Swire Properties Limited

In the first half of 2026, underlying profit increased 11% year-on-year to HKD 4.9 billion, and recurring underlying profit increased 36% year-on-year to HKD 4.7 billion. Attributable gross rental income rose 3% year-on-year, or 6% like-for-like excluding the Miami disposal, while Hong Kong retail income increased 3% and Mainland China retail rental income grew 14%. The investment portfolio was valued at HKD 272 billion, up 1% from the start of the year, and the company booked a fair value gain of HKD 578 million versus a first-half 2025 fair value loss of HKD 6.1 billion for the full year 2025. Net debt rose 2% to HKD 40 billion and gearing edged up from 14.6% to 14.8%, while the weighted average cost of debt fell 20 basis points to 3.3%. Looking ahead, management said Hong Kong office rents should see opportunities for positive reversions in Pacific Place in early 2027, while Taikoo Place would take longer; Mainland retail sales momentum is expected to remain healthy, and new openings are scheduled in Sanya in late December with grand opening at Chinese New Year.

Tim Blackburn said the first half was a strong period with good momentum across the portfolio, helped by residential sales, retail resilience, and portfolio upgrades under the HKD 100 billion plan. He described the business as entering a ‘harvest phase’ as several projects approach completion, and emphasized disciplined execution, capital recycling, and continued investment in core markets. His tone was constructive but measured, repeatedly pointing to resilience in Hong Kong offices and strong demand in Mainland China retail and residential.

Roy Shearer focused on the financial resilience of the group: underlying profit of HKD 4.9 billion, recurring underlying profit of HKD 4.7 billion, attributable gross rental income up 3% year-on-year, and a 6% like-for-like increase excluding Miami. He highlighted a stronger valuation backdrop, with the investment portfolio at HKD 272 billion and a HKD 578 million fair value gain, plus a lower cost of debt at 3.3%. He also stressed balance-sheet flexibility, noting HKD 60 billion of committed facilities, around HKD 20 billion of cash and undrawn committed facilities, gearing of 14.8%, and capital commitments of HKD 28.6 billion, with most Hong Kong commitments after 2029.

Analysts focused on Mainland China retail softness, Hong Kong office reversions, Mainland office leasing/disposals, and whether the new CFO would change capital allocation priorities. Management said Mainland retail sales remained healthy, with some July variability largely due to weather, and expected to see normalization in some comps but still solid trends; for Hong Kong office, Tim said negative reversions were narrowing and that Pacific Place could turn positive in early 2027, while Taikoo Place would lag. On Mainland office, management said Beijing occupancy was at a post-pandemic high of 97% at One Indigo, Taikoo Place Beijing was 30% to 40% pre-committed, and any disposals would be evaluated case by case but there was nothing specific. Roy said there was no change in strategy with his arrival and that execution, capital recycling, and financial discipline would remain priorities.