would say that I would love to see that I can create more shareholders' value by reducing the NAV discount. I hope that the shareholders over the 9 years should be happy with the dividend performance of this company, with 9 consecutive year of mid-single-digit dividend growth, but the share price could be better. My treasurer reminded me this morning that when I first joined Swire Properties, the share price was $26. So, I'm still under the water, I think, at the moment.

So, there will be a lot more work to be done. I think in order for the NAV discount to trade narrow down, we have done quite a lot in terms of this by having a successful capital recycling program. We did the share buyback before. We have a clear strategy. Our HKD 100 billion plan is executing on the right track. I think there may be things that the market is affecting the whole industry, which we can't change. But I'm sure that Roy will continue all these good works in order to create more sustainable long-term shareholders' value.

Thanks, Tim and Fanny. Next question? Gentleman in the second row.

This is Mark Leung from UBS. First of all, Fanny, really thanks a lot, Fanny, for your contributions. Regarding on your comment on the NAV discount, I want to follow up on that one. Because I think for Mainland actually has recently relaxed the asset restriction for C-REIT issuance. Do you have any plan to issue C-REIT in the near term? I think that's the first question.

And second question is regarding on the recurring income growth going forward. I'm not sure management can share any pre-leasing data for the 3 retail malls in Sanya, Guangzhou and Xi'an. That's my 2 questions.

Okay. Mark, thank you for your question. In relation to C-REIT, we have been watching the market development for many years. And we are very happy for the recent development, particularly a few regulatory restrictions being uplifted. Certainly, we will continue to look into this market, and we will not rule out any possibility on the C-REIT provided that it will provide some capital efficiency for shareholders' value creation then.

Mark, just on -- well, on the pre-leasing, I would say the pre-leasing is going well. In some of our centers, for example, in Julong Wan, we are opening these new centers in phases to enable some of the brands to occupy the space early. And what I would say, I think I mentioned in the briefing that most of the new centers are the Taikoo Li format. So rather than building the mall or the podium mall and then starting a pre-leasing process, actually, from the beginning, we are co-creating and designing these new malls with our brand partners. They are choosing locations. We are designing stores together so that we can open these stores early on in the opening process. So, that's a collaborative process. We are aligned with our strategy in the Chinese Mainland with the core brands. And that's a very exciting outlook for us in the next couple of years.

The next question, gentleman in the front?

Tim, Fanny, this is Karl Chan of JPMorgan. I have 2 questions. My first question is on Hong Kong retail because one of your peers mentioned that year-to-date, the tenant sales in the shopping malls in Hong Kong far exceeded expectation. So, just curious what we are seeing in the Hong Kong retail shopping malls? But then when we talk about rental reversion, I think most peers are still reporting a negative rental reversion for Hong Kong retail. So, just curious what's our outlook for rental reversion in our Hong Kong retail portfolio? So, that's my first question.

My second question is on capital recycling. Because if you look at Slide #6, which tracks the progress of disposal versus capital commitment. If we look at that chart, the blue bar, which is the cumulative disposal process is still lagging behind the capital commitment, right? So, just curious for 2026, what is the direction that we might anticipate? Do we expect that we will do more disposal in order to catch up the pace? Or do you think that 2026 will be a year for reinvestment? So, that would be my second question.

Fanny, should I take the first one, you take the second one? Okay. Thanks, Karl. Your question on Hong Kong retail, I mean, yes, we've had a good start in '26. Certainly, visitations and tourist visitations has been positive. So, we're seeing healthy sales growth this year. And yes, we're also seeing positive reversions in our retail malls, certainly in Pacific Place and in Citygate Outlets. Cityplaza may be slightly lagging, but overall, positive reversions for our retail portfolios.

In terms of capital recycling, I think we will continue to look for capital recycling opportunities. We mentioned before that what are considered to be a core and then what is -- so the remaining will be non-core then. We will continue to look for asset disposal in order to recycle the cash back to reinvest into the HKD 100 billion. But I think our criteria for the capital recycling is to also maximize the value of the divestment. So, there is no so-called specific target that we want to match the investment and also match the pace of that particular investment as well then.

Just to remind the opportunity going forward, we still have 2 floors to be handed over to SFC in the future, which is going to be confirmed. And apart from that, we also would look for -- continue to look for divestment opportunity going forward then.

In the interest of time, we'll take the last question. Gentleman in the second row. Yes.

Karl Choi from Bank of America. Two quick questions. First is about the impact from the Middle East conflicts, if any, so far. Just curious on the office side, are you seeing any slowdown in sort of decision-making as a result of what's happening? And on the flip side, have you heard about reduced leakage of retail sales, especially for your Mainland Chinese malls as a result of disruptions of travel, especially to Europe?

And second, a longer-term question. Since Swire is quite known for longer-term thinking, a lot of the capital markets are quite concerned about potential disruptions impact from AI. What's management's sort of latest thinking about that, especially as it pertains to office, a lot of concerns about less demand for office. Just curious if you could share your thoughts and if that could lead to some changes in your thinking about the portfolio mix and what's considered core versus non-core?

Thanks, Karl. Well, 3 very good questions. You helped me quite a lot with sort of giving me some of the answers. As far as the Middle East is concerned, well, I'd say in our office portfolio, the first couple of months of this year, as I mentioned, we're seeing a pickup in inquiries and also a pickup in leasing activity, demand for expansion space and new demand. But I think naturally, we would anticipate some hesitation around decision-making if things continue to escalate as they have been, and we'll be watching that very, very closely.

On the retail front, in terms of reduced leakage, I mean, we saw the benefit, I think, in maybe in Japan and in Thailand last year, where we saw reduced leakage to those markets and to the benefit of our retail malls in the Chinese Mainland. I think it's certainly possible if this continues that, that will be beneficial for Hong Kong and the Chinese Mainland retail sales as well.

In terms of capital flows and things, I mean, following some of the comments from the Financial Secretary, clearly, there are different views of what the impact might be in Hong Kong, but there is a view that there may be opportunities because of the stability in Hong Kong and Hong Kong's position as an international financial center. There may be some upside, notwithstanding the sort of the macro.

And your last question on office and the impact of AI. We're certainly giving this a lot of thought and a lot more thought, something we'll be trying to scenario plan. I mean, certainly, as far as the -- our office portfolio is concerned, it makes us focus on that debate around core, non-core and really making sure that we are putting the best product and the most innovative and resilient office product into the market so that we can continue to capture the flight-to-quality. There will be an impact inevitably on office demand. We want to make sure that we have the best product in the market and the best -- with our 2 flagships in Pacific Place and in Taikoo Place, they're ideally placed and extremely well amenitized and well connected. So, I think they will prove to be pretty resilient in any of those scenarios.

Thanks, Tim. And this will be the end to our analyst briefing today. Thank you very much for joining us.

Good afternoon, ladies and gentlemen. Welcome to Swire Properties 2025 Interim Results Analyst Briefing. May I first introduce the host of today's briefing. With us on stage are Mr. Tim Blackburn, Chief Executive of Swire Properties, and Ms. Fanny Lung, Finance Director of Swire Properties. Tim and Fanny will first take us through the 2025 interim results, then we'll proceed to a Q&A session.

Before we start the presentation, we will first take a look at a short video highlighting the company's key developments and milestones over the past six months. Please enjoy.

[Presentation]

Hope you all enjoyed the video. We will now invite our Chief Executive, Tim; and also our Chief Financial Officer, Fanny, to walk us through the presentation.

Tim, please? Thank you.

Thank you very much. Well, look, a very good afternoon. I'm glad we haven't had to bring you in on another rainy day. A very warm welcome to Swire Properties 2025 Interim Results Briefing. As usual, I'll take you through the results and the highlights for the first half of the year, and I'll touch on some of the key developments and the latest progress with our strategy across our core markets.

I'll share some portfolio updates, and Fanny will cover the financial highlights and the updates on ESG and our sustainability achievements. And then I'll close with some comments, and then we have some Q&A. Okay. So, despite the challenging operating environment, we reported an underlying profit of HKD 4.4 billion, an increase of 15% year-on-year, mainly due to our focus on capital recycling of our noncore assets in Miami.

Our recurring underlying profit decreased by 4% to HKD 3.4 billion, largely due to the softness in the Hong Kong office market, which is offset by resilient rental income from our retail portfolio and supported by the growing contribution of the Chinese Mainland. The company has declared an interim dividend per share of HKD 0.35, an increase of 3% on last year, which is consistent with our commitment to enhancing shareholder returns and our aim to deliver mid-single-digit annual growth in dividends and to pay out approximately 50% of our underlying profit in ordinary dividends over time.

I'm also pleased to note this represents a sustainable growth in dividends for nine consecutive years. So, with a strong balance sheet and a healthy gearing ratio, the business is on a solid financial footing. We're well placed to achieve our long-term growth targets, thanks to an active capital recycling strategy, a diverse development pipeline and value-accretive asset reinforcement opportunities, combined with the portfolio upgrade opportunities in Hong Kong and in the Chinese Mainland.

Since the year-end results, there have been several significant developments which are presented here in this slide. In May, we launched the second batch of residential presales at Lujiazui Taikoo Yuan Residences in Shanghai, which was very well received by the market and achieved among the highest prices in the Pudong primary residential market. And we're currently preparing to launch the third batch in the third quarter of this year.

As I mentioned earlier, on the capital recycling front, we've successfully completed the divestment of our interest in the retail and parking garages at Brickell City Centre in Miami in June. And in May and July, we completed the sale of two land plots adjacent to the mall. But finally, in Miami, we also acquired the remaining 25% interest in the Mandarin Oriental Hotel on Brickell Quay in preparation for potential redevelopment of that site.

And in Hong Kong, the SFC has confirmed they will complete the purchase of the 43rd floor at One Island East in December as planned. And finally, and you can see from photograph in the top left quadrant here, at the end of June, Louis Vuitton unveiled the Louis on Nanjing West Road in Shanghai, which is quite an extraordinary retail experience and has attracted daily crowds of over 100,000 people and has contributed significantly to strong retail sales performance at HK Tangui Taikoo Hui at Jing an in July.

This slide highlights our track record of continuous capital recycling. And thanks to efforts to divest of noncore assets in Miami, we successfully recycled HKD 6 billion in the first half of the year and increasing the cumulative disposal proceeds to almost HKD 58 billion, providing the liquidity to support the progressive dividend and our HKD 100 billion investment plan to drive growth for the next decade.

As I've previously reported, we made good progress over the past three years with our plans to invest HKD 100 billion across our three core markets with 67% now committed. In the Chinese Mainland, we've continued to focus on retail-led mixed-use projects in Tier 1 and emerging Tier 1 cities, and we are on track to double our GFA in the Chinese Mainland by 2032.

In Hong Kong, we continue to pace our plans for future expansion opportunities at Pacific Place and at Taikoo Place in light of the challenging market conditions. And at the same time, we are continuing to build a strong pipeline of trading projects in all markets. This slide illustrates the new completion -- sorry, the new project completion schedule for over 13 million square feet attributable GFA over the next five years.

In terms of new projects, we're focused on maintaining a balanced portfolio. And notably, in addition to the continuation of our retail-led strategy with the well-established Taikoo Li and Taikoo Hui brands in the Chinese Mainland, we now have a strong and diverse pipeline of premium residential projects in Hong Kong, Shanghai and Southeast Asia.

So, moving to the investment portfolio. The office market in Hong Kong remains challenging due to current oversupply and a lack of new demand. Nevertheless, there are signs that a capital markets-led recovery is underway, which should stimulate demand for premium office space. And we've seen an increase in the level of inquiries, especially at Pacific Place in the first six months of this year.

Overall occupancy of 91% across the office portfolio, we continue to outperform relative submarkets, consistent with the flight to quality trend and thanks to our commitment to placemaking and industry-leading ESG credentials. Occupancy at Pacific Place is at 94% and stable. and Taikoo Place occupancy at One Island East and One Taikoo Place was 91% and 89% across the other Taikoo Place towers, significantly above the average occupancy rate for Hong Kong East.

And while negative reversions have narrowed, rental levels continue to reflect the prevailing soft market environment, and we will continue to focus on tenant retention given the subdued market outlook. The attributable gross rental income was down 5% year-on-year. The attributable valuation of the portfolio was unchanged.

Despite these challenging conditions, the retail portfolio in Hong Kong has been resilient with occupancy at Pacific Place, City Plaza and Citygate Outlets maintained at 100%. Encouragingly, year-on-year retail sales growth was positive at Pacific Place and City Plaza and has been accelerating in the second quarter. Attributable gross rental income was down 2% year-on-year, attributable valuation for the overall portfolio -- retail portfolio in Hong Kong declined 1%.

Turning to the Chinese Mainland portfolio. Over the past decade, in terms of attributable gross rental income, we've delivered a steady CAGR of 11% across the Chinese Mainland portfolio, which now contributes 42% of our attributable gross rental income by region. Notably, rental contributions from the Chinese Mainland retail portfolio now exceed those from the Hong Kong office portfolio.

Over the long term, we anticipate a balanced contribution between our Chinese Mainland and Hong Kong portfolios as we gradually bring new projects online. With a strong pipeline of retail-led projects under development in the Chinese Mainland, our six operating malls are well positioned to increase market share, thanks to a constant process of asset reinforcement.

We're making good progress upgrading our three malls in Shanghai, Beijing and Chengdu, and we're proceeding with significant asset reinforcement and expansion plans at our three other malls in Shanghai, Beijing and Guangzhou. All these works will be completed in phases over the next 24 months.

Across the Chinese Mainland, our malls are all busy with strategic upgrades to improve the tenant mix and enhance the overall retail experience. And the slide illustrates the scale and the significance of these upgrading plans, especially at HKR Taikoo Hui and at Taikoo Li in Sanlitun as we introduce new luxury flagship stores and upgrade the overall retail experience.

I'd say in less than a month, the Louis in Taikoo Hui in Nanjing West Road has already established itself as a new landmark in the city. Continuing with the retail, while also challenging, we do see more positive signs of the recovery across our malls in the Chinese Mainland. And our two malls in Shanghai, Taikoo Li and Taikoo Li Sanlitun have outperformed.

Overall retail sales grew by 1% year-on-year on an attributable basis, significantly ahead of sales in the first half of 2019, and attributable gross rental income was positive in renminbi terms. Occupancy rates remain high across the whole portfolio and the triple valuation increased 4%.

Performance of the office portfolio in the Chinese Mainland was resilient despite the oversupply situation, and we remain exclusively focused on opportunities presented by the flight to quality for premium grade offices in core locations in Tier 1 cities, specifically in Guangzhou, Shanghai and in Beijing.

And many of our new retail-led mixed-use developments will complete over the next two years, starting with Julong Wan Phase 1 in December of this year. And thanks to the progress with our GBP 100 billion plan, we've built solid foundations for growth in the Chinese Mainland, especially for our retail-led portfolio with GFA almost doubling over the next five years.

Moving on to the residential trading portfolio. We've established a strong pipeline, 11 projects, as I mentioned, representing approximately 4 million square feet GFA on an attributable basis across all markets with phase completions over the next five years. And here, this slide has a bit more color on the trading portfolio in those cities, specifically in Shanghai and Hong Kong. Sales in La Montana and Mon Chang have been steady.

We're making plans to launch our two latest projects on Hong Kong Island. The Hedland Residences, the first significant residential development in Taiwan for over 20 years and an ultra-luxury house development on 6 Deepwater Bay Road in the third quarter. In Shanghai, we've been pleased with the response for high-quality prime Riverfront residences at Lujiazui Taikoo Yuan, and we're preparing to announce the launch of the third batch in the third quarter.

This slide includes an overview of the rest of the trading portfolio across all markets. just highlight in the Southeast Asia, where sales have been gradually picking up as we approach completion at Savyavasa in Jakarta. And we're excited to be launching our first residential project on Wireless Road in Bangkok in the fourth quarter of this year.

So, moving to the hotel portfolio. So, after a difficult period, the performance of the hotel portfolio has been steady despite a slower recovery in Hong Kong with occupancy and rates improving in the Chinese Mainland. We will continue to expand the House Collective through hotel management agreements, and we're looking forward to five new properties coming on stream over the next few years in the Chinese Mainland and in Tokyo.

So, on that note, I will pass over to Fanny.

Thank you, Tim. Let me try to move the screen. Okay, it's working well.

In the first half of 2025, our company delivered a strong performance with underlying profit increasing by 15% to $4.42 billion. This growth was primarily driven by gains from the disposal of our investments in Miami. Following the successful execution of our capital recycling strategy.

Recurring underlying profit declined by 4% to HKD $3.42 billion, reflecting reduced rental income from our Hong Kong office portfolio, higher sales and marketing expenses incurred for some residential trading projects in preparation for the sales launch, which was offset by the improved contribution from property investment in U.S. and a reduction in hotel losses.

Our investment properties portfolio remained stable overall. Attributable gross rental income decreased slightly by 2% year-on-year to HKD 7.335 billion. The Hong Kong office sector saw a 5% decline, reflecting ongoing market headwinds and pressure on new supply. However, our occupancy remained steady.

Hong Kong retail properties was almost fully let and continued to have check footfall, which with only a mild decrease in gross rental income, reflecting lower turnover rents. In the Chinese Mainland, retail rental income increased slightly by 1% in renminbi terms despite the disruption caused by upgrading works in some malls.

Sales and foot traffic continued to grow, particularly in the second quarter. Chinese Mainland office rental income declined by 3% due to subdued demand in major cities. Beko City Center in Miami recorded a 7% increase in rental income prior to its disposal due to improved trade mix and higher opening rate. We remain committed to delivering sustainable returns to our shareholders.

The first interim dividend for 2025 has increased by 3% to $0.35 per share, marking nine consecutive years of growth. Our dividend strategy aims for mid-single-digit annual growth and a payout of approximately half of underlying profit. Additionally, our share buyback program announced in August 2024 has been executed with 92.5 million shares repurchased for a total consideration of 1.457 billion, representing a 97% of the budget.

As of June 2025, valuation of our investment properties portfolio stands at 269.418 billion, 1% decrease from December 2024. This decline reflects fair value losses primarily from office investment properties in Hong Kong and the Chinese Mainland portfolio as well as disposal of investment properties in U.S., transfer of certain Hong Kong property to assets classified as held for sale -- these were partially offset by foreign exchange translation gains from our Chinese Mainland properties.

There was a reduction of 12.5 basis points in the capitalization rate for certain Hong Kong office properties. Supported by the strong cash inflows from our property s disposals, our net debt decreased slightly to 42.853 billion as of June 2025. Gearing ratio remains stable at 15.7%, in line with December 2024.

There was a significant improvement in our weighted average cost of debt, which reduced from 4.0% to 3.6% due to our continuous efforts to increase renminbi debt portion as well as lower HIBOR during the period. We continue to maintain a robust liquidity position. As of June 2025, available committed facilities increased to HKD 66.8 billion with around HKD 11 billion undrawn. Cash on hand rose to HKD 13.254 billion, bringing total liquidity to HKD 24.279 billion.

We continue to increase our renminbi funding proportion with 40% of our credit facilities now in renminbi, providing effective hedging to our investments in the Chinese Mainland at low funding cost. With the recent successful issuance of our [indiscernible] public bonds, we can expect that the renminbi funding proportion to further increase.

Green financing now contributes approximately 70% of our facilities, well above our 2025 target of 50%. Credit rating remained unchanged at A2 under Moody's and single A under Fitch. Our capital commitments as of June 2025 were around HKD 30 billion, including HKD 10.8 billion related to joint venture companies.

These commitments are strategically allocated across key developments in Hong Kong and the Chinese Mainland. Around HKD 11 billion is earmarked for Hong Kong projects and around HKD 19 billion for the Chinese Mainland, reflecting our continued investment in the long-term growth opportunities.

Now moving on to sustainability. Early this year, Swire Properties was named #1 globally in the Dow Jones Best-in-class World Index 2024, an achievement recognizing our leadership and ongoing commitment to sustainability. This year, we are proud to reach top 1% in the S&P Global CSA score for both Global and China in the S&P Sustainability Yearbook 2025, the only company in the real estate management and development industry to obtain this distinction in both the Global and China specific Edition of the Yearbook.

We're also excited to be the first Asia Pacific real estate developer to publish an S&P Global Ratings Climate Transition assessment, achieving an overall rating of medium green. On the social front, we are honored to be recognized as Randstad Hong Kong's most attractive employer in the property and real estate sector for 2025, marking the second consecutive year we have received this award.

On climate change, attaining net zero emissions by 2050 remains one of our highest sustainability priorities, and we are well on track to achieving this goal. In terms of our progress on our 1.5-degree aligned science-based targets, I'm glad to share that we continue to make remarkable progress.

We reduced 40% of our absolute Scope 1 and 2 carbon emissions in 2024 against the 2019 baseline, which exceeds our target set for 2025. We continued to explore opportunities to increase our off-site renewable electricity adoption. In 2025, 92% of our Chinese Mainland portfolio is estimated to be powered by renewable electricity.

Our City Gate outlets received the SE Region Technology Award 2025-'26 for commercial buildings existing building commissioning. In 2024 alone, City achieved annual energy savings of 770,000 kilowatt hours, a 17.7% reduction compared to 2021. Taikoo Li Sanlitun, Building NE, the Re and the basement car park have been awarded PEPEF evaluation design and operation, 3-star rating by the China Association of Building Energy Efficiency. It is the highest rating award and places us among the first batch of projects to be evaluated.

Moving on to tenant engagement. The flagship Green Performance Pledge, with more than 150 office tenants in Hong Kong and the Chinese Mainland, equivalent to 60% of our occupied lettable floor area has committed to collaborate with us in driving greener office operations, well exceeding our target of 50%.

At our annual TPP forum, over 110 tenants have been awarded for their sustainability achievements in the 2024 and 2025 cycle. Our Green Kitchen initiative also achieved a significant milestone for engaging over 130 F&B tenants across our Hong Kong and the Chinese Mainland portfolios committed to the initiative.

We have also expanded the program coverage from store fit-outs to store operation via the new operations recognition scheme, which recognizes existing F&B tenants efforts on environmental performance improvement from their daily operations.

For the green retail partnership, following the signing of the MOU with the LVMH Group last year, we have kept the momentum and formed a GRP committee with 10 LVMH Maison to prepare for the adoption plan of our jointly developed Eco-design Checklist for new projects in our Chinese Mainland portfolio.

This July, we further our efforts on retail brand engagement by signing a strategic partnership on sustainability with Kirin Group to signify joint efforts in sustainable store design and operations. Finally, building on the Make Way For Nature theme, we have launched the next phase of our sustainability [indiscernible] we engagement campaign with an enhanced focus on well-being inspired by nature's wisdom.

To bring this vision to life, we are rolling out a series of wellness centered engagement activities at Taikoo Place and Pacific Place aimed at fostering stronger connections with our tenants and community networks while promoting a healthier environment. We encourage you to stay tuned for these upcoming initiatives and events as we continue advancing our sustainability vision across the communities we serve.

So that brings to the end of my presentation, and I will now pass it back to Tim to wrap up on the outlook then.

Thank you, Fanny. Okay. So, this slide summarizes our view on the outlook for the second half of 2025. I'd say our performance in the first half continues to demonstrate the resilience of the business. And despite the uncertainty of the operating environment, we're well positioned to meet future challenges, thanks to the strength of the balance sheet, the quality of our properties and the diversity of the growth pipeline.

We remain committed to our strategy of active capital recycling and continuous investment in our core markets to deliver sustainable dividend growth for our shareholders. On the retail front, thanks to their differentiated positioning, our three malls in Hong Kong have maintained 100% occupancy with retail sales improving, and we'll continue to upgrade the trade mix and invest in major events, in loyalty programs and in premium customer lounges to improve the overall experience for local shoppers and for tourists alike.

In the Chinese Mainland, the retail business has been resilient, and we anticipate a period of relative stabilization in the retail market with the outlook being more positive as consumer sentiment improves and the positive impact of our trade mix upgrading is realized. Given high vacancy rates, we expect the office sector to remain subdued.

And despite the challenging market conditions for our Hong Kong office portfolio continues to be resilient, enjoying high occupancy, thanks to the flight to quality trend and reflecting our place-making efforts and industry-leading ESG performance. We have seen an increase in inquiries, especially Pacific Place, as I mentioned, and we anticipate the market will remain challenging and highly competitive given the supply-demand imbalance.

We will continue to focus on tenant retention in anticipation of a recovery for premium office over the medium term. The residential front, market sentiment in Hong Kong has been gradually improving, thanks to polish support, and we are seeing sustained demand for our residential properties in Shanghai.

There's currently no change to our strategy in Southeast Asia. We'll continue to focus on prime residential opportunities in Jakarta, Ho Chi Minh, in Bangkok and in Singapore. So, in summary, we have a balanced and diversified portfolio with strong fundamentals, supported by our active asset management and transformative placemaking strategy.

We continue to make steady progress with our HKD 100 billion investment plan to build a strong pipeline to meet our goal to enhance shareholder value and deliver sustainable annual dividend growth. Thank you.

Thank you, Tim and Fanny. As the briefing is currently on webcast, please raise your hand and wait for the mic for your questions. Please let us know your name, and organization and please ask no than two more questions.

This is Karl from JPMorgan. So, first of all, congratulations on the resilient results as well as the outstanding share price performance in the past year. So, I have two questions. The first one is on capital recycling. So, in the first half, we were able to execute the Miami disposal. So just curious, looking ahead for the next year, what kind of assets -- noncore assets that we might be thinking of disposing? Any direction in terms of timing, asset class or geography? So that's my first question on capital recycling.

And the second question is probably one that you might have anticipated, which is on share buyback. So just curious what's your latest thoughts on executing a new share buyback program, especially just curious, do you -- would you consider the current share price when you think about whether you should do a buyback? Because after the share price has jumped so much since you last started the buyback program.

And also, if we take reference to peers like Hongkong Land, now when they do the buyback, it's based on 20% of the disposal proceeds. So just curious from your perspective, when you think about whether you want to do buyback, would that be a potential direction that you might consider? So that's my two questions.

You take the first one Thanks, Karl. Yes. On sort of further opportunities for capital recycling, we've already started on that both obviously for the second half. And we -- as I mentioned earlier, we've managed to complete the divestment of land site in Miami or North Squared. So that's the first of our divestment plans in the second half.

And as I mentioned, we have confirmed the sale or the completion of the 43rd floor of One Island East, which will be completed on the 31st of December this year. So those are two examples. And then we'll continue to look for other opportunities, specifically in Hong Kong for divestment of noncore assets in the second half.

Okay. Karl, thank you for your question on share buyback. If you don't ask this question, I will be disappointed. Our share buyback or strategy in relation to that will not refer to other companies. I think we always have our strategy. But let me explain it again. It's our primary aim is to deliver returns to shareholders through sustainable dividend growth, and we will prioritize our capital to achieve this objective. Targeting mid-single-digit growth in annual dividend.

So, this is our priority. And in terms of share buyback, we always say that share buyback is part of our broader allocation -- capital allocation plan, which will be evaluated on and off together with the remaining investment under the $100 million plan. But we also need to take into account other factors, for example, like market conditions and as well as the impact to our FFO and also whether we'll be restricted by the stock exchange requirement, et cetera, and et cetera.

So, this has always been our strategy on share buyback, and we will not refer to any one company, other company in Hong Kong, and we have our own strategy on that.

Next question, gentleman in the second row in the middle.

This is Raymond from HSBC. So, the two questions. The first question is more on the longer term, which is about 100 billion investment plan. So, as you mentioned, like 2/3 of the capital has been already committed. So, like if you look at like the coming in the next two years, actually, there are quite a lot of projects to be complete.

So like -- should we expect like in terms of acquisitions or the pace is going to accelerate like in particular 2026 or 2027 instead of like focusing on execution? Like another actually, -- just a quick idea is like in the report, you actually mentioned that there are some uncommitted projects in the emerging Tier 1 cities and Tier 1 cities like Shenzhen. Can you -- can management provide us some more color here?

And the second question is about tenant sales performance in Mainland China. So, as we see that like a very strong performance in the second quarter, in particular, the [indiscernible] So can we -- can management share more color like how do we see the tenant sales performance like in the upcoming 6 to 12 months' time? Do you see that more opportunity for you to capture more market shares in those projects that you have exposures?

Yes. I mean with regard to the 100 billion plans, we announced the plan in 2022. It's broadly determined as a 10-year plan. And we've been encouraged by the opportunities that we've seen, and we've been able to make a very good start, particularly in the Chinese Mainland, and that's been somewhat opportunistic.

I think the next couple of years, I think you're right with the volume of projects that we have and the market conditions that we are working with, we're very focused on the quality of our execution to make sure that we can deliver these projects on time and to the quality that we would expect based on our track record in the Chinese Mainland, where we've worked extremely hard over the last decade or so to build the Taikoo Li and the Taikoo Hui brands.

That said, we remain committed to identifying an opportunity, certainly a retail-led opportunity in Shenzhen. We've said that many times in these discussions in the past. And if the right opportunity came along, then I think we would still look very seriously at that. I think in Hong Kong, similarly, we have some existing land bank in Taikoo Place, which we are ready to develop at the time when we feel more confident in the outlook for the office market.

So, we'll time that and we have the ability to time that when we feel more confident in market conditions. And then in Southeast Asia, I think the strategy is somewhat opportunistic because it's by the nature of residential trading. As we get more confident in new markets, like, for example, in Thailand, as we see how our launch goes, then that will give us an opportunity to consider investing in further projects in that market. And we are continuing to look for opportunities in Ho Chi Minh. Unfortunately, availability of land is still slower than we would like.

And in Singapore, we haven't found the right opportunities yet. It's a very competitive market, but we continue to believe that Singapore is an appropriate fit within our strategy and within our portfolio.

I think, Raymond, in terms of the overall sales performance, I think clearly, we are taking market share because if you look across our Chinese Mainland portfolio, our retail sales performance have been comparatively much better than our competitors. And I think that is down to a very unique nature of our business is because we keep upgrading our shopping malls, and we have a lot of activities, marketing activities in order to increase the sales performance of our portfolio.

And each of the Taikoo Li, as T mentioned about, is very unique in terms of design and operation as well as the outlook. And so, I think that's contributed quite a lot to -- as well as to the good management team that we have in our Chinese Mainland portfolio. So, under the background of a very tough retail market. I think the -- our management team and the credibility of our unique Taikoo Li and Taikoo Hui brand play a lot to our better performance in the market then.

Thanks, Fanny. Lady in the front, first row.

This is Cindy from Citi. I have two questions. The first is on the planned retirement of Fanny. So just wondering like you are still young and energetic. So, what's your consideration for the retirement at this time and how the Board received that? And will you stay at other positions as well group afterwards?

The second question is on Hong Kong office. So, I think just now team mentioned that there has been increasing inquiry at Pacific Place. So, does it coming mostly from financial sector or any other sectors? Is it expansion or relocation? And how about Taikoo Place? And given the increase in current rate, would you think it is possible for, say, nor negative reversion into the second half of this year?

And another thing on office side, you mentioned reduction in cap rate for some assets. So, what's the rationale behind?

That s three questions there. I'm not sure the first question is for Fanny or for me, but you're right, Fanny still remains incredibly energetic and it's far too young to be even considering retiring. But Fanny will -- has planned for a long time to retire towards the middle of next year, and she will continue to serve the company in her capacity as the Chief Financial Officer at least until May of 2026.

Fanny you have the last word on that, but -- you'll see plenty of Fanny, don't worry in the over the next year. Maybe -- well, I'll take the second question, I think, was on inquiries. So, we're seeing, as I said -- just over 30% increase in inquiries in the first 6 months of this year relative to last year. And inquiries are coming from a variety of different tenants with different requirements. In some cases, it is relocations, but we can offer solutions within the portfolio.

For example, tenants who are looking to downsize can move from specific 1 and 2 Pacific Place into 5 and 6 Pacific Place, 5 Pacific Place is now at 100% occupancy in 6 Pacific Place is increasing. And then within Taikoo Place, tenants are looking to relocate within the portfolio, either expanding or reducing their requirements or upgrading into higher quality and higher spec buildings.

And the requirement is coming from most areas, reflective of the sort of diverse rent roll that we have in Pacific Place and in Taikoo Place. But obviously, financial services, insurance companies, retail, et cetera. Last question was on cap rates.

Right. In terms of cap rates, I think the office sector, we -- I highlighted that there was a reduction in cap rate of 12.5 basis points, which is referencing the latest market transaction, particularly the exchange transactions that we have in the market. In terms of our valuation, it's normally done biannually by an independent valuer. So, they take a look at the reference like the transaction rate that they can find in the market.

Thanks Tim and Fanny. In the interest of time, we'll take the last question, gentleman in the front.

This is Mark Leung from UBS. I got two questions. I think the first question is regarding on the disposal pace. So, I think in the investment properties, we got about 450 million transferred to asset held for disposal. And may I check what kind of asset it is related to? And then also regarding on the pace of the Miami remaining MO redevelopments, would management consider to sell it as a raw land parcel or we hold it until completion? That's the first question.

And the second question is regarding on our upcoming new Mainland retail malls. What's kind of pre-leasing schedule right now, the rate and also the targeted yield on cost how do we look on maybe and Sanya, especially for Sanya because we see some policy updates regarding on the border closure.

Yes, Mark, I think if you're referring to the slide in Malaysian to investment property valuation, there is a 0.5 billion net transfer and also in our announcement about [indiscernible] for asset held for sale. This is in relation to the transaction that Tim mentioned about is for the floor of the One Island East, which because we already served the notice for completion, which will be within the next 12 months completion. So, the accounting requirement for that is you need to transfer that particular asset to asset held for sale there.

Your second question was on Miami on the redevelopment of the Mandarin Oriental site. So, we're currently evaluating options for this site. The hotel was closed at the end of the second quarter. And we're currently going through the process of developing a scheme, and we've launched the project for presales. We received a very strong interest in the site. It's a very attractive location on Brickell Key.

It's the last available site for development for residential. And we've sold approximately 50% of the first tower. But we'll continue to evaluate the pace of sales and the pricing that we've achieved so far looks very encouraging, and we're on track to make a decision a bit further down the line.

And then in terms of pre-leasing schedules in the Chinese Mainland, I think it's probably a bit early to say. But what I would say is we're seeing very strong interest from the brand partners and particularly the luxury brand partners that we've been working very closely with in the Chinese Mainland over the last couple of years. They've been confirming locations and working through that process of the brand. So that gives us a lot of encouragement in terms of the positioning of those new retail centers.

And in Sanya, I think you asked the question on Sanya. Yes, there's some more positive news on in terms of policy direction. I think we had hoped to hear a bit more in 2025, but it looks like by the 18th of December, there will be substantial progress towards the free trade zone, which had previously been announced by Beijing.

And our team are working very hard to understand exactly what that means for our Taikoo Li project in Sanya in partnership with CDG. But it's an exciting project. It's receiving very keen interest from the brand, and we look forward to more good news from Sanya in due course.

Thanks, Manny and Tim. And this concludes our Analyst Briefing today. Thank you for joining us.