City Developments Limited (C09) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, friends from the media, analysts and fellow CDL colleagues. A very warm welcome. My name is Belinda, and I'm the Head of Investor Relations and Corporate Communications at CDL. On behalf of the CDL management team, I'd like to warmly welcome you to CDL's strategic review briefing 2026. This is the very first time we are holding our briefing right here at the Union Square Residence sales gallery, and we are delighted to have so many of you in this room this morning. Union Square is 1 of CDL's major integrated mixed-use redevelopment projects, and it is perhaps a fitting setup as we share the next chapter of CDL's strategy road map. So this is a hybrid briefing. We are also joined virtually via webcast by many members of the media, analysts and the investment community, and we thank you for joining us this morning. For today's briefing, in line with CDI's commitment to environmental sustainability, we will not be providing any printed materials. Instead, I encourage you to scan the QR code that you see on the screen in front of you to download or view the strategic review materials. For those that are joining us on webcast, you may similarly be able to download these documents via our website. Now they include a press release summarizing some of the key highlights of our strategic briefing this morning and also a presentation deck that our group CEO, Mr. Sherman Kwek, will be walking through very shortly. So for all the guests joining us please similarly ensure that you have those documents with you. Today's briefing will be in 2 parts. Our Group CEO, Mr. Sherman Kwek, will kick off with the presentation and delve a deep dive into the strategic review presentation outcomes, followed by later a Q&A session together with our management team. So without further ado, may I ask Sherman to please kick us off with the presentation.

Okay. Great. Thank you. Morning, everyone. Wow, double mic. Yes, thank you all to the media and analysts for taking time to come attend our unveiling of our strategic review. And I know it's been a long time in coming. As all of you would remember, I mentioned before, we appointed Tone, our global advisory firm that advised us on this exercise last year, probably about September. And in the immediate few months from then, they are ensuing. They basically did investors -- investor perceptions audit, right? And that was in order for us to get garner as much feedback as we can from both sell-side and buy-side analysts. And once that was done, it was primarily much of this year. I think that the management team, the Board and many workshops that we've done with Teneo as well. We have gone in to really do a deep dive into our strategy and to refine what we would like to achieve in the next 3 years. So without further ado, I'll take you through it. I'll try to be relatively brief and quicker with my presentation so that we leave more time for Q&A, which I'm sure lots of you have burning questions to ask. Okay, that doesn't work. Okay. Our GET strategy that's been in place since 2018. Some people may be a bit disappointed saying, "Hey, why did you go back to the GET strategy again? The truth is actually when we embarked on this exercise, all of us went in with open minds and in fact, the overriding sentiment back then was to I think, do away with the get strategy and come up with something entirely new. But throughout the past year as we've been working on this, especially during many workshops and during the ongoing process, I think we found ourselves coming back much of the time to these 3 pillars that we had originally arranged it in, right? And even for me, right, even though I was the original architect of the GET strategy in 2018, but I was very willing to say goodbye to it. And obviously, we want to do what's best for CDL and all the shareholders. But because of the relevance that these 3 pillars continue to have and also, don't forget, it's something that all of our staff, all my colleagues at CDL, we are all used to this, right? I mean we've been living and breathing this for the last 8 years. So we thought actually, we actually ended up concluding there was a very apt to stick with this strategy, but refresh it and enhance it with further clarity and targets and outcomes. So just going through it again, as you all know, it's -- the 3 pillars are growth, which talks about how we build our development pipeline as well as how we further expand our presence -- on the commercial side, the hospitality side, the living sector, basically, how do we invest and deploy capital, how do we grow CDL. And there, you will see some of the achievements we've done over the last 8 years. We've garnered more than HKD 26 billion of residential sales and greater than 15,000 units. On the enhancement part, also very intuitive. Basically, it's how do we unlock value from our existing portfolio, whether it's through AEIs, which we've completed 5 major ones, including, obviously, the biggest 1 was Republic Plaza, we've done City Square Mall. We've done our other mall in Phuket, Chiang Salon. These are all very big major AEIs, Pali [ Renaissance]. So we really pushed the envelope to get some of these major AEIs done. And post AEI, actually, all these assets have been performing very well. Rental reversions have been strong. The second part is obviously the redevelopments, right? And primarily, this would comprise of 2 major redevelopments that I would say, have unlocked tremendous value for CDL. All of you are sitting in 1 of them right now, which is this Union Square mixed-use development, which comprises of the residences, the office and the retail which you can see from the giant model over there. And of course, we also have Newport, Plaza, which is integrated development, single tower, and that 1 was the former Fuji Xerox Towers, right? So -- we are also redeveloping that. And that should TOP by next year. So we're actually very excited to see that project come along nicely. We've just done a site visit recently, so progress has been really well. And lastly, obviously, we've also spent invested capital to renovate our hotels in order to strengthen their market positioning. And so that's an enhancement. And the last part is transformation, right? Yes, in the past, I think for transformation, we had a lot of different descriptions attached to it, right? I mean -- but now I thought we'll just simplify transformation. Essentially, it's really our capital recycling as well as our fund management, right? I mean these are the 2 things that will really drive and transform the company as we go along. So with that in mind, the original GET strategy. I mean, we then, as I said, went through a very long and [ audios ] process about how we would -- what are the priorities that we want to get out of this, right? And that will help us in terms of setting our future targets. So taking into account all the feedback that came from the investor perceptions audit as well as, obviously, I mean, we have to make a lot of judgment calls in it as a management and as a Board after all, I mean, I would like to think that we know our business better than others. We have come up with these 4 priorities. I think so 1 of them is a sharper strategic focus. Secondly, we want to be more proactive when it comes to our portfolio management. Thirdly, there is a measurable implementation road map, right, that guides us, okay? And we set it at a 3-year time frame because we believe that, that is the right way to look at it. It's not too long, and yet, it's not too short as well, right, where cages you and you don't have much room to maneuver. Okay? I don't want us to rush to meet annual fiscal year targets just for the sake of it when it would not be -- may not be in the best interest for CDL. And lastly, a clear path to enhance shareholders' return -- to shareholder returns -- so this way, I mean, you can clearly see, right, I mean, that if we execute on this, where will we end up and what will we look like 3 years from now. So as you've all probably already gone through the whole deck, I mean this is our GET+ road map, 3, 4, 5, 6, we didn't intentionally come up with these numbers, but they just kind of fell into this nice sequence in a nonentertainment ease I think that's the right time frame to look at it. I don't really like giving out annual targets even though the last 2 years or so, I've given our annual divestment targets. But I think it's better to look at it from a 3-year time frame, which allows us to plan better, not to leave money on the table and to really ensure that we monetize our assets properly. 4 sectors, which won't come as any surprise to all of you, residential. Commercial. Commercial, obviously includes office and retail, hospitality and the living sector, right, which includes what we call PRS, private rented sector that term actually derives from the U.K. It's known as multifamily in other parts of the world. So it's basically apartments for rent, right? So living sector would include PRS, would include student accommodation, which include retirement housing. So anything for rent, but for people to live in, okay? So living sector. And then we come to the 5, which is $5 billion of new investments, and we have to keep investing, right? I mean, so that we ensure that we maintain our growth. And lastly, $6 billion of divestments, and that's our capital recycling initiative. So diving into more granularity. So on top of our GET strategy, the plus stands for the 4 targeted outcomes for the so-called minimum of 35% or more in terms of the dividend payout on reported PATMI. That 1 we had announced earlier, so that will come as no surprise to all of you. The other 3 are targets that we are very focused on. For the , it's obviously leverage. We intend to hit 55% leverage or thereabouts, net gearing by around 2029. We do need some time to delever and you will be able to track our progress as we move along. And as I've always said, right, I think any business needs a decent amount of leverage in it in order to enhance returns, right? Especially for a developer, I mean, much of our leverage comprises of development loans, right? So this is very important for us because developments our bread and butter. So I think if we are using pure cash and insufficient leverage, I don't think it's good for our business. When I first took over as CEO in 2018 now net gearing based on fair value of our investment properties was less than 10%. Actually, I think it was 7% exactly. So -- and I don't think that was an efficient use of our balance sheet. So -- now I think if we can get it down to 55% -- sorry, when we get it down to 55%, I think this will be a very healthy level for us. Thirdly, we have a view, which is unlock -- and this is where we are projecting that we have greater than $1 billion of divestment gains that will that will contribute to our PATMI, profit after tax and minority interest. And lastly, we have scale, right? Currently, I'll go into this in more detail later, but we have SGD 5 billion -- and we intend to double this and scale it up to SGD 10 billion by being much more focused on our fund management efforts. In terms of the 4 sectors, I mentioned earlier that we will focus on residential, commercial, hospitality living. This just gives you a snapshot of where we are in currently and what are the priority markets that we intend to focus on, right? So for the 5 billion investments that we have mentioned, of new investments. These are the 4 sectors. These are the 4 sectors that we're focusing on and the priority markets below as well. I think it's important to show you how we're focusing as well. There's 1 market where we are planning to do an orderly exit of almost all of our presence there, except for hospitality, and that's Australia. I think it's not a market that's really worked out too well for us. We have -- we went in, in 2015. And in total, I think we have about 7 development projects there, and 2 more projects that we didn't develop but we have exited one, and we want to exit another. So it's not a market that's worked out too well for us, and we have been unable to build scale, so it's a market where, I think, for the residential and the commercial and the living, we intend to exit. Obviously, it needs to be in a managed time frame so that again, we don't leave money on the table, right? We ensure that we properly monetize the assets and do justice to them. But that's 1 key thing on the cards. In terms of residential, I think the focus will be on Singapore and China, and I'll go into this in more detail. Yes, I know when you put China out there, as everyone spooked but again, right? I mean, we have to look at our business in the longer term, right? And we -- I've always believed in the value of being a well-diversified company. It's not good just to be exposed and fully concentrated in 1 market, no matter how strong you are in that market. Then there's commercial, where Singapore will be a key focus for us in terms of expanding our commercial presence. Hospitality, we will be streamlining the hospitality portfolio. And in future, if we do make investments in this sector, it will primarily be in key gateway cities. And lastly, the living sector. We have a really great portfolio in Japan. For instance, we have 40 operational -- we have 40 operational PRS assets, multifamily assets in Japan, doing really well for us. So there may be further expansion on that front. And of course, in Singapore, we have some new assets coming up -- for instance, we have the [ SAI ] component, which is a stand-alone 35-story tower that's part of Zion Grand then Newport will also have a new service department components. So all these will form part of our living sector. Okay. When it comes to capital deployment, this is the $5 billion I talked about. We are doing our best to give you more so-called transparency and detail. So we've broken it out by geography. And you roughly know I think the sectors that we are looking at. And this is basically 60% in Singapore, then there is another 30% that is shared between China and Japan. -- and there's a 10% for others, okay? Now I want to emphasize as well, right, that the $5 billion of new investments is a capital allocation framework, right? It's not a rigid quarter -- do we have to spend the $5 million? No. Could it change? Yes, I mean, for instance, right, if -- I mean, a lot of these new investments will be opportunity-led, right, be it Singapore, overseas, I mean, in Singapore, no 1 can predict with a crystal ball how many land tenders you're going to win in a year, right? On some years, CDR wins on. In some years, we may win 3 or 4, I mean, it really depends, right? I mean, likewise, overseas, right? I mean we must find the right opportunity, and it must meet our risk-adjusted returns targets. -- and other criteria before we will invest, right, be it in China or in Japan, right? And if we don't find the right opportunity, I mean, then maybe Singapore might actually become a bigger part of this $5 billion. So again, -- it's a framework to guide us and it's our road map going forward, okay? We know where we are willing to put capital to and to what sort of extends okay? We know where we don't want to put capital to it, but it doesn't mean that this is rigid and we have to spend this $5 billion, right? And also, as I said, it will depend on how we do with the rest of our efforts, right? If our capital recycling goes a lot faster and stronger than we expect, then perhaps this number might even grow, I mean, bigger than that. So in essence, this $5 billion of capital is capital that competes against other priorities for CDL, right, such as deleveraging, such as enhanced return to shareholders. So really, it's things that have been measured, I mean, accordingly. Now I come to the part that obviously a lot of people are focused on, which is the $6 billion of divestments, right? And I think many of you who know us know that we are pretty conservative when we put down our projections. So this is something that we intend to exceed okay, the $6 billion of divestments over the next 3 years. Now some of you may say, hey, in the last slide, when you talk about new investments, you broke it out by geography, right? How come this slide, then you're breaking it out by sector or, let's say, asset class I mean, simple, I think, again, at the end of the day, we have to do what's right for CDL. And I don't want to cause or trigger unnecessarily market -- unnecessary market speculation, right? I mean if I were to break this out by geography, and let's say, I pluck a number from the air, I have 40% divestment coming in Singapore. Everybody will start speculating what are they selling in Singapore? Is it this building? Is it that? Is it this office -- so I don't want that, okay? That's not good for CDL, okay, and does not allow us to retain the flexibility as well for -- flexibility as well in terms of our capital recycling. So I thought it's better to break it out by asset class basically by sector. But still, I think this should give you a lot more clarity and transparency than what any of you have previously gotten from CDL, right? At least now you know, okay, in terms of our divestments, 30% will come from hotels. 40% will come from commercial we have 20% from legacy residential, right? So legacy residential and others okay? So obviously, no prices are guessing this will include that $800 million portfolio we had talked about before that U.K. so-called legacy portfolio, but it also includes other stuff, right? I mean even in Singapore, I mean, we have some legacy residential that we need to get going when it comes to recycling the capital that's been trapped there for quite a while, right? So an example is, I probably shouldn't be quoting specific projects. But for instance, Clinton, right? I mean in Clinton, we still -- as of the time when we created this slide, we still had 61 units there. I mean, we since sold 2, okay? But so we have 59. But this is an example, right, of stuff that kind of lingers along until you make a firm decision that we want to monetize it. So there's a lot of red legacy residential that we can put to work as well, right? And then we have a small amount in living that we need to clear -- so an example, like I mentioned earlier, we have a living project in Australia that we'd like to sell. So -- these are the things we do. And then in terms of the potential pathways that we could achieve this, one is our outright divestment and the second part, which ties in with our fund management ambitions is obviously the seed of suitable assets into managed vehicles. Now this is a one-off, okay? So please don't expect or ask us to do repeat this disclosure again in the future. This is something that I think -- we've certainly never done it before, and I'm not sure any other developer has ever done this before, where we decided to disclose at least for the next 3 years, what is -- what are the cash inflows we're expecting from our property development sales, right? These are existing projects. We're not forecasting ahead and thinking that we're going to buy some land somewhere we don't already own. So in terms of the projected cash inflows, as mentioned there, these comprise of 3 things, right? One is future cash collections from contracted sales for our Singapore projects. So as you know, I mean, we collect payment in installments based on percentage of completion -- so as it constructs, I mean, we collect more payments. So these are cash that we haven't collected from buyers, but sales that have been inked already, right? And this is from 2027 to 2029. We also have 5 unlaunched projects in Singapore. So naturally, we've had to make some assumptions, and I believe these were conservative assumptions about sales velocity, about ASPs, average selling prices, about the construction duration and period. So we've had to make some of these assumptions. And it also includes our 2 projects in China with a particular emphasis on Stint, right, which I'll talk about more on the ensuing slides. So I think the reason we wanted to just show this slide as well is because -- and the number just coincidently worked out to be greater than 6B, it's just to emphasize, right, that I think A lot of times people have asked us, right, why aren't your residential sales, strata-title sales let's say, in Singapore and all that. I mean, while they included in your divestment, right? And I always tell them is because it's not the right way to look at it. I mean when you buy a piece of land, I'm still going to spend a lot of construction cost and everything else to build it, right? So -- if I were to include divestments, that would, a, make our divestment figure balloon into a massive number and b, it would not be apples to apples with investments, right, which is purely capital you put out to, let's say, buy a piece of land or something. So our divestment figure of 6 does not include our so-called our residential strata-title sales other than when it's legacy, as I mentioned earlier, right, but for all of our existing ongoing projects, it does not. So we thought it would be helpful to share with you what is our expected cash flow from these property development sales over that 3-year period. Okay. So now digging deeper into what I talked about earlier from an investment standpoint. In Singapore. Obviously, that's going to be our core market. We've already mentioned 60% of our new investment of the 5B will be focused on Singapore, okay? And that's primarily going to be government land sales, collective sales, off-market transactions. We've done all of the above. We will also -- we could also potentially redevelop existing assets that may yield a residential component. Example is this very project Union Square as well as Newport, I mean, which was formerly pure office. And we currently have a launch pipeline of 2,200 units. So I think we are very comfortable, especially after our land replenishment for Tangzhong rule as well as for Petro -- so I think we're very, very comfortable where we stand in terms of our current pipeline. But we continue to -- I think this is a moving target. And obviously, we have a user Grand. Our project in Lakeside Drive in Jurong West. We have that launching this after day. So let's see how that goes. Okay? If that substantially depletes our launch pipeline then time for us to replenish. And for China, I mean, again, right, this is going to be very much opportunity led despite all the noise about China. And yes, China's real estate market is not in good shape, okay? It's under tremendous pressure. But there are still opportunities to be had. I mean -- and the proof will be in the pudding, okay. Currently, a lot of our hopes and expectations ride on our Sentient project in Shanghai. Okay? This is a 51-49 JV with the 51% and we're the lead development partner on it. And this is a project that went through great length, great extent of effort in order to secure this site last remaining prime piece of land, last mining prime parcel in the STD so-called boundary. And we are very excited about this project. As mentioned earlier, I mean, there are high expectations on it. So let's see how it goes. I mean we are targeting to launch the -- they are, in total, 145 residential units. Number may not sound like a lot, but the quantums are not going to be small. Of that, we have 70 high-rise condo units in a single tower, and then we have 75 villas are basically landed properties like bungalows. So -- and as mentioned, the quantums are not small. I mean for high-rise, the all units are above 400 square meters, okay? So these are very luxury units. And for the landed properties, they range from 500 to 700 square meters. So these are going to be -- these are going to be a real trophy assets and iconic assets. And I'm looking forward to the launch, I mean, in December. I mean, if all goes well, I mean, I don't like to jump ahead and make predictions. But hopefully, we're launching the high-rise, okay, in December and then the landed next year the lender will be in phases. But if all goes well, I hope to have a full sellout, I mean, of our high rise when we launch it on -- hopefully, on day 1 or launch weekend. Let's see how it goes. Again, China real estate market may be in very bad shape, but there are certain spots where -- it's still -- the market is still doing very well and demand is still very strong. And for key districts within Shanghai and ours is in Huangpu District, right, which is arguably 1 of the most desirable districts. Demand is still very strong for luxury residential. So let's see how that goes. I mean, just to throw out another figure from our Sintendi project. I mean, if eventually when we're done selling all the residential, and this is just the residential component. Obviously, we have hotel and retail on it as well. But just from the residential component, I think we are expecting no less than RMB 15 billion of sales value, okay? So let's see how that goes. I mean the high rise will be the first test on the cards coming up in December. Okay. In terms of accelerating our exit we have the legacy, the U.K. legacy platform that we described that develop we comprising of development sites and also completed residential projects. We have previously disclosed, that's about roughly SGD 800 million. We've already disposed some from it previously. So this is what's left. And as mentioned in Australia, we currently are still left with 2 development sites -- and we intend to proceed ahead to clear out the rest of our development portfolio there because, as I said, I don't think we can build sufficient scale in this market. In terms of commercial, as mentioned earlier, I think this is a key area of focus for us, especially in Singapore where we intend to continue to unlock value through active asset management and also redevelopment. As you all know, we have other potential redevelopment opportunities that we can explore. We did, through a collective sale buyback Delfi, which is next Orthotel and Claymore Connect. So there's a potential there to look at how that can all sync up under a strategic development incentive scheme. I mean there is a city house, our venerable heritage iconic office building in the CBD which could qualify under the CBD incentive scheme. So there are various things that we are looking at. But as I mentioned in earlier briefings, Don't forget, right, every time you embark on a major redevelopment of an existing asset, right? Firstly, you lose all the rental income from that building. okay? And secondly, there's a lot of capital put forward towards building out, right? Or you take on massive amounts of development loans, right, I mean, to build out the project. So don't want too many happening at the same time. Otherwise, you've just put lots of strain on us, right, and then my gearing will go up further and everybody will complain. So I think it's about pacing it out. And currently, as I said, we have 2 major redevelopments going on Union Square and Newport. And I think that's good, okay? I mean, that's something that we're very comfortable with. So -- and below, you can see what's our existing NLA, net lettable area as well as the development pipeline that's coming up. In the U.K., -- you will know that we previously tried to list our 3 office properties. Well, back then, we only had 2 office properties, 125 Old Broad Street and -- all gate House, and we were teaming up with a third party to list a REIT in Singapore that was going to be comprised purely of U.K. office and commercial assets. But that REIT didn't materialize. Subsequently, we acquired St. Catherine stocks. And it's a fantastic property, freehold as well. So we have 3 freehold office assets, commercial assets, sorry, because some of them include retail components, 3 freehold commercial assets in the U.K., okay? And the value of that would be about GBP 1 billion. So I need to take -- we've been taking a close look at how we should proceed ahead with this. And I think at the end of the day, we have to wait until market conditions are appropriate. So for now, it's all about monitoring these assets and ensuring that we continue to optimize their performance. But we will let you know when we decide to do a big initiative involving them. And as mentioned earlier, I think we intend to exit from the commercial side of Australia as well. Currently, we own this 50% direct stake in 330 Collins Street. And we are co-invested alongside a fund that we also have a stake in. We are also an LP in that fund. So this one, I think we need to ensure that it's an orderly exit so that, again, we obtain the right exit price for the building. So this is still a work in progress. Moving on to hospitality. This is our global portfolio, a total of 165 hotels, which includes 2 hotels that are coming online in the next 12 months. And if you want more clarity, those 2 hotels are basically the Sunnyvale hotel that we -- that is a redevelopment of an old property that's in the U.S. and the Works Hotel, which is part of Canning Hill, peers, our project there. So 165 hotels are close to 48,000 rooms and we have -- if you include CDL Hospitality Trust as well as M&C New Zealand. We have 88 owned hotels. And then we have 67 franchise hotels that primarily deals with the Middle East and Africa region, where we have done a master franchising deal with a local party. So they are so-called franchising our brand and expanding it. So that's the 67 hotels. And then these -- they are MHR managed hotels. So these are hotels that we don't own, but we manage for third parties. So these are and branded under our stable brands Millennium, all that. So these are 10 hotels. Now to dive in terms -- and -- sorry, as shown on the right, we have put a tailored approach for each asset and maximize asset value. And it's because as we look through our entire portfolio, and trust me, we went through every single hotel, there is no 1 size fits all. Every asset requires a different action plan when it comes to monetizing value. be it, optimizing it, be it improving the performance, repositioning it or divesting it. So if I go into the next slide, just focusing on the assets that we own and obviously, keeping in mind that CDLHT as well as MCHZ are both listed entities on their own with their boards and management. So let's focus on the ones that CDL owns, okay, directly. So these are the 54 hotels, right? When I say directly, includes M&C, right, which is also our 100% wholly owned subsidiary. So Focusing on the 54 hotels. These hotels as of 31st December 2025. These hotels have a value of $8.6 billion. okay? And looking at it, we decided that, okay, let's take some initial steps towards really trying to unlock value here. we have set aside about $5 billion of assets that are actually doing very well, okay, could be doing better. But we are heavily focused on the operational side in order to ensure that these assets are continue to perform better. And then we have the enhanced part, which is about 20% of the portfolio. So these assets currently, there could be assets that are not in good shape, that are very worn down. So these assets need to have potentially more time, more capital spent on them. Okay? And there's identifiable upside. And after we are done with enhancing, you can see that we put 2 arrows there, right, meaning that these assets could either go into the core bucket or they could go into the divest market. And then you have the last bucket, which is divest. And so that 1 is our confirmed. We want to divest $1.8 billion. of currently mature noncore underperforming hospitality assets, which is the same description we use on the rest of our divestments, the other mature noncore underperforming -- so -- and again, some people may complain and say, hey, why not more? But as I said, right, it's a step at the time, right? I mean this is a portfolio we've -- much of which we've held for several decades. And Again, we don't want to leave money on the table. We want to ensure that we properly unlock value and we optimize value for each and every asset. So it really is a tailored approach. And as mentioned earlier, right, I mean, the the alpha license enhances well, right? Because once we enhance it, it could go either way. Then comes the living sector. This living sector is actually sector that we have built up a lot of expertise in. And yes, it is when we initially mentioned into the living sector, it was meant also to form our seed assets for our fund management ambitions. And it still currently is the case. It's just that some of them we may have to nurture for a bit longer. We have to stabilize over a period of time before we eventually can turn it into a fund management via a managed vehicle. But you can see there, basically, the 2 sectors where we have strong -- we have experienced strong results, and we want to continue growing our presence in Singapore and Japan. In the U.K., yes, you can see there, we have 1,505 PRS units as well as 2,368 student accommodation beds or PBSA, as we call it. I mean that one, I mean, especially when interest rates were high, I mean lows came under pressure. So we're continuing to review the portfolio. In the meantime, we are obviously placing a lot of emphasis on the operational part of it, right? I mean, because these assets are really going to drive them to form better. So this is something where we need to enhance operations. And finally, as mentioned earlier in Australia, we intend to exit. Okay. Now we get on to the transformation part, right, which is a fund management, okay? And this is -- yes, we've been asked this before back in 2018, I said, okay, we'll set a target then in 5 years, we'll achieve USD 5 billion. Didn't happen, okay? And I've already addressed this at the recent half year results briefing where I took responsibility. I said that I think one of the problems that we want to go into fund management, but yet we kind of like 1 foot in, 1 foot out, what it's time for us to really be focused, right? I mean if this is going to become a core part of our business and a key pillar, okay, especially in terms of how we drive and accelerate our capital recycling, we need to make this a bigger part. Currently, what is our SGD 5 billion of AUM, right? It comprises of CDL Hospitality Trust and IRET Global. Those are the AUMs there, okay? And we also have invested in some funds where we are part of the so-called part of the GP or fund manager. So we've taken in a little bit there. In terms of rules, okay, I mean, I think this is how we will account for our AUM in the future, right? I mean we're very strict with ourselves. So I think we are 50% or more of the fund manager or we derive 50% more of the asset management fees we will count in the entire amount into our AUM, right? So like in the place of these 2 REITs, we're 100% of the manager for CDLHT, and we are 50% of the manager for [indiscernible] Global I mean we're taking the whole AUM. And if you are less than 50% of the fund management of fund management company or take less than [ 500 ] fees, we've just taken a proportionate amount of the AUM or the gross asset value. So that's how we choose to look at it. And I think we need to further accelerate, especially on the private equity side. I think we need more private funds to augment. And we have some coming up in the pipeline. Okay? I didn't mention this earlier, but some of you may say, "Hey, your divestment efforts are going so slowly this year. Well, it's been a difficult year. Again, at our half year results briefing, I mentioned, right? I mean, look at what's happened throughout this year. It's been such a turbulent year. And we've had the Middle East crisis and that war is still going on today with retort back and forth. So it's really not been an easy environment for us to get our divestments done. But very much like actually 2025, where you saw that in the back half, we got very, very active. I hope to see the same appear this year. We obviously have a lot of things that are in advanced stages of negotiations. So with any luck, hopefully, we'll be able to make some pleasant announcements that hopefully will surprise some of you in the remaining months of this year, especially under this fund management part. So I look forward to unveiling more as we progress along. And we're going to have a dedicated platform, okay, for this fund management entity. Actually, we already have a wholly owned subsidiary, it's called CDL real estate asset managers. So for short -- I didn't come up with name. So for short, it stands for cream. So we might actually use that entity because Cream actually already has a capital market services license, CMS license. So -- but it really, really will be a dedicated platform. We will hire in a CEO and management team that will be accountable for the AUM growth accountable for the P&L of that unit. Accountable for the fee income and the investor outcomes, right? So this is going to be a very dedicated, and it will be governed by an investment committee at some stage will be an investment committee, maybe, maybe not. We will unveil more as as we progress throughout this year. But it is something we want to focus heavily on, right? And we believe that our so-called proprietary -- I mean, our inherent abilities as a developer, as an owner operator make us -- put us in a very advantageous position, okay, and gives us a proprietary pipeline by which we can approach this. And so the right side is basically the target. We intend to double our AUM from existing 5 to 10 within the next 3 years. Hopefully, if all goes well, hopefully we get there sooner than 2029. okay? But again, let's see how things go. And as I mentioned before in previous briefings, right, I think it's -- we will never be fully asset-light, okay? That's not the DNA of CDL. Okay? I mean, we are an asset owner. We currently have $36 million of assets on our balance sheet will never be asset-light, but we do need to make part of our company more asset-light and more nimble okay? And this will also help to drive growth in our return on equity, right, our ROE. So therefore, fund management is as well as strong capital recycling are the key ways for us to achieve this, right? So we need to ensure -- and so by doing fund management well, it will ensure greater capital efficiency, it will grow our recurring fee-related earnings as well as it will give us a higher ROE, as mentioned earlier. And I'm not going to go into too much detail on this slide, but as what I mentioned earlier, we have over 60 years of experience. I mean, CDL has been around a long time, okay? And we built up deep knowledge and expertise in all of these domains, right? I mean site acquisitions, property development from end-to-end, right? I mean, in terms of property sales and in terms of leasing, in terms of asset management, hospitality operations, I mean, we have certainly honed our skills over the last few decades. And I would say we're very competent at what we do. And we've done many partnerships and JVs in the past. So I think this lends up very well in order to give a boost to our fund management ambitions. And again, this is more of a road map just showing you how it's going to be done, right? We can originate deals either by seeding our own assets from our portfolio into managed vehicles or new acquisitions, okay? So the extra AUM that's going to come -- doesn't necessarily all come from CDL's our own portfolio and maybe new acquisitions that we manage on behalf of others. If we do go into a fund, so far, I've been very disciplined when we've been negotiating the current deals. I mean, I do not want us to be a substantial stack a part of the LP stack -- so my personal preference is to ensure that we are 20% or less of -- in terms of the LP stack for any PE fund that we set up and manage, right? -- because this then is a true divestment, right? I mean, if you're going to be like 80% of the LP stack of the fund, then you're just selling to yourself actually. So we can originate staff, then we will syndicate it out the third-party capital. We will obviously earn fees. And then we release capital that we can then redeploy into higher-yielding investments, high-yielding opportunities or paying dividends or pay down debt. And also many users are for capital to be redeployed. This is something we just thought we will touch on only because there were a lot of questions on this as well, especially when we announced it at our AGM earlier this year. This is basically the CDL performance share plan. And it's a share-based incentive framework that aligns senior management remuneration with long-term value creation for shareholders. So if you look at the so-called performance conditions, right? I mean, I would say they're very much aligned with our new GET+ strategy as well as what we need to do, right, in order to maximize shareholder value. So this is total shareholder return, earnings per share, ROACE, return on average capital employed as well as greenhouse gas emissions reductions, right, which is, I think, our corporate social responsibility that we have to do. And so I feel that our interests are heavily aligned, especially for management. So on the last slide, just to recap, although I've spoken at length about everything earlier. This is what I think we want to focus on the 3, 4, 5, 6, 3 years, 4 sectors, $5 billion of investments at $6 billion of divestments. And again, we want to put achievable numbers on there. So hopefully, especially with regards to divestment, we can surprise on the upside. And the trust part of the Gates is the payout, leverage unlock and scale. Okay. Thank you very much. Sorry. I actually ran on for much longer than I should have. Don't worry, there's no so-called cutoff time for the Q&A. So if -- please ask all the questions that you have. Thank you.

All right. Thank you so much, Sherman, for the very comprehensive Okay. Commercial break forward, I see on your hands. Just give me a commercial break while we set the stage up for the Q&A. So while we prepare the stage and as we bring up the chair, I've mentioned that we are holding the corporate briefing here for the very first time at the Union Square and any of our sales gallery actually because we want you guys to have a look. -- at the mixed-use development that's coming out. So you remember many years ago, you were here at this actual show flat where we're showing you Canning Hill peers. -- at that time was only a vision, yes. So if you look at it on the right-hand side, you actually see Canning Hill, peers in its full glory that's going to come up, and it should be completing sometime end of this year. So can you visualize that -- on your line, sorry, on my right. Yes, on your left and my right, but can you mention what you see there eventually will come into fruition. So that's the very exciting thing. And I think this is why it's very fitting that we are discussing CDRs mix chapter of value creation in the heart of an area that we have been actively shaping and rejuvenating the cityscape and in particular, the Singapore River. So maybe I think I will ask the management team to take seats. I see all the hands very excited, give me an opportunity to on the head, yes.

Randy has requested to take on 2 before Yes, please.

Thank you. So let me allow me to introduce the men we're all longs people on what cars can't really tell, but I have a lot of hands here already. But let me just quickly introduce the management panel. -- or those who are -- so in the center, we have Mr. Sherman Kwek, our Group CEO; on the right, Craig, our Group COO, mix to me is Mr. Chang Yang Hong, our Group General Manager; Ms. Yiong Yim Ming on my furthest left is our group and -- well, not new but somebody that you may have seen, but we've asked him to join on the panel is our CIO, Gerald Yong, okay?

So Yes, I will start very shortly with the Q&A. So please stand by. My colleagues are around the room and also for those who are joining us on webcast, you too can participate in this Q&A segment by tapping on the Question tab on your screen. So -- let's go. First then, I shall go on the third row. Let's start with Mervin.

Mervin from JPMorgan. Congrats on the rev after review. I think it was quite brave ambitious to say a 3-year time frame. You start taking the easy route out with 5 to 7 years, you want to call it, and I appreciate the details on the hotel business. A lot of investors thought there was a sacred cow that you never touch. So congrats on that. Maybe can we start with the Hotel segment. Obviously, 20% looking to enhance then 20% to divest. But can you give us some details in terms of the expected RevPAR increase GOP margin improvement that you expect over that time period? Second question I have in terms of Assuming you achieve all this in 3 years' time, bottom line, what do you expect in terms of uplift in profitability for the whole group potential dividend increase over the medium term from here. I think everybody wants to see what the the bottom line with you successful with all these initiatives. Thanks .

Thanks, Mervin, for your question. I'll take the hotel piece I think how we're looking at it is not so much on the RevPAR increase because we're weighing both heads, right? We are both the operator through our own brand, Main and Hotels Resorts, but we're also looking at it more specifically as the hotel owner. So I think what we've done here is we've broken that down into different buckets. And we hear that there's a core segment that we intend to keep. And the other 2 markets, of course, to optimize, which may take a bit longer than the 3 years depending whether it's the redevelopment further enhancement works. And of course, the last bucket is the 1 that we're all focused on, which is the next 3 years, which hotels would be in the divestment list. How we are looking at it is more in terms of obvious share our KPIs on this ROACE, right, which is returns on the capital employed. So by selling these hotels, we do expect that, that return will improve because some of these assets are -- I would say, it's a mix between mature assets that are already doing well and also some of which are not pulling their weight. So I think we have identified these and it will be a process to sell these. Unfortunately, I cannot name which hotels they are going to be. but we will focus on these hotels over the next few years.

Okay. Maybe I'll move down.

Let me just clarify I think Marvin also asked what kind of PATMI uplift we're expecting from this -- so the hotel divestment pool is 2 parts. One, of course, is more the mature assets as well as, so to speak, the not-so-performing assets. I would say net-net, they kind of offset in terms of NOI contribution. .

And the overall profitability.

The overall growth I think overall wise, I mean, if you look at 1.8B, clearly, I think we are streamlining. So with that, of course, I think we do expect a decrease in central costs and of course, decrease in financing costs. So that kind of offsets us. And you don't -- we are not really looking so much into investment into new hotels. So in terms of PATMI uplift, record, it will improve that segment, maybe by about 10%. .

How about the overall do you see the profit .

Overall to the group, I would think in terms of quantum wise, it should not be more than $10 million to $20 million.

Okay. Maybe, Shan Shall I take Janssen systems. .

This is Shan from Goldman. I have 2 questions on execution. First is on time line. I guess some of this divestment are not new. So I assume that the team has been working on it for some time. Given that the strategic review is out, can we actually expect execution on the $6 billion to be more front-end loaded? And if not, what are the reasons? Second is on U.K. and Australia divestment. The market is quite challenging. So if this don't come into fruition by year 3, what is your plan to be?

Shan, thanks for that question. Look, I mean, this list of $6 billion, right? I mean, something we've come up with over the past few months and obviously, I mean, there's been a lot of discussion in assets that moved around. And I would say that some of the deals may be front-loaded, but essentially, right, I mean, we took a 3-year time frame to it. So we looked at what we could reasonably divest within 3 years, right? So I wouldn't necessarily say that everything will be front-loaded. Yes, there may be some big wins or quick wins early on. But we do need 3 years, right? I mean, to divest $6 billion. I mean, unless you want me to just go on a fire sale and sell everything, which, obviously nobody wants, right? It's not in the best interest for CDL shareholders. So we will need time to get these divestments done. I do not believe looking at the list that we have that there is any divestment we can't do within the next 3 years. So there won't be any leftover that we can't do. And again, without revealing too much because obviously, I mean, we -- management still needs some flexibility here. I mean our actual divestment list is bigger than $6 billion. Okay? So sometimes, there may be a case where one asset is taken out, and another is put in. So I do not see us not meeting this $6 billion target. And some of these properties may not be easy to sell in the current environment. But -- you never know. I mean sometimes even in a difficult market, a certain -- an investor may have a different intention for the asset or they may want to redevelop it into another asset class, which is faring better. So you'll be surprised, as you probably know already, even for our hotels, we've sold hotels we've sold. I think at the briefing, I last talked about how we saw away our Millennium Hotel in Millennium Harbors house in Boulder, Colorado, right? I mean that asset also almost long forgotten about has been losing money. But wanted converted into student accommodation because it's -- and so yes, we made a very substantial gain in selling that as I think we sold it for $85 million and made $18 million color books of $5 million. So -- so as an example of, yes, conditions may not be great in certain markets, but sales can take place as well. Now I mean are we -- I mean I obviously want to maximize the value we can obtained for each divestment. And so I will not sell at fire sale prices or prices that don't make any sense at all. But are we willing to take losses for certain parts of the portfolio like the U.K. legacy properties or that? Possibly. I mean, I think we have to be realistic. I mean when we sold Ransoms Wharf, the previous site that we announced as part of the U.K. legacy platform, I mean we took a small loss on that. I think it was about GBP 10 million, right, or thereabouts. So sometimes, you know what, I mean you've got to take the good with the bad. And I think we are practical, but yet at the same time, we will not leave money on the table just so I can tell all of you, A, I met my target, right? That, I think, would not be fair to CDL.

Okay. Maybe Vijay. I'll take that first, and then I'll come back to the media. Let's just go visit. .

From I have 3 questions. Maybe I'll take it 1 by one. First, in terms of the $6 billion divestment target, is that a baseline? Or is it a ceiling based on your portfolio, which you have assessed at this point of time? And how does this target compare with your FUM growth of 10 billion? I suppose you divest an asset to fund management, would you count it as you have made the target of billion? And would you be growing our portfolio via REITs or private funds? In the future this .

Okay. So Vijay, you -- sorry, maybe I should take a question at a time. Your first question was the $6 billion. Actually, I had answered that to Shuen when she asked earlier. -- the 6B is something that we see as very achievable. In fact, the overall divestment list that we have is bigger than that. So that, for me, is a floor. It's not a ceiling, okay? So it's a target I have to hit, we have to hit, okay? -- and hopefully, far exceed if we can, okay? Okay? But we will hit it. Your second question is, okay, if we were to see some assets in the fund management, as mentioned earlier in my presentation, not all of the fund management are so-called AUM will come from our own assets, okay? Some of them may be new acquisitions. And without revealing too much wait and see because we've already been approached by certain parties that like what we have, our expertise, all that and willing to do fund structures with us on new acquisitions, right, stuff that neither party already owns, right? So we may be looking at that. So I would say that, yes, if we were to see an asset into a fund vehicle, and as I mentioned earlier, we will not be holding too much equity in any fund that we invest in, preferably not more than 20%. So I will see that as a real divestment. We are divesting that just into a vehicle that preferably will be managing -- so that will count. But that will be a portion of the 6 Bomela. It won't be all of it, so on.

And maybe you .

What was your third question? Sorry. .

How are you planning to grow your fund management? Is it like a REIT or a private fund, how you're looking at -- and what does it mean for your existing REITs?

No. It just means that, I mean, we are going to set up -- we're going to really form a proper fund management entity, although we do have a fund vehicle ready, but we really want to higher. I think best-in-class team, okay, a CEO and his team, who's going to really drive our fund management ambitions. We're going to ensure that we closely monitor and add further value to the REITs that we manage as well as set up potential private funds and when the capital market conditions are right potential new REITs as well.

Quickly my second and third question. In terms of commercial management, commercial growth in Singapore, the investments, would it be organic like Union Square Residences or you're looking at M&A? And lastly, maybe what's the board views on the overall strategic review? Any comments on the board .

Yes. In terms of commercial expansion in Singapore, it could be both, it could be redevelopment of an existing asset, it could be an acquisition of a new property. So we are always, I think, on the lookout for accretive deals that are fit in with our strategy. And in terms of the board views, I mean, this is this strategic review. I mean, was the outcome of it. I mean everything you see here today, I mean, it was approved by our Board unanimously. So yes, this is something that management spend a lot of time putting this together. And as mentioned earlier, we are really grateful to our advisers to neo as well. I mean many workshops and the process has lasted basically for much of this year. But yes, I mean, this is something that is board approved. So thank you.

Okay. mindful. Let me just take 1 question from Pavia, maybe if you could pose your question, please. .

I have a couple of questions for you today from Bloomberg. The first is you've broken down the $6 billion by asset class. How much of it will be sold to outside buyers and how much seeded into your own vehicles to grow AUM -- and then also curious to know, CDL has fallen short of divestment targets before. What are the consequences if you miss the $6 billion? And a question for the Chairman. Does the Chairman want to lay out a succession plan? And can he commit to letting Chairman succeed him?

Okay. So the first question was about how much of that $6 billion will go into managed vehicles, again, in my answer to Sharon and Vijay. I mean -- we don't really disclose to that granularity. I think, again, we need to leave some flexibility for the team, right? I mean -- and we will shift and move according to market conditions. But part of that 6B will definitely make it into managed vehicles, okay? But as I mentioned, not all. How much of it -- I mean, let's wait and see. Okay. Anyway, you have the basically, what I presented today is like a report card, right, for management. So you have the next 3 years to monitor our performance and hold us accountable for what we have said today. And again, we'll be releasing periodic updates. Anyway, I mean we do every half year, we do in-depth updates to the media and analysts. So you'll be able to see -- are we moving closer towards our targets? Are we executing the right direction? So I think that's where we'll be measurable. The second part of your question, I'm...

You missed your target. .

Yes. capital investment. Again, I think the problem with that is when you do annual divestment targets, right? Yes, last year, we were able to hit $2 billion, okay? And everyone rejoice. But it's not healthy. I think the annual divestment targets, then you'll be hard-pressed to hit it. And again, I don't had some sales in hand, but I didn't want to do them because I will be leaving money on the table. And those assets I felt were worth a lot more than the prices that we're getting. . So that's why we give 3-year -- a 3-year time frame. And as mentioned earlier, to Shen and Vijay, this is a floor, not a ceiling. So this is the minimum that we're going to do over the next 3 years and fully confident that as a team, we're going to make it happen. And the last one, really I apologize since our Chairman is not here, I cannot answer on his behalf about succession planning, but thank you for that question.

Actually, if I can just add on. The ex call is remunerated both on STI as well as LTI. So the LTI slide was a flash earlier on with the 4 indicators for divestments is also part of our STI target. So yes, we will be paying the line for not missing the divestments. If that's the question. .

Okay. Let me go to the next row. Okay, I see. Ladies first, so we go with Real. .

I'm Rachel from Macquarie. And thank you for giving such a detailed presentation. I just want to clarify a few points. In terms of your dividend payout, how should I think about it? I mean showed that you have $1 billion of gains from potentially contribution to your PATMI and your dividend payout is more than 35%. So should I just easily assume your $1 billion then 35% will be paid out for dividend payout? Or would you then prioritize your leverage first before you pay out to your dividends and -- just a bit of clarity on that? My second question is really on the living sector. I remember you said that you wanted to divest seat some money of your living sector into the fund. But when I look at your $6 billion of divestments target, the living sector is only 5%. So just wondering, was that seeding included in that 5% seems a little bit smaller, yes. SP-6 I'll do the dividend one.

For dividend payout, I think we have put 35% as minimal. I know you guys are computing a 1B divestment gains and that to $0.30. So I will just give a few parameters to that. Number one, 1B, I think, is conservative if you ask me. Number two, if you look at divestment, I think we have already committed -- so in terms of divestment proceeds, which I'm sure will come in as 1 of the questions later. Of course, I think where we have divestment proceeds, our first priority will be to return debt. -- so of course, to return that, especially those in natural currency. So the by U.K., of course, I'll retirement U.K. debt. And then after that, basically because we do central treasury, everything goes to retiring net debt to start with. And no, we don't really need the divestment proceeds to pay dividends. So effectively, we always look at at least 1 billion EBITDA. So I think the operating proceeds from that would pay for rejuvenation of our projects for financing costs as well as for dividends. So the proceeds is kind of delinked. So I think really, I think what drives us is the gains where we want to really dedicate that we will pay a minimum of 35% of PATMI.

Rich, on your question for Living sector, -- good Catch, we have allocated 5% of the $6 billion that works about $300 million only, right, alluded to your question. Yes, we have a portfolio of $3.7 billion in green pipeline AUM, especially for some of the hot asset classes in Japan, I think we mentioned before, there are a lot of interested parties we may have done it earlier or during the 3 years. .

So that just hear from us in due course. .

Yes. So Rachel, and answer to your question, it's not included in that in that living sector, part of it on. .

Maybe just 1 follow-up in terms of the dividend payout because you put more than 35%, right? Under what circumstances would you think about paying up more than and you parent. .

Well, that will depend on various factors, including, obviously, our financial performance for that fiscal year -- you may remember that last year, for FY 2025, we paid out 40%, right, of PATMI, I think we had a strong tally of $2 billion of divestments. Our operations were doing well. So I think it really depends. And ultimately, this subjected to the approval of our Board it's something that we review annually. But we certainly want to reward our shareholders for coming along with us on this ride as we grow, as we enhance as we transform and with all the plus outcomes. So we certainly will try to reward them as much as possible.

Okay. Derek, and then it, I'll come back to the rest, Eric, and then you can then talk us and then Brandon. Okay. All right, Derek, what are you? .

Thank you, Melinda. Sherman team. I just had a few questions. First 1 is on your hotels, right? I think you mentioned that about $5 billion worth of hotels is well performing. I'm just wondering whether -- could you give us a bit more color and metric around what you mean by well performing, maybe ROACE or yields that you think to be fairly -- you are fairly happy about. Then at $1.8 billion that you would like to enhance, -- is it going to be still be hotels? Or is it going to be a different type of asset class. So that's my first question. Second question is on investment. You mentioned about $5 billion that you would like to deploy. And a large part of that is Singapore. Can I assume that to be above what you typically do on a BAU basis. So for example, -- the group is participating in a lot of land tenders. So this $5 billion, is it on top of what you usually do? And could you give us a sense of where or what asset class is most interesting. And last but not least, I'm just wondering whether as you achieve all your targets, where would we -- should we be pinning ROE or your return on assets in the medium term, that would be very helpful if you can give us some guidance

Thanks, Derek. I'll take the hotel question. you're right, under the core portfolio, we have identified a couple of assets which are -- I would say they are very hard to replace, right? I mean they are assets generate very good income for us. if we were to sell them, I think naturally, we also divest for very high profits. But I think we're thinking of them in the long term that they will continue to appreciate and these are likely in very key locations that have further capital appreciation ahead of them as well. So I think that's how we're looking at it. And of course, the key part of our recurring income as well. For the enhancement bid, I would say it's also a mix. We have some assets which we identified after we done the works will retain its hotels. And in our slide, we've shown that it could go either way. It could either be then be divested or it could go back into our core portfolio. But there's also a mix of assets which are not for redevelopment. And in those, it's, I guess, still open-ended as to what they may become. Some of them may still have a hotel component, but with other asset classes insight as well.