CapitaLand Investment Limited (9CI.SI) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to CapitaLand Investment's First Half 2025 Financial Results Briefing. I'm Grace Chen, Head of Investor Relations. It's wonderful to see everyone this morning. Hard to believe that we are discussing our first half performance again, always in very joyous August, a special month for Singapore. Just past -- just the past weekend, we celebrated our 60th year of nation building. To all Singaporeans, Happy National Day. And in case you don't know, 2025 is also a milestone year for CLI. CapitaLand celebrates our 25th year in operations. We're very happy to have you with us, our investment community. We have our sell-side analysts, members of the media as well as our financiers. And I know many of you are also viewing us online, so a very warm welcome. Today, we will have our senior team walk us through our first half results. And first up, we have Mr. Andrew Lim, our Group COO, for opening remarks, and we'll pass the time to Paul Tham, our Group CFO, for -- to take us through the financials. Andrew, please?

Good morning, everyone. Welcome to our first post-Liberation Day results briefing. I'm sure all of you are feeling as liberated as we are, but I just want to -- rest assured that we are not going to do anything that does not mean a liberation from our principles of sound, sensible judgment for our journey towards our North Star. I just want to remind everyone that this -- what our North Star is for CLI. Break it down to 4 pieces. First is $200 billion, 2028, right? That should be a number that is familiar to everyone. The second is $500 million Lodging Management revenue for Kevin and his team. The third is a landing and a resolution on our China for China pivot, which is a process that is actively being undertaken, and I'm sure all of you are following closely. And the fourth is the growth of our private assets platform. If you look at us today on our funds business, we resemble something that is a penny-farthing. Have you guys -- I'm not sure if you're familiar with it, but it's an old-fashioned bicycle where one wheel is very large and one wheel is very small. You can ride it, but it's a little bit unstable. This, I think, describes our funds business today, right? We have a very large leading wheel in our Listed Funds business. We're Asia Pacific's largest REIT manager, and we're very proud of that. And we've done more in the last 12 months than anyone else in the REIT space. We have a relatively small funds business that we want to grow actively. And the North Star for us is that we turn the penny-faring into a racing bicycle, a proper road bike with 2 equal-sized wheels, much more stability, much more speed, much more agility, much more nimbleness. So that's our North Star. And the journey continues in first half 2025. Okay. Let's turn to -- as I mentioned, post liberation, macro uncertainty, high. What have we done in capital deployment and formation? We've been very busy, very busy on execution. Capital formation, $2.6 billion in total equity raised year-to-date. So some of that came after first half end. That's a 1.3x increase year-to-year. Capital deployment, putting that embedded FUM to work. We deployed $3.2 billion year-to-date. We have deployed $3.2 billion via funds in our REITs. That's a 79% increase year-on-year. Much of this is in our principal thematics, which we have shared with you, secular trends that we believe are cycle resilient and allow us to invest for the longer term, delivering returns to investors who see what we see, lodging, living, logistics, self-storage, private credit. SCCP and Wingate were our 2 signature M&A pieces over the last 6 months. It's important to note that SCCP were closed in March, Wingate closed in June. So any financial effects are going to be seen in the subsequent reporting periods. But over and above the financial effects, what's equally and fundamentally important is that we get these businesses aligned, integrated and starting to work towards our North Star, right? And we'll share a little bit more about that later. And of course, disciplined capital management, as all real estate-related companies are beneficiaries of. When rates come down, appetite goes up. We'll show you that in a second. Okay. So a minute about our 2 recent acquisitions, I'm sure you guys are very interested to see how we are doing. Important to remember that SC Capital today is a 40% associate. So from an accounting standpoint, from an ability to work together standpoint, formally, they are effectively still a separate company. They're running independently of us. But that's not to say that strategic collaborations, ideas, us meeting and sharing strategies are not -- is not taking place on a very often -- on a very common basis, very frequently. So we meet with Suchad all the time. Suchad is an incredibly entrepreneurial ideas guy, and he's constantly coming to us with new ideas, which we are co-creating with him, trying to figure out how best to make the 2 companies work together to extract the best of both companies as we run effectively independently for the time being. Where is SC strong in? SC is strong in hospitality, particularly, and hospitality -- in Japan hospitality. Where are we strong in? We are strong in lodging around the world, and this is a very natural synergy for us to begin to start that strategic collaboration. And I'll give you an idea that we are working on a bit later. Wingate is a very different proposition. Wingate, we just consummated it, closed it, 100% subsidiary. We can work absolutely together as one, and we are doing that right now. I believe that we are doing that at a perfect time because, as I will share with you, private credit to me, to us as an organization is prime for growth in Asia Pacific. So we've already got some of Wingate products in position to take to our capital partners in Asia Pacific. The initial interest has been very strong, and I am highly confident we will start to see the fruits of the Wingate combination very soon in second half. I'll take a few slides to walk you through where we are on our 4 verticals, starting with our Listed platform. As I'm sure all of you who watch the market and report on the market know, core and core plus is back with a bang. What's the principal reason for this? I think it's interest rates. We are quite clearly past peak rates. And as peak rates come down, spreads to NPI yields start to make sense again and allow investors to come in and look at core and core plus. And as a result, we can see that our REITs have been very busy in the last 6 months, able to raise capital and, importantly, able to deploy capital where we've seen total transaction values now north of $3 billion in the year-to-date period. So again, this is our crown jewel business. Let's think about the earnings, high, high-quality recurring income, perpetual capital. And this is to us, again, that big wheel in our penny-farthing, one that we're very proud of and one that we are still looking to grow with the acquisition of 40% acquisition of JHR earlier this year and something very interesting brewing in China, second half of the year. Private Funds, work in progress. Total equity raised, as I mentioned, up 29% year-on-year. So amidst a challenging capital raise environment, right, capital raise volumes are still down, especially for real estate strategies. We are punching at and above our weight and are doing better than we were this time last year, so up 29%. We, again, are investing in the thematics we've shared before, are important to us and secular to us for growth, lodging, living, logistics, self-storage, private credit. You can see examples across the products that are successfully being able to deploy the capital that LPs are entrusting with us. What's equally important is that the next 12 months has a healthy growth pipeline. We've got over $2 billion of targeted FUM coming in across these strategics and thematics. We are highly confident we will close our CLARA II living fund. We have an APAC credit fund that is substantially seeded -- pre-seeded and has started soft launching. We have an APAC living fund that's in the works. This is the product we are working closely with Suchad and SC Capital team on to harness the strengths of both teams, to see whether we can come out with a bang and really make a statement on the living space in Asia. In India, we are capitalizing on this very strong wave of optimism, tailwinds in the logistics space as well as the DC space. We're confident in the next 12 months we should be able to put out product that caters to both of these very important trends. Now I want to take a minute to talk about private credit. We -- based on our house market research, the Asia Pacific credit market -- overall credit market is somewhere around USD 63 trillion. 80% of that is held by the banks. That's an incredibly huge number. Now, obviously, not all of the markets are accessible. We are including difficult-to-reach markets as well, but it's a massive number for Asia Pacific. If we are able to convert just 1% of that bank channel to private credit, that's about $500 billion in a market size for Asia Pacific private credit. Today, the private credit fund product as a whole is about $21 billion. And so from just that simple view of it, if you believe that there is room to grow the private credit space, we are in at a very early stage of a long secular growth cycle for Asia Pacific. The same type of growth cycle that we saw in the U.S. first, and we are seeing in Europe now. We are already seeing markets in Asia that are leading in that front. Australia is by far the one that comes to mind first, which is why we bought Wingate, and Wingate falls in very nicely into that strategic road map. Other markets that are interesting, Korea, obviously, Singapore comes into play and India. Where are we on the product side? We have 2 products in credit. We have Asia Pacific credit program 1 and Korea credit program 1. Both were fully deployed, both have closed and both are winding down, with returns that are comfortably above our target hurdles that we committed to our LPs. We are now in the process of working on KCP 2 and ACP 2. With the track record from the earlier predecessors, I think this gives us an excellent chance of securing re-ups from our existing LPs, but also raising the size, raising the mandate, becoming more discretionary in our nature and becoming more scalable, which is obviously the end goal for all of our private equity products. So credit is in a very interesting space for us. It's incredibly strategic. It will help us grow that wheel for PERA. It gives us a proper bicycle, PERA bicycle. And we've got a very special guest here that Chee Koon will introduce to you in not-too-distant future. So that's the private equity side of things, right? We are absolutely executing. We are not there yet. I think you all can see that. But we are highly confident that we are heading towards our North Star. North Star is $200 billion, both on the funds -- Listed Funds and the Private Funds side. If we continue capital raise effectively, we continue to manufacture good products that LPs want and we continue to deliver returns through underwriting, we will get there. Okay. Now back just across to our operating platforms. Lodging, again, growth mode, 9,400 units above that signed across 43 properties, higher clip than same time last year. Openings are slightly lower, but Kevin says he's -- we are confident this is a second half phenomenon. It will catch up. And importantly, RevPAU is staying relatively consistent. Lots of activity happening as our Lodging Management team marches towards its own North Star, $500 million revenue, 2028. And on the Commercial Management side, Ervin and his team are doing what we set out to do, continuing to look after our customers well. And by looking after our customers well, we can manage our occupancy costs while driving positive rent reversion, which is the name of the game. At the same time, we are growing our third-party contracts as a service. You can see that dotted box, that contribution is going up. You see that on the right-hand side pie chart, and you also see better diversification across our 3 core markets of Singapore, China, and now India is coming on very nicely as a consistent contributor as our BP, our logistics and suburban office platform begins to crystallize and attain critical mass. And underpinning all of that is our digital platform, CapitaStar, which is very powerful, incredibly popular and growing nicely. Okay. I'll just end off with one other point I'd like to make to all of you and that we also talked a little bit about better balance across capital employment, and I think this sums it up nicely. Total investments across all 4 of our core growth markets grew 60% to $1.3 billion year-to-date. So again, we said this to you, we wanted to get better balance at Investor Day across our core geographies. We are investing heavily into India. Those of you would have seen, we signed a highly strategic monumental MOU with the Maharashtra government for over $2 billion to invest in that, which gives us nice seed platforms into the vehicles that I talked about. Korea credit program is well underway. Australia, we've got Wingate that will lead the way, lead the charge in our private credit growth. And in Japan, we have our strategic partnership with SC Capital, alongside the second largest lodging REIT that is already listed there. So there's a lot of activity going on in our core markets, which should again allow us to achieve that balance by 2028. Okay. So I'll pass it to Paul a bit. I don't want to sound overly rosy. There are a few headwinds. I'll just leave some of these headwinds with you. As we are executing, as I hope you can see, we are seeing that uncertainty remains incredibly high, right, thanks to Liberation Day and a host of other factors. What is happening is that people are taking longer as a result to make decisions. Investment decisions, M&A decisions, tenancy decisions, all of these things are taking longer because people are nervous, right? How do I sign a lease for the next 3 years when I don't know what's happening next week? How do I invest with this capital manager if I have no idea what interest rates will be or whether this country will be at war, that country will have a tariff of 2x, et cetera, et cetera? These things confuse and obfuscate and make life difficult for decision-makers. We empathize absolutely. Our data tells us that to raise a fund these days takes 2 years. So you are going to expect to see choppiness from an accounting period to accounting period. If a fund closes a $2 billion -- $5 billion fund in that first half, it's not because they worked for 3 months and got that done across the line. It's because they worked for 24 months, and they've managed to get that across the line at that accounting period and reported that. So please bear with us. If you see choppiness in our results, it's not because we've lost our -- we kept -- we're not looking at the North Star. We are still very focused on the North Star, but these things take time, and accounting periods are accounting periods, right? We're very confident. Second half, you will see the fruits of our labor for first half come through as we invest further and further for the 2028 goal. Second one of these is structural, right? China continues to compound us in the market. We are doing everything we can to give Tze Shyang the time and the effort and the resources to work through this very uncertain period for China. But as I think all of you can see, they are taking longer to sort out their problems. And again, Liberation Day is not helping. So it is an issue for us. We know China plays a big part of our business. We are taking steps to balance and readdress that. But in the meantime, it's still a large part of the business that requires a lot of our time and effort and resources, not least of Tze Shyang and his team. So we'll do everything we can, but I think it's going to take a little bit more time and effort. The hope that we would get a resolution at the political level has not materialized. So there may be sentiment-driven issues that have affected our portfolios. If that sentiment lingers longer, it starts to calcify. And that's -- then that's when we have other issues we have to address. For now, we're still working through that, making sure that we can do everything we can. We are punching above our weight. Our assets are doing well. Retail is the most resilient of our asset classes in China, and it's our largest -- by far, our largest portfolio in China. And again, I talked about an event coming up in September, which should allow us to shine the light to say that for the right retail assets, for the right manager, for the right sponsor, there is capital that we'll deploy for real estate. And we are confident that come late September, we'll be able to deliver that to you, make a strong statement for China. Okay. Let me stop there and turn it over to Paul, who will justify all of that with numbers.

When Andrew said that accounting periods are accounting periods, he makes it sound that I did something bad. I think on behalf of the entire finance team, we are offended by that statement. So let me just run through first half numbers. There were some adjustments, obviously, because of first half numbers, but it may not look as pretty as we would like, as Andrew indicated. But the truth is there is actually a fair bit of strength in the underlying numbers, which is why I think we're a little bit less concerned about some of the financials from -- versus what you see for the headline numbers. So maybe let me start with operating PATMI on the left side. So operating PATMI, down first half versus first half, down 12%. The reasons being, I think, what most of you are expecting [indiscernible] and we've lost contribution from divested assets, lower fund performance. Perhaps I start with the corporate and others, which was a plus $17 million down to a negative $8 million for us. This was -- we had a one-off tax write-back last year due to previous restructuring and a write-back of some of the provisions, which is an $18 million swing. So I would take that as a one-off. We don't really look at that as part of our core operations. So the movement in the corporate side does not -- is not such a major factor for us. So really, where we focus on is the 2 boxes, the real estate investment income and the fee income. So if you look at the real estate investment income, the $104 million to $106 million, most of you know we divested $5 billion worth of assets last year. We divested ION Orchard, U.S. multifamily, Suzhou iHub, and we were expecting a dip in our Real Estate Investment Business. I have to say, I think a lot of credit to our treasury team, to some of our investment teams, we were able to redeploy fast enough. India funds started to contribute more. Interest savings started to contribute more. And we made up for what we thought was going to be an earnings gap in the Real Estate Investment Business. That for us has turned out much better than we expected. Hopefully, we can continue this into the second half. We still have a little bit ways that we want to grow. But I would say from the teams that have been working on improving either asset performance or some of the returns, they've made up for what we thought was going to be a gap. So on that front, I think we're actually pretty comfortable. And I can't say we take full credit of that. Obviously, lower interest rate expectations helped as well. We've been able to -- working with some of the banks who are here as well, we've been able to cut some of our costs down on the interest side, which has helped buffer this up as well. So that's actually been a surprising strength for us this first half and we think will continue into the second half. The second part, and this was a little bit disappointing to us, was the Fee Business. So the Fee Business is showing that it is down $13 million. The comfort that we take here is, as most of you know, we started the first half pretty positive. As Andrew had mentioned, we thought we were going to see a number of transactions happen in the first half. And then when Liberation Day happened, everything was put on hold. Buying and selling was put on hold. And so we had a 2- to 3-month period where things were paused. But we think we are somewhat out of that, and you would have seen that from some of the transactions that are more public, at least have been announced, The Ritz, obviously, there is 9 Tai Seng, 5 Science Park, CapitaSpring. Between those, that is $1.7 billion worth of deals. $1.7 billion worth of deals, as you know, as a fund manager, that means $17 million worth of fees for us. So we know we can make up the transaction and performance fees in the second half. I think what we took the encouragement from is the fact that the recurring fee number is still up 5%. So even though we know the numbers look a little bit weak, I think we're much more confident in the second half delivery on these different components. The portfolio gains in the middle, this is really a little bit more of just movement on balance sheet due to distribution in species, some of the private placements, not vastly dissimilar to last year first half. I think where the difference will come going forward is, obviously, last year, we had the big divestment of ION Orchard. So this year, we are still counting on a few more divestments from India, from China to make up some of where we would hope that portfolio gains comes from, but still confident that we will see a markup in that space. So when we look at the overall, though it's down 13%, we certainly don't expect that to continue in the second half, just being able to see the transactions and the pipeline. So a little bit more confident on the outlook going forward. On the operating PATMI, so we stay in -- about the same range, about that 60% from the Fee Business, 40% from the Real Estate Investment Business. The goal is still to get this to 70% or higher than 70% from the Fee Business. The funny thing is as you look through some of our stats, sometimes I get questions, investors are worried, particularly, I think this quarter, why did your revenues drop so much? Why is your balance sheet drop so much? This is positive for us. This means we're actually headed in the right direction, right? The deconsolidation of class, obviously, is a 20-plus percent drop in revenue, but no difference in contribution to the bottom line for us. So this is us moving in the direction -- right direction. And we would expect that over the next 6 months and 12 months after that, we would expect a greater shift towards even more so on the Fee Business. Just very quick on the overall revenues. I'll talk through the fee income on the next slide a little bit more. But just to show you on the real estate investment revenues, as mentioned, that big drop for us is really the CLAS, the deconsolidation of CapitaLand Ascott Trust. Without the deconsolidation, the revenues are about flat, which is where we expect it to be. Okay. So the main part of our business, and this was the part that Andrew articulated so well, and I had to search what a penny-farthing was while he was speaking. That was the Google search, I think, for half the CLI team. If you don't know, Andrew is actually a fairly avid cyclist. I've tried to run him off the road a few times, but I have failed, which is why he's still here. But he's quite right, right? The goal is to balance out these 2 Listed and Private Funds for us. Now Listed is doing very well. As you can see the recurring, up $8 million. The addition of JHR, Japan Hotel REIT, from SC Capital is putting that to nice growth, and this is before the transaction fees kick in. So we expect Listed Funds, thanks to the work of the team, William, Tony, all of our Listed Funds teams. The REITs are doing well from both fronts, right? They're seeing DPU increases, which is helping improve our NPI, but we're also seeing transactions. So this part of the business, together with the new C-REIT listing, we're pretty comfortable it's going to grow quite nicely. It's also got by far the best profit margins for us. Private Funds Management numbers are down because, well, one, as you all know, one is obviously the performance fees. Last year, we had healthy performance fees from Korea. So that drop-off didn't help us this year. The second component, you would also know, last year, we mentioned that for some of the China funds, we had to give fee reductions, and that impacted the numbers. Where the growth is going to come from is the numbers here only show 1 month of Wingate contribution and slightly over 3 months of SC Capital contribution. So just to give you an indication, as you can see sort of that $4 million that we highlight, about $3 million of that is from 1 month of Wingate. So with the private credit piece, which Andrew mentioned and we'll talk about a little bit more later on today, we do expect healthy growth from the M&A in this aspect. Because of that, I think we're very confident that Private Funds is clearly going to be positive in the second half of the year, and we should outpace last year's revenue growth numbers just based purely on the math. So I think on that side, that would put Private Funds on a nice growth pace, hopefully scales up over time. So as Andrew mentioned, we get a little bit more equal contribution from the 2, and that's certainly the goal. Lodging Management, continuous good steady growth. Does not quite have the same RevPAU tailwinds that we had from a few years back where RevPAU went up by 40%, went up by 20%. But what the team is still doing nicely is we're still seeing good signings, good openings, which means that based on the pipeline, we know that growth will come quite naturally, not at the speed potentially that we would like, but that's why we always put pressure on Kevin on this. And then Commercial Management, flat this quarter. Last few years, obviously, we had some uplift. There's going to be a little bit of an up and down, nice steady income. But clearly, as we do more third-party signings and NPI improves in some of our properties, we'll see an uplift here as well. So overall, on the right-hand side, you can see on a total basis, up 2%, recurring up 5%. We expect this will pick up pace in second half. On the Real Estate Investment Business, just to give you a sense of a little bit of a breakdown, obviously, that CLAS contribution on revenues and EBITDA and then operating EBITDA. You can see where that drop-off is for operating EBITDA. If you look at it right at the bottom on the right-hand side, you would see the balance sheet investments. This component is going to continue to decline for us, and this is intentional. As we recycle assets, this will come down. The big drop, $19 million for us was largely ION Orchard and some contribution from U.S. multifamily as well. So we expect that portion to come down. Private Funds, as some of our value-add funds have started to improve, we expect that contribution will naturally increase. Some of our investments in the Private Funds have not historically been contributing very much because they were development funds, but we're starting to see some of that uplift. So that's positive for us. And then on the listed REITs, most of you follow them quite well, and so this is just our share of the earnings. This part will also likely come down somewhat because we are lowering our stakes on The Ritz. So obviously, we divested -- sorry, we sold versus -- last year this time, we sold $150 million of CapitaLand Ascott Trust. We did the distribution and species of CICT. So that's why the earnings have come down, despite the fact that the REITs themselves are actually doing slightly better. So this, as I mentioned, it may seem a little bit contrary, but this component coming down means we are actually headed in the right direction. This is our expectation going forward. So what's going to happen to that money? So we are recycling some of that investments. So balance sheet movement on the top, not as much this first quarter. Truth be told, the number movements were so small that initially when finance and I discussed, we thought they were rounding errors. But it was because it was a very slow first half for us. It certainly did not meet expectations for us on where we thought it would be. But we expect in the second half that those transactions that would have happened in first half should happen in the second half. So we expect balance sheet divestments to continue. We expect that $4.3 billion to come down further, allowing us more capital for potential reinvestment into new areas. Private Funds, this, on the other hand, will increase. We will be investing more. We are becoming more capital efficient. We take smaller stakes in our funds. In the new funds, we certainly have smaller stakes than we do in the old funds. So we get better capital efficiency. But this number, we expect, will increase as we reinvest into a number of the new funds that are launching. And then finally, on the Listed Funds, as mentioned, this is still part of our intent to reduce our stakes. To be fair, some of the stake reduction is not coming necessarily from a divestment. Most of you would know, CICT went out and raised $600 million just recently. So from a CLI perspective, as we didn't participate in the placement, we will naturally dilute down. So in certain cases, we expect some funds back. In certain cases, we just expect improved capital efficiency. So we're going to continue on this path. This should continue to trend downward overall, and we expect that this will get reinvested into a lot of growth opportunities for us, which is exactly why when we talk about our debt headroom, we believe from where our gearing is right now at 0.46, we believe we've got $3 billion to $6 billion that we can spend on M&A opportunities, on organic growth, on seeding new funds, on warehousing, some of which Andrew mentioned earlier. For instance, we are warehousing credit assets. We are warehousing lodging assets. So some of this is meant to cycle and fund into growth. This is what we are using the debt headroom for. Maybe the only other thing to highlight on this slide is interest cost has come down for us. So from 4.4% down to 4.0%. If this seems higher than most of you would expect, that is partly because we do borrow in Aussie dollars, we borrow in U.S. dollars for a lot of our other investments. But we expect this 4% to trend downward for us as well. Hopefully, as rate cuts do kick in, if the U.S. does go ahead in September with a cut, obviously, that also helps us on the Singapore side and across the borrowing. Australia also just cut just this past week. So we do expect borrowing costs will slide for us as well. So that is something that we think not just helps us on the interest rate savings, but also, as most of you know, this means we will see more deals moving as there's a little bit more positivity in the market. So that's it on our financials. Just the last closing slide. A lot of what Andrew mentioned, this is where we're really focused on going ahead. We are building large thematic funds, living, lodging, logistics, self-storage, credit. These are areas that we are very much focused on. Our domestic renminbi business, somewhat more standalone, but the idea is as it goes to scale, similar to the 1B Master Fund that we did, the Sing 1B Master Fund that we did earlier this year, these give us better economics, so we get better margins, which is why we're focused on this. C-REIT listing should happen by fourth quarter, also be incremental to us in terms of fee earnings. M&A, we are continuing to look for more bolt-on opportunities, things to build the business areas where we can redeploy some of the capital that we're getting back, but also very conscious that we're trying very hard to make sure that we can capture the full synergies out of Wingate and SC Capital, having just completed those acquisitions. And then the last thing is just on the portfolio. Obviously, interest savings, a big plus for us second half of this year. Balance sheet recycling, hopefully, some portfolio gains from that as well, particularly out of markets like India. And then we are still conscious in making efforts towards our cost savings targets, improving organizational efficiency overall. So these are sort of key focus areas for us for the second half and things that we expect will be able to show up in the next accounting period, even if it didn't show up in this one. Thank you. I'll pass the time for Q&A. Chee Koon?

Thank you, Paul. I will invite Chee Koon; Paul, would you stay in front; and Andrew. And today, we will also have Kevin Goh, our CEO of Lodging as well as Ervin Yeo, our Chief Strategy Officer and CEO of Commercial Management, rising KOL in the property sector, if you follow his LinkedIn, join us for Q&A. Chee Koon, would you like to share some reflections before we start?

I see hands up so fast. I'll try to keep this short. Paul and Andrew have done such a great job in the presentation, so I'm increasingly trying to work myself out doing presentation. Thank you, Paul. Thank you, Andrew. So maybe just to reemphasize a few points on China. The pace of recycling has not been as fast as we would like in terms of reducing our balance sheet exposure. But with the formation of the China REIT and the setting up of the renminbi Master Fund with the insurance company, you should see increased activities happening. Sometimes things take a bit longer because of the approval processes that needs to take place in China, which are beyond our control. So that is the context, but things should happen. But also given the fact that because we have a long track record and reputation in China, we're actually getting a lot of inquiries from domestic capital to actually give us capital to look at more asset management growth. So the challenge is also on the China team to be able to build up new capabilities, again, that we can actually raise more domestic capital in China. It's just that we believe, fundamentally, we want to be able to build out the teams, find good deals. And it's on the basis that we can find good deals, underwrite good deals, then we take that capital. I mean, it's just the backdrop for the Chinese economy. It's a bit -- sometimes not so clear for us to underwrite the outlook. That's why we are a bit more careful in the amount of capital that we are prepared to take. So again, it is the fundamental basis of making sure that we want to be very focused on delivering high-quality, consistent earnings for our LPs and our investors, and we raise funds on that basis. So that's on China. Growth, I think Andrew has captured a lot. It's -- the REITs business is doing well, good engine because we have invested in the business since early 2000. I mean, when CLARA first started, for those of you who follow CapitaLand very closely, remember, it was a CCT, it was CMT, then there was an Ascott Trust when. I was running the Ascott business, the market cap was small -- asset base was small. It took us time to build it up to where it is. We managed to put the CCT and CMT together. At that point in time, it was probably controversial because it was done in the -- just during COVID time. But if you look back on some of the strategic moves that we have done, putting CCT, CMT to become CICT, I mean, today, you look at -- I mean, the market speaks for itself. We look at the Ascendas REITs, that came along because of the merger with Ascendas-Singbridge and how we -- also because Ascendas-Singbridge managed to put the Ascott Hospitality Trust and the Ascendas Hospitality Trust to become a much bigger vehicle. And once you have the size, you will be able to trade with a much lower cost of capital and be able to do a lot more deals and can compete more effectively against many other people. I mean, that was a very single-minded objective that we wanted to do, and it takes time. I mean, it took us years to get us to where it is today. And that's why I think that there's a lot more things that we can do on the listed space to create new listings in other jurisdictions or to create new products in Singapore as well. And that's something that we will focus on getting that through. And of course, the growth apart from -- on the Private Fund side, we are building up teams on the ground. There are different kinds of news that you are hearing about we are doing this deal, we are doing that deal. I'm sure some of you may ask me. But I think to -- being an investment manager, we will constantly be looking out for deals. Some of you may hear in the market, some of you may want me to comment, but we're not going to comment on any specific deals. But as an investment manager, if we think that there are good deals, structuring good deals, able to structure a good deals and can bring in capital and we can make good money for investors, naturally, we will look at it. So if you ask me on any specific comments on anything that you hear in the news, I am unable to comment. But I just want to tell you that it is our job to constantly be looking and structuring deal. And that happens because we really have deep boots on the ground. And through the -- when we started to restructure the business, building up relationship with the different capital partners, become more confident on the capital that will come together with us on some of the deals that we are doing, and that will be the kind of basis in how we look at deals. Of course, M&A side, apart from Wingate, apart from SC Capital, we will continue to look at good deals. But just again, I'd like to remind the audience is when we look at M&A, it's not just M&A just to bulk up on our AUM. We must find high-quality deals that if you buy a $2 billion platform, can we grow it to $10 billion, can we grow it to $15 billion. This is really the consideration when we look at M&A, okay? And at the end of it all, it's really about the people. We have been spending time curating the team, recruiting people. The team is a lot more international coming from people with strong private equity background because if you can't find good people with good -- the right value system, we will not be able to do good deals and be able to make sure that we invest well on behalf of the investors. And there's a lot of co-investment that takes place because we personally have to put in money to make sure that we are all aligned with the investors. With that, I also want to take the chance to introduce Kishore. I mean, we came out with the news. Kishore is joining us. He's going to help us to -- he's going to be the CEO for Alternative. He's going to drive -- help us to drive in terms of the credit business. And I think useful for him to just spend a few minutes just to introduce himself and maybe explain why he choose to join us, yes.

Thanks, Chee Koon, and good morning, everyone. Thanks for the welcome. So my name is Kishore Moorjani. I've been in the, I guess, private markets or private funds industry for about 30 years. In most industries, that would make you a dinosaur. Fortunately, this is one where it gives you more pattern recognition because your LLM resides in your brain for the most part. I spent the last 15 years at Blackstone, lived in Singapore for about 20 years now. At Blackstone, I ran a business called Tactical Opportunities. So that invested quite extensively in insurance, in credit, in particular in Australian credit business called La Trobe Financial, which we took from a small family-owned mortgage lender to today, I think, Asia's largest private credit manager at about AUD 20 billion of AUM. I've been in Singapore, as I said, for 20 years. So from afar, I've always looked at CLI as a brand that I think is pristine as a business that is -- I've always viewed as a brand with -- that's sort of a generator of safe returns with good discipline. Chee Koon, I've known for many years, and I've gotten to know much of the team over the last little while. I'm really excited to come in and work with this team to sort of expand into adjacencies beyond sort of the direct real estate place where, clearly, CLI has an incredible position of strength, but take that in a bold but very disciplined manner, right? So I clearly see there are areas where this brand with its balance sheet has the ability -- has a clear right to play and an ability to win, right? So we're going to approach it from that standpoint, take the experience of this team, complement it with people who understand the verticals that we're going into and look to capture that. So I'm looking -- I'm really excited about coming on board and working with Chee Koon, Paul, Andrew and the rest of the team. Thank you.

Thank you, Kishore. And with that, we will start our Q&A. Mervin from JPM is not around because he hurt his leg, and somebody is here to put up the hands for it. Terence, please.

Terence from JPMorgan. I just had 2 questions. First on acquisitions, I wanted to ask a little bit about how you're seeing acquisitions of other platforms. I understand that you have that $3 billion to $6 billion that you could potentially deploy. Were you looking more at bolt-on acquisitions or something a little bit more sizable? And in terms of timing, you mentioned that rates are falling. So how do you see multiples now? Is this the right time to get in? Or is there a risk that if you were to delay further, multiples could rise? And on the second question, I want to ask on divestments. Perhaps, could you touch a little bit more on some of the plans for second half, in particular, the China divestments, the C-REIT and also the Master Fund and potentially India, India data centers? I think that's quite interesting.

On the M&A side, we have been looking -- I mean, we -- and Janine probably looks at like 100 deals. Obviously, we say no to most deals because for the current situation, many of the GP with big exposure to private markets, actually, many of them had difficulties raising capital. So the -- we definitely will look for capabilities, whether to give us new sector expertise or market that can help to strengthen our market positioning. I mean, Wingate, the reason why we looked at Wingate was because we wanted to go into private credit. We just think that it's going to take a long time to just build up a team and do the business. So it's much faster to at least buy a platform that we are familiar with, the people that we know and use it to turbocharge the growth and -- through that, and it's happening. And will we look at more private credit platforms or adjacencies? Definitely. Asia-Pac is an area that I think is still relatively undeveloped, and there are adjacencies to the private credit business that can help to bolt on. I think those are interesting things that we will look at. In the real estate side, if there are things that we can do in terms of platform, say, on -- that further help us to deepen our capabilities on logistics, student accommodation or even data centers, we will look at it. So -- and potentially even new adjacency. If you take a step back, if you want to build an asset management business, we have real estate. Now we are building up private credit. Real estate from an asset management perspective, it's very dependent on interest rates. When the interest rate goes up, fundraising becomes very, very challenging. I mean, the advantage that we have is because we have the stable of REITs. That gives a lot of flexibility for us to be able to recycle assets for many of the funds that we have seeded. It may not be the only exit, but it's at least we offer options to many of the funds that we have created. Of course, if we can sell better pricing to third party, we should do that because we need to deliver best returns. But in the end, if we need to find liquidity, at least we have the REITs that we can fall back on, which I think is a good advantage. So real estate, private credit, the one that we are thinking deeper is whether we want to look into an adjacency in the real asset space. I mean, we are already in data centers, whether we want to go into broader infrastructure space, so that we build asset management company that has 3 verticals, still very much asset base, real estate, infrastructure. And then even the private credit, we want to do it on the asset base type of private credit opportunity. That's how we are thinking about it. But at this point in time, it's only real estate and private credit infrastructure, it's still data center, and it's an area that we are reviewing and seeing whether there's a meaningful way for us to look at this. I mean, it's going to take a long time to build from scratch. So if you're going to go into this, it has to be a meaningful type of platform.

I can take the other question on divestments. So as mentioned, so one of the areas we're looking at, obviously, is India. As most of you know, and we've been public and so has CapitaLand India Trust, we are looking at raising an India data center fund. That is probably targeted, we think, for the tail end of the year. Our more immediate focus is we actually have 2 India Logistics Funds, and these are legacy funds for us where we own 50% of the fund. So when we talk about our contribution to the Private Funds business, this is part of that. So the funds have -- both funds have done well at the point of near exit. So the intent for us is we are planning to exit these 2 funds and set up a core logistics India fund and another value-add fund. That will allow us to reduce our stakes, get some of our capital back and also get performance fees. So the hope is to do at least one of those transitions in the second half of this year. So with that, we are hopeful that we may also see some uplift in terms of gains. So that's the hard push for us on the India front. On the China side, as you all know, it's still a very challenging tough environment for China. Fortunately, with the C-REIT listing and the Master Fund, these gives us avenues for capital recycling. So for the Master Fund, as Chee Koon just mentioned, we want to make sure we do what's best for the investors as well, which means not just CapitaLand assets, but also potentially third-party assets. So it should be a nice blend of assets in the fund. But that said, we do think there are 1 or 2 assets on balance sheet for us, which are viable candidates to go into this fund. So I would say in the second half of the year, between the various initiatives, we are hoping to divest more than $0.5 billion worth of China assets. For these, we may not quite see the same uplift as we would expect from India. We expect some will be positive, some will be negative depending on the assets themselves.

[indiscernible]

If you talk to the seller, everybody wants a high multiple. So the guidance from our perspective, I think we need to pay a fair multiple for platform. The key for us is how can we work with the platform to generate the growth to be able to justify the multiple that we pay. So if a platform that is very good, is shiny and doing well, and we believe we can add value, I think it's not fair to expect a discount. I mean, if you buy platforms at a deep discount, I think you may be buying into trouble because it's a deeper business. So I just want to leave it as that. And every deal is different. But if the numbers is something that we don't think we can justify paying and we won't be able to deliver the returns for investors, then we will walk away from the deal. That's the discipline that we look at in terms of platform acquisitions.

Just to add on that, I think platforms that interest us these days are ones that are in sectors that are operationally intensive because in this environment, our view is that in order to deliver alpha to your investors, you need to be able to work the assets harder than someone else. And if you've got a platform that has the expertise, the track record to do that, you're in good shape to deliver alpha, and your capital partners tend to agree with that view. If you're just relying on interest rate reductions, smart engineering, smart financial engineering, I think those days are -- there's much, much harder investment case to prove because, as I mentioned earlier, capital partners are being much more considered. They are taking a longer time to clear their investment committees, and all of these questions are being asked. So if you have an Extra Space Asia, if you have a -- that if you have CapitaLand malls that you can show your capital partners that we know the asset better than anyone else, we can operate this, we can sweat it, we can deliver the returns that we are underwriting, then that, I think, is a very powerful proposition to take to capital partners. So if you look at the thematics we are investing into right logistics, living solutions, credit, I mean, DC, so those would be naturally where we would want to bulk up because I think it makes a very interesting strategic narrative and helps us get that -- the business up and running.

We'll have the next question from Brandon.

Just 2 questions. The first one would be, I think we have recently seen quite a bit of buoyancy in Singapore's equity markets. So are there anything within your stable that you think that is right for listing, perhaps something like Ascott or even something like your self-storage venture, which you started about 3 years ago? So that's my first question. The second question would be, can you give us a bit more color on the growth trajectory of credit? Like I think when you hit $200 billion, like, how big the proportion would credit contribute? And what kind of numbers you're looking in terms of IRRs and also the frequency of event fees? I mean, ultimately, I mean, this is something you seem extremely passionate about. So I just want to find out where we can put in our model for this business.

On the listing in Singapore, I think there are interesting opportunities. But to do any listing, my own view is unless it's of a significant size, there's no point in doing a subscale type of listing. After that, to grow that platform to raise capital is just not as competitive. So especially at the point in time where we are not short of capital, I don't think it's something that we will put at the top of our mind. What we want to do is to turbocharge the growth. We look at the Ascott's business, it is a very unique platform in the lodging space. It is one of its kind. I mean, it's not -- I mean, yes, there are many other hospitality platform, but this one is really in the standard corporate state where the operating margins are a lot higher because you just have much fewer people working at the properties. It's growing quite nicely. Out of 170,000 -- or 180,000 keys that Kevin has built up, only 60% is operational. So there's a lot of fee uplift as the properties becomes operational, and the team is continuing to invest on growth. We want to continue to invest in the platform to drive up the revenue, and we want to position it at a point in time where we can have capital market solution. And should it be as and when it is ready, then the question is whether it should be listed in Singapore. I mean, whether it should be listed in which jurisdiction will be dependent on what we think will give it the right cost of capital for it to be most competitive. If Singapore offers that, then, naturally, we want to consider that for Singapore because, I mean, we have to make sure that every vehicle that we set up is set it up for growth. So that would be my response to you. I mean, I publicly said that we will not discount the possibility that we may take that part for Ascott one day, but it's actually growing well. I mean, the fee income for the management contract, the fee income is locked in for 20 to sometimes 40 years. It's -- the fee perpetual is better than loans. If the banks give the loans at 3, 5 years, then you've got to find new loans, it is 20 years. And generally, the owners will extend the management contract because they are just so used to the property and especially if they've been doing well. Kevin, do you have anything to add on that, yes?

Yes. I may just take your other question, Brandon. So on the private credit space, it's a little bit harder now to set a really high target because Kishore is already sitting here. If he wasn't here, we would set a very high target. But for it, given right now we are about $117 billion funds under management, private credit is only about $3 billion for us. I think for it to be a material contributor to the group, it's going to have to be at least 30% of our Private Funds or 10% to 15% of the overall. So ideally, we would love to see this get at least to a $20 billion, $30 billion contribution. The returns on that for our existing funds, so our first Australian credit program 1 fund is going to come back at about a net 14.5% return. That's a little bit higher. So it clearly beats hurdle, but we'd be targeting more of a sort of 10% to 12% on average. If we were to get more insurance capital in, we may lower that hurdle, just matching together. So from a balance sheet viewpoint, we expect it will be small stakes in the similar 10% type stakes, but getting to sort of a 10% return is sort of a fair estimation for us.

In a related...

Kishore, do you want to add anything to that?

Mervin, JPM has also sent in a related question. What is the typical fee as a percentage of FUM for credit funds? And how does the base and performance fees compare against CLI's existing Private Funds? Do you have anything else to add?

So generally, for our credit funds, generally, we are 1% to 1.5% of equity on a typical fee charge right now. Base and performance varies. Similar to our real estate funds, for our core funds, obviously, there is more geared towards base and less towards performance. So similar for the credit, it varies by fund type.

Next question. We've got a...

This is Terence from UBS. Just quoting Kishore, safe returns with good discipline. I guess, the 2024 dividend was attractive, but I think we start to see its effects this half where the NAV fell 7%. I think gearing also moved up 0.39 to 0.46. So how do we convince investors that this on balance is a net positive move?

So there are 2 components to our drop. So NAV dropped from $2.7 -- $2.72 to $2.52 over the first half. There were 2 factors to that. One was actually relating to FCTR. So as you know, Indian rupee, renminbi, U.S. dollar all depreciated against Sing dollar for us. So unfortunately, for us, with the exception of U.S., where we're pretty much fully hedged, for the others, we did take a fair bit of movement, and we have a fair bit of renminbi exposure there. Hopefully, we are getting to the bottom at least on that exchange rate. But unfortunately, we felt -- still felt residual effects of that. If you were to strip out the residual effects of FCTR, generally, on an overall annual year, we've been earning $600 million to $700 million in profits, which is about the same as where dividend cash distributions have been for us. So I would say the NAV movement this time around was more than we expected or more than we would have liked. But part of that was due to the FCTR component. The other was the distribution and species of CICT, which was about $300 million. I wouldn't say we will always do a distribution in species of units. As mentioned, we also sold $150 million of CLAS shares end of last year. So we will sort of inter-mix between the 2. Part of that is to get the cash back to redeploy into other proceeds. Part of it is we do look at that return in NAV as actually just rewarding shareholders as well.

Got it. And the second question is 2025, I think there's been quite a bit of recycling of the Singapore book into CICT and CLARA. So the question is, how is CLI keeping up Singapore pipeline? Or is it fair to say that the S-REITs will have to start looking more and more offshore from here?

I think there are still third-party opportunities. For the REITs that we have in Singapore, the -- I would say that there are few opportunity. There are third-party assets. CRI, together with CLD, we will continue to look at opportunities together. We can always set up development fund together with CLD colleagues to pursue opportunities. And the third avenue of growth would be in terms of the potential rejuvenation or redevelopment of assets within our portfolio. Some of them are quite data, but sitting on top of excellent transportation nodes. I think there is a lot of upside. And the question is whether the REITs we want to do it all by themselves, which may affect the DPU or work together with other capital partners, and so that it doesn't affect the deal. So all these are things that we work in very close partnership with our REITs team to make sure that there's -- again, we want to pursue proper high-quality growth. With respect to whether each of the REITs are looking for overseas, I think that depends on the mandate. I mean, I don't want to speak on behalf of the various REIT CEO. CLARA has its own mandate. So if there are good opportunities in the markets that they have already decided to go, they will continue to do that. CICT is largely Singapore with some small presence in Australia and Germany at this point in time.

I can just add to that. I think part of this is the change in business model for us. We don't look at our REITs as recycling vehicles anymore, right? They are meant to really optimize and be fund management vehicles, which means that it's no longer relying on deals from the sponsor, whether it's us or CapitaLand development. And I think if you look at the number of our REITs, I would say Ascendas REIT with William and Serena on CapitaLand Ascott Trust, they've shown the ability to do accretive good deals with third parties. Our expectation going forward is that this is the model that we expect from them. Anything that the sponsor can do to help, we would certainly like to do. But we think that the management teams we have in the REITs are of an international high-enough standard that they can run very well on their own. So that would be the expectation for growth going forward.

We have the next question from [ Vijay].

I just have 2 questions. My first question is in terms of FRE to FUM,, fee-related earnings. Is there a pressure or squeeze in terms of FRE to FUM, especially on the private side, considering that this segment has been quite growing strongly, and there is a lot of competition in this space? I noticed this has come down about 6 to 4 basis points this first half of the year. My second question is, what are your thoughts in terms of Hong Kong market, especially on equity side or a private credit side with more distressed opportunities emerging over there?

Thanks, Vijay. I'll take the first one, and I'll leave Paul to talk about Hong Kong. The first one is, yes, there will always be fee pressure. Yes, it's a highly competitive environment, but then goes back to what are you -- what is your value proposition to your LP, right? If I can show you something that is backed by a first-in-class operating platform, that is backed by strong management team, backed by a GP that is supportive, full credibility, full integrity, all of these things, I think, are worth something in today's environment where uncertainty is high. You don't know where the next crisis is coming from. You don't know -- I'm not sure if you can trust your partners, et cetera, et cetera, who may have the best of intentions, but may be swayed by other things that happen, right? So I think for us, we know what we can bring to our capital partners. We can bring a pedigree that I think is very difficult to match. You can argue about whether being semi state-owned is good or bad. We think it's very good. We think it brings us a very strong ability to stand toe to toe with other GPs out there to say we will be here regardless of what happens. And we've got excellent funding cost stability. We've got excellent capital cost stability because of that. And if we've got the right operating platforms that underpin the right strategies in living, lodging, logistics, private credit, ECs, then that gives us the ability to hold fees and say this is -- you're getting a bargain for all of these things that we bring to the table. So that's the way we're going to do it.

Just specifically, if you're asking about this first half fees, just as Andrew mentioned, I mean, there is a little bit of fee pressure. But what reflects in this accounting period numbers is there's a lack of transactions for first half. So fund management fees, that's partly the drop in 3 basis points. The other change -- and I apologize, I should have highlighted, the reason it drops from 85% to 79% on the overall is because for SC Capital and for Wingate, we don't do property management or lodging management. So in the all-in fee number that usually reflects, as we start doing more third-party and broader fund management, that number is going to move down. So we think in the longer run, the focus for us is the fund management one and that 45% should move up as the transactions come through. On your other question on Hong Kong, it's a good indirect question. As Chee Koon mentioned, we are not commenting on specific deals that are in the market. I do think we are on the lookout for opportunities. We believe that we are in turning points in certain markets, whether it's due to interest rates or where the economy is. So we are keeping our eye open for opportunities and assessing what we see.

Okay. Donald?

Donald from BofA. A couple of questions for me. First on the -- maybe not the Hong Kong question, but Andrew, you mentioned earlier that you think core is back, right? And so in your acquisition and M&A plans, you have that 4 sectors. But what about REIt, the traditional real estate like retail and office within the region? Is this something that is starting to be a bit more exciting for you guys? That's the first question. My second question is also -- I'm not pointing to you, but relating to what you said earlier that something interesting is coming out in China sometime in the second half. Could you elaborate on that? And I guess, my question also is on the divestment in China, it has been taking a few years. So at the Board level, is there a time line where you need to rightsize your China exposure? And if there is a time that you say enough is enough, we're going to divest at viable price? Or is it a pricing thing? Or is it a demand thing? Could you elaborate on that?

Very quickly, the surprise event was C-REIT listing, sorry. It's only one surprise. Okay. So to call, the answer is yes. There is -- we saw the early shoots of this last year, but there wasn't enough momentum. This year, it has turned because many jurisdictions, when clearly demonstrated, they were past peak rates and started to cut. And this wall of core money, which has, in most cases, has to deploy, pension funds, insurance companies, they start to get -- look at what core products are interesting to them. And for countries where office/retail are investable for the right types of assets, right locations, it absolutely is in play. So 2 good examples, Singapore, clearly, for a multitude of reasons, but our commercial business remains on a very strong stable footing. And Australia, Australia, we have started to see capital flows come in, Angelo and Rahul on the ground starting to see strong interest in the right types of retail. So products are being formed, funds are being formed, funds are being launched, retail funds are being launched, and we can see that coming as well. So for the right type of product, right type of investor, we will -- we want to take advantage of this being on the ground in Australia. Office a little bit more difficult to piece because office, I think that the issue is structural. So you got to figure out whether your market does have too much office supply for the structural change that has occurred, right, with work from home. And if you still have too much supply, then you have to be careful about pricing. Retail, nothing got built in the last 4 years, 5 years largely in Asia. And so there's -- that supply glut has passed. It's been absorbed. And now the demand is back because retail is core, because there's nice, steady, resilient return for the right types of assets.

Would it be more owner-operator kind of model that you're looking at or through the funds management?

Both, both. I mean, obviously, we can't be operator everywhere. But in our core markets where Ervin is active and is looking to grow into, we would certainly look to expand our footprint. That third-party contract can potentially turn into asset ownership as well. But for a market like Australia, say, for example, where your incumbents are incredibly strong, unlikely that we would try and butt heads with them, right? We'd go down the fund management model first.

I think since we're on this topic, Ervin, do you have any reflections on the operational end?

Yes to that. So in markets that we're active in Singapore, Malaysia, China, we are still looking. And there may be something coming up in Johor. But Andrew said that in the past 4 years, a lot of places in Asia did not need shopping malls. It's not true in Malaysia. There's quite a lot of retail coming up there. So we are looking at different models of asset-light management where we can bring our network of tenants and our operating abilities there. We are certainly strong in KL, in Penang and in Kuantan, but we are looking for space in Johor. So watch this space. There should be something coming up soon.

And Donald has a question on the divestment time line.

Yes. China divestments, yes, we are as impatient, I think, as the market is on this one. We certainly like -- would like to see them move faster. I think over the last few years, certainly, it's been more challenging than we had hoped. And Tze Shyang, fortunately, he is our CEO there, and he's got to be the strongest perseverance I've ever seen of anyone in following these things through. We do expect to make headway in the second half concretely on a couple of assets, which I think will help. We would love to see more progress. Part of putting the Master Fund and the C-REIT in place is to allow a pipeline for us to exit. So it will not happen necessarily at the speed that we had hoped. Certainly, as a management team, we hope to go faster, but we hope that we get some concrete progress in the next few months.

Any more questions? We do have one from Derek, who is viewing online, Derek, DBS. Can you share what is the expected or target premium to book from the divestments for second half? Is NAV a level that is achievable?

Yes. Derek, you only get questions answered when you show up in person, I'm afraid. I'm just kidding. Yes, certainly, we expect in an overall, it depends very much by market. Certainly, for India, we're expecting a premium to book. For China, it will be a little bit of a mix, some assets above, some below. We hope that, overall, we will be a net positive from an NAV perspective.

Another question from Terence. His mic is coming.

Just asking this on behalf of a client. Basically, the client was mentioning that share price is down this morning. It's slight disappointment that there wasn't any like special dividend or interim dividend. So what do you think about dividends towards the end of the year and also buybacks to the extent that buyback momentum seems to have slowed?

So on the interim dividend, well, we don't do interim dividends. At some point, I think as we complete our transition and we are stabilized in terms of earnings and all that, we may actually relook our policy on this. But as of right now, we do dividends once a year. If you look at first half earnings, I think, clearly, while we expect second half to be better, I think it's hard for us to promise a very significant increase in dividends quite clearly. But we do think our core dividend, and we have reiterated this multiple times, our core dividend of $0.12, we think, is something that is very consistent for us and something that is achievable from a cash flow perspective. Even this quarter, our first half cash flow was $311 million operating cash flow that ties in quite sufficiently nicely with our $0.12 dividend. So if second half improves, we'll have a little bit of leeway there. In terms of share buybacks, yes, we understand momentum has slowed. I would say, collectively, as a Board and management, we have come to the decision to really focus on growth and investing behind M&A, both organic and inorganic growth. And so share buybacks for us will not be a priority. We would still keep it as a tool in the arsenal for something that we would do together with dividends. But the focus, we think, that there are opportunities in the market for us to invest behind, and that's what we're going to focus on.

There is a question.

Dexter from Bloomberg. If I can just clarify a few points first. Paul, you said, was it $0.5 billion in Chinese divestments on book this year? Is that correct?

Dexter, I said we hope to achieve more than $0.5 billion in divestments for China, yes.

Okay. Can I check first one point? You guys previously published your real estate AUM. I'm just wondering why is it no longer published in part of your results. I feel more...

So it's quite simple, quite honestly, on that one. We used to -- for those of you who are less aware, we used to have real estate AUM, and we used to have funds under management. We realized it was quite confusing to the market because of the number of times we took queries on what's the difference between the 2. So given that we are trying to be focused really on our Funds Management business, that's why we covered that number. What real estate AUM used to include was actually a lot of the assets we manage under the lodging side of the platform, so that was included. But going forward, our focus is really growing on the funds under management to the $200 billion, and that's why we just show that number.

Okay. So do you have a number for currency still around $130 million was the NFY number?

So we don't track it on a quarterly basis.

Okay. I see. Then can I check, on the China divestments, you said the number. Would that mostly go into that Master Fund that you set up then? Or is it more in terms of general to third parties and stuff like that?

So at the start of the year, we had talked about our plan for capital recycling more broadly as a group. And the intent at the start of the year was to try and get closer to the $1 billion number, between $0.5 billion to $1 billion in terms of China divestments and divestments in other markets as well. So it's not just China. We're divesting in India. Obviously, we've got assets still in Singapore, some in Europe. We are trying to become more asset light. So for us, these divestments is across multiple geographies. Specifically on the China assets, I think it will be a mix. We expect there is -- obviously, there's the C-REIT, there's the master fund, there are third-party buyers, there's potential single-asset funds. So I think we are looking at a broad range of opportunities there.

Okay. And last one for me. Obviously, you guys are doing -- trying to do a little more in other areas [indiscernible] and stuff like that. There was a time where obviously you are pegged as to your peers like developers. So what kind of peers should we benchmark -- or the market benchmark you guys against nowadays? Or what do you think is a fair kind of benchmark against you right now?

It's a very good question. In Singapore, there is really only 2 pools, right? There's REITs and developers, and we always constantly feel that we should not be in the developer bucket. I'm looking at a handful of analysts who still bucket us as developers. We think we should -- or where we aspire to is we are looking at global and regional peers who are really fund managers. So we think of Charter Hall, we think of Goodman. We used to think of ESR. Obviously, that has changed a little bit. We look at Blackstone. We look at Brookfield. And we think of these as more comparable to us given where our business model is evolving to.

Okay. I have a question from Tan, Xuan, Goldman Sachs, viewing us online. I recall management had discussed expansion into U.S. and possibly through platform acquisition. Given recent outflow of funds from the U.S., what is the latest view on this?

I mean, we look -- I mean, U.S. is a big and deep market. I don't think that if you want to be in the asset management space, we can ignore U.S. as a market. Of course, given all the recent news, things -- I mean, outflow of funds, and that's true. Since that we have not done anything, but that doesn't mean we should not continue to evaluate. If there are good platforms and we think that, that can help to turbocharge at a pricing that we like, I think we will continue to look at it. So that would be -- I mean, at the end of the day, it's the team that you can find, is it in a sector that we want and can it help to turbocharge our Fund Management business.

Before I take the last question from Brandon, there's one person who hasn't spoken, and I would like to invite Kevin. Maybe you can provide us with some sound bites on how Lodging Management is doing. We have some news on merger synergy and all.

Yes. Maybe just a couple of key takeaways. I think Chee Koon earlier mentioned about us starting a corporate base, high margins. That part, we're still preserving. And I think a lot of investors like us for that. Especially the recent exits that we have in the service apartment space, it gives a very good return. But as a fee earner in the Lodging Management area, we are actually moving into new areas, right? You have seen, I think 2 days ago, we have an article to say that we are going to resorts. It doesn't mean that we are buying resorts, but we're actually managing resorts. And the fee that can come from managing a resort is really a lot more than if you were to just manage a singular service apartment in the city. So from that perspective, we're actually widening our addressable market just from the traditional service apartment to hotels, to resorts. Our brands are now multi-typologies. And that, I mean that Ascott brand can be in a city, but Ascott brand can also be in a ski resort, a seaside resort, a mountain resort because those guys are the same people that stay with us. You go to the seaside, you go to city resorts, you get the same brand signature, the brand experiences. And we do that with all other brands like lyf, Citadines, Somerset. So the recent signings that we have, we'll get villas in Bali, in Jimbaran Bay. We are getting Nha Trang in Vietnam. Vietnam has got beautiful coastal resorts because it's an elongated shape country with a lot of coastlines. We're going to get a couple of hundred units there to manage. So it's going to be quite an exciting journey for us. We're going to turbocharge growth by looking at multi-typologies. We're looking at new addressable markets, right? So I mean, to an earlier question on listing, it's Chee Koon's decision because we are kind of like a subsidiary to CLI, but I do feel that there's a lot of growth to be delivered in the next few years. And I think over the next 2, 3 years, you will see a lot more new openings, a lot more new properties from all the Ascott brands, 14 of them, and you'll see us going into a lot more exciting locations that all our loyalty members, which, by the way, grown by leaps and bounds from 0 in 2019 to close to about 7 million now. And we're going to see it growing to 15 million, 20 million, 25 million, right? So I think I am very optimistic that there's a pathway to a very nice growth path for the Lodging Management business.

Brandon, do you have a question?

Yes. Just one question. I noted from the press release that I think your Chairman is quite confident that CR is going to hit the $200 billion FUM. So I'm just keen to find out whether is that a hard target. And I think with what's going on globally right now, you got us what is the implied CAGR growth that you're looking for within both the private side and the listed side to get to that $200 billion number. Or do you think we can -- we could see like a mega platform acquisition if that $200 billion target gets harder to achieve?

I mean, we indicated $200 billion as a way to guide the team. Asset management business is a scale business, right? You need to build scale. You need to build the AUM, so that LPs will essentially generally be attracted to GPs with scale and still provide a lot of cost synergies and for you to do a lot more things. So yes, we set a target of $200 billion. If it's just using this real estate as a vertical, I think it would be potentially challenging. But now that we have a private credit and potentially another vertical in the infrastructure, I do think that we should be able to get there. But I want to say, again, on -- organically, on private credit, on our businesses getting to $150 billion, $160 billion, I think that should be doable. Will we rush to do M&A just to fulfill the 2028 target? If we cannot find good deals, I'd rather come here and tell you that I can't achieve it because I cannot find good deals rather than to just buy any AUM. And in the end, I failed to deliver the returns for shareholders. So yes, it's an aspiration given what we want to do, but I want to give the assurance we are not here just to buy AUM to achieve headline numbers. It's about high-quality platforms that can help to deliver long-term earnings, so that we can pay good quality dividends for our investors, yes. So that's how I would look at it. And $200 billion, of course, is something that we are very focused to want to do. But if I can't do it because I cannot find good enough platform, I will come and explain.

We will need to wrap up soon, but we have a question from [ Gola ] and one last question from [ Joy ], and then we will wrap up.

In your China portfolio, you have some business parks from the Ascendas-Singbridge side. Would you ever think about looking at a second C-REIT? Because I know it took a long time to get to this first one, but shouldn't the second one be faster? And would you be able to talk a little bit about that? What would you look for if you do that? And the second question also with North Asia, Hong Kong, what would you want -- what would drive you to buy something in Hong Kong, a platform or whatever it is in terms of -- yes?

Hong Kong, it's interesting time -- going through an interesting time. My own view is -- I mean, okay, maybe we look at China as a whole. I think China, the real estate sector is going through, I mean, difficult few years. And I think it will take a few more years to truly recover. But if you look at Chinese -- the China as an economy, [ $100 billion ], it's actually a lot more advanced than many of the other emerging market. Will it recover? I think it will. It's just going to take time. And my fundamental view is that Hong Kong's real estate sector will come back once the Chinese economy strengthens again. So that's a fundamental -- it's a view that I take. Are there interesting opportunities in Hong Kong? Yes, there are interesting certain asset classes. I think student accommodation is interesting. I think certain logistics or even data centers could be interesting. Are there interesting offices that we can buy and reposition into hospitality products? I think that those are interesting things that we will look at. Will I just buy office for office? I won't. In Hong Kong, not now, not now. I mean, unless I can get a super good price, then I will. So that's how I look at Hong Kong at this point in time, I mean, just from an investment perspective, at least from my perspective. So we will look at Hong Kong if we can find good opportunities that we can deliver good returns. I mean, we do have LPs that are interested in some of those things. So let's see, yes. So we have a team in Hong Kong looking at some of those opportunities. C-REIT, yes, you...

Thanks for the question. So maybe a couple of points. First, on C-REIT, C-REIT is a perpetual. So to us, having a C-REIT is an important piece to build our REIT franchise. A lot of people think of C-REITs right now potentially as a means to an end to recycle. But actually to us, you have to take the view that this is a long-term platform. Whatever you put on to it has to perform. And to us, this is a franchise. The C-REIT market is emerging. And in China, it's going to draw a lot of attention. If you follow the C-REIT market, 73 C-REITs have been issued since, what, 2 years, 3 years back, raising a total of about $220 billion already. It's still in its nascent form. It will serve its purpose in China. We feel that we have the credentials, the track record, the asset management capabilities to really enhance a C-REIT. For us, we start off with retail because that's our strongest asset class. With the Ascendas merger, we also have been managing a lot of business parks and industrial parks. In the future, it is definitely viable for us to consider a second C-REIT, but our focus right now is to get our first REIT off -- first C-REIT off and do it well.

So essentially, we won't say no. So the first one, it's retail REIT. We wanted to do well. We wanted to trade well. It's important because if you trade well, you have strong investors following, and it has an interesting cost of capital. And then it creates a very nice platform for us to be able to inject a lot of our retail assets down the line. It just takes time for us to get to where we are today because, I mean, just a number of regulatory approval that we need to get to. But I'm happy that the team managed to get us to this point.

Okay. The last question, Joy sent across quite a number of questions. We only have time for one. So the first one, given fundraising is now taking much longer, 2 years, can we get a sense of the potential funds in a different stage -- stages of discussion in the 2-year cycle? Andrew?

Okay. Thanks, Joy. Yes, the average is 2 years, but obviously, you get stuff that is shorter and some that is longer, depending on the quality of your product, timing of launch, et cetera, et cetera. So as I mentioned earlier, we've got a number of funds we are in the manufacturing stage of. And we think that, that constitutes a pipe of about $2 billion -- more than $2 billion in FUM in the next 12 months. So those are ACP II, Credit Platform 2, that's already in soft marketing, right? We've got that out in the market. We've got a self-storage fund that is due for a second capital raise on the back of a very successful first deployment where we have deployed over 85% of the first raise. So that's coming very soon. As I mentioned, we are working with Suchad and the SC team on an Asia Pacific Living product. And then there's a DC product that I think we want to look at as well. We have a new DC Head of Funds that has just joined us recently. Again, that's something we can work closely with ourselves and also with SC Capital around. So I think these are the 4 interesting, again, very thematically aligned Asia Pacific flagship funds that we are definitely working towards. And if we execute well in the next 12 months, you'll see all 4 of these come to market. Or at least we'll be able to share where we are in discussions and -- or where we are in the manufacturing process.

Okay. Thank you, Andrew. Chee Koon, any final comments before we wrap up?

Building up the private funds business requires us to invest in the capabilities and the teams and the relationship with the LP. I want to sound -- I mean, essentially, a lot of the groundwork has been done. You should see a lot more things happening in the course of the next couple of months. I mean, I just want to stress that, I mean, the REIT space took us 20 years to get us to where we are today. Give us a bit of time. It's about building up the teams and building up the relationship and the track record. I mean, raising third-party capital, it's a different skill set, and that's a lot of time that we spend. And people need to feel comfortable that you are doing the right things that's alignment of interest. You can show good deals, and that takes time. And I think that we should have a lot more interesting news to share with you in the coming months. Yes, thank you.

Okay. Thank you, Chee Koon. Thank you, gents, for -- and for all your time for spending the last 1 hour with us. Thank you for your support for CLI. There's refreshment behind you, so please help yourself with that. To our viewers online, thanks once again, and we'll see you at our next update. Buh-bye.