Wharf Real Estate Investment Company (SEHK:01997) H2 2025 Earnings call March 10, 2026 05:00 AM ET Company ParticipantsAngela Ng - Investor Relations ManagerKarl Choi - Senior DirectorStephen Ng - Chairman and Managing DirectorConference Call ParticipantsAlpha Wang - Global Investment Research AnalystKarl Chan - Equity Research AnalystNone - AnalystNone - AnalystNone - AnalystNone - AnalystAngela NgAfternoon, everyone. Welcome to Wharf REIC final results presentation. I am Angela Ng from the IR team. You ca ...

Wharf Real Estate Investment Company (SEHK:01997) H2 2025 Earnings call March 10, 2026 05:00 AM ET Company ParticipantsAngela Ng - Investor Relations ManagerKarl Choi - Senior DirectorStephen Ng - Chairman and Managing DirectorConference Call ParticipantsAlpha Wang - Global Investment Research AnalystKarl Chan - Equity Research AnalystNone - AnalystNone - AnalystNone - AnalystNone - AnalystAngela NgAfternoon, everyone. Welcome to Wharf REIC final results presentation. I am Angela Ng from the IR team. You ca ...

Wharf Real Estate Investment Company (SEHK:01997) H2 2025 Earnings call March 10, 2026 05:00 AM ET Speaker1Afternoon, everyone. Welcome to Wharf REIC final results presentation. I am Angela Ng from the IR team. You can download the PowerPoint presentation from the QR code on this LED wall. Our management presenting today includes Mr. Stephen Ng, Chairman and Managing Director, and Mr. Horace Lee, Director. Before I go through the PowerPoint presentation, let me first invite the Chairman for an opening remar ...

Market Challenges Dampen Group Profitability Wharf Real Estate Investment Company Limited 2025 Final Results | 10 Mar 2026 • UNP +5% to $2.13 per share • 2H DPS +10% to $0.66 (FY $1.32) • Net Debt ↓$2.2B to $32B; Gearing 17.2% • Interest Cost Decline Outpaced Mild Declines in Revenue & OP • Overall Occupancy of IP Portfolio 92% • Net Asset Value -3% to $59.85 per share Economic Indicators Positive But … Source: Bloomberg, Census and Statistics Department, Hong Kong Tourism Board OVERVIEW Results Highlights ...

Financial Data and Key Metrics Changes - Investment properties revenue decreased by 3% and operating profit fell by 4% due to persistent weak market conditions [2] - Gearing ratio improved to a new low of 17.6%, reflecting the company's commitment to deleveraging [2][6] - Core underlying net profit remained stable, with a 3% increase attributed to lower borrowing costs, which decreased by 27% [2][6] - Interim dividend per share increased by 3% to HKD 0.66 [3][6] Business Line Data and Key Metrics Changes - Hong Kong investment properties and hotels saw a 3% increase in core underlying net profit [3] - Retail rental income softened due to a drop in turnover rent, while office rental income rose by 2% driven by higher occupancy [5][12] - Harbour City maintained its revenue position relative to peers, benefiting from its scale and location [4] Market Data and Key Metrics Changes - Inbound visitation to Hong Kong increased from 9% to 15%, and retail sales ended a fourteen-month decline with positive growth in May and June [5] - Retail occupancy at Harbour City was 93%, while office occupancy rose to 90% [11][12] - Overall retail sales in Hong Kong have retreated to 2011 levels, with Harbour City retail revenue at 2014 levels [3][4] Company Strategy and Development Direction - The company is focused on deleveraging and maintaining solid cash flow despite falling asset values [6] - Plans to enhance experiential retail to drive engagement and sales, including partnerships with premium brands [9][10] - The company is considering significant capital investments to enhance competitiveness, particularly for the Marco Polo Hong Kong Hotel [24][25] Management's Comments on Operating Environment and Future Outlook - Management noted that the retail market in Hong Kong is in a base-building phase, with cautious optimism for gradual recovery [3][21] - Geopolitical tensions and uncertainties around interest rates continue to impact the market [3][14] - The company remains agile and proactive in navigating ongoing headwinds, with a focus on sustainability and ESG initiatives [15][16] Other Important Information - The company achieved LEED Platinum certification for several properties, reinforcing its commitment to sustainability [10][16] - Total equity has declined by 11% since IPO, primarily due to investment property revaluation [7] Q&A Session Summary Question: Retail sales performance and footfall outlook - Management observed a small year-on-year improvement in retail sales in May and June but cautioned that it is premature to conclude a recovery [21][22] Question: Capital investment plans for hotels - Management is evaluating whether to redevelop the Marco Polo Hong Kong Hotel or undertake a complete overhaul, with significant investment required [24][25] Question: Occupancy cost sustainability and rental pressures - Occupancy cost at Harbour City is stable at about 20%, but management does not expect base rent to increase significantly in the near term [29] Question: Office rental income increase explanation - The increase in office rental income is attributed to improved occupancy rather than rising rent per square foot [32][34] Question: Competitive landscape in retail - Management acknowledged increased competition in the retail sector, particularly in Cosway Bay, and emphasized the need for strategic investments [38][39] Question: Future acquisition plans - The company is not in a hurry to undertake acquisitions and will only consider attractive opportunities that align with its deleveraging strategy [53] Question: Redevelopment potential of Ocean Center - Management confirmed plans to redevelop Ocean Center but prioritized the Marco Polo Hong Kong Hotel due to its current state [75]

Financial Data and Key Metrics Changes - Investment properties revenue decreased by 3% and operating profit fell by 4% due to weak market conditions [3][4] - Borrowing costs decreased by 27% thanks to a drop in HIBOR, leading to a stable underlying net profit [3][4] - Gearing ratio reached a new low of 17.6%, reflecting the company's commitment to deleveraging [3][7] - Interim dividend per share increased by 3% to HKD 0.66, maintaining a consistent dividend policy since IPO [4][7] Business Line Data and Key Metrics Changes - Core underlying net profit from Hong Kong investment properties and hotels increased by 3% [4][7] - Retail rental income softened due to a drop in turnover rent, while office rental rose by 2% driven by higher occupancy [5][6] - Harbour City maintained its revenue position relative to peers, benefiting from its scale and location [5][6] Market Data and Key Metrics Changes - Retail sales in Hong Kong showed quarter-on-quarter improvement, ending a fourteen-month decline with positive growth in May and June [5][6] - Inbound visitation growth rose from 9% to 15%, indicating a recovery in tourism [5][6] - Retail occupancy at Harbour City was 93%, while office occupancy rose to 90% [12][13] Company Strategy and Development Direction - The company is focused on deleveraging and maintaining solid cash flow amidst a challenging macro environment [3][4] - Plans to enhance experiential retail to drive engagement and sales, including partnerships with premium brands [9][10] - The company is considering significant capital investment for the Marco Polo Hong Kong Hotel to enhance competitiveness [24][25] Management Comments on Operating Environment and Future Outlook - Management noted that the retail market in Hong Kong is in a base-building phase, with a cautious outlook for the second half of the year [4][24] - Geopolitical tensions and uncertainties around interest rates continue to impact the market [4][15] - The company remains agile and proactive in navigating ongoing headwinds while focusing on sustainability initiatives [16][17] Other Important Information - The company achieved LEED Platinum certification for both Times Square and Harbour City offices, reinforcing its commitment to sustainability [11][17] - The company aims to cut Scope 1 and 2 emissions by 42% and Scope 3 emissions by 25% by 2030 [16][17] Q&A Session Summary Question: Retail sales performance and sentiment outlook - Management noted a small improvement in retail sales in May and June but cautioned that it is premature to conclude a recovery [22][23] Question: Capital investment plans for hotels - Management is evaluating whether to redevelop the Marco Polo Hong Kong Hotel or undertake a complete overhaul, with no immediate plans to start work [24][25] Question: Occupancy cost and rental expectations - Occupancy cost at Harbour City is stable at about 20%, and management does not expect base rent to increase significantly in the near term [31][32] Question: Office rental income increase - The increase in office rental income was due to higher occupancy rather than rising rent per square foot, with competition remaining a challenge [36][37] Question: Future plans for Times Square - Management indicated readiness to invest in tenant and shopper engagement at Times Square to remain competitive [75][76]

Financial Performance - Group revenue decreased by 1% YoY to $6407 million[20] - HKIP & Hotel revenue decreased by 3% YoY to $5917 million[20] - Operating profit decreased by 5% YoY to $4684 million[20] - Underlying Net Profit (UNP) remained stable at $3119 million, with HKIP & Hotel UNP increasing by 3% to $3084 million[20] - Net IP Fair Value Change resulted in a deficit of $5118 million[20] - Interim Dividend Per Share (DPS) increased by 3% to $0.66[20] De-Leveraging and Financial Management - Borrowing cost decreased by 27% YoY, a reduction of $292 million[8,22] - Gearing ratio reached a new low of 17.6%[8] - Net debt decreased by 21% since IPO[26] Market Overview - Hong Kong retail sales retreated to 2011 levels, while Harbour City retail revenue was at 2014 levels[11] - HK retail sales showed improved momentum in Q2, increasing by 0.3% compared to a 7% decrease in Q1[14] Harbour City Performance - Harbour City retail revenue remained flat[45] - Harbour City retail occupancy was 93% and office occupancy was 90%[45]