# Cromwell European Real Estate Investment Trust — 1H 2026 Half-Year Results Presentation

Event: 1H 2026 Half-Year Financial Results Webcast Presentation & Analyst Briefing
Date: 13 August 2026
Issuer: Cromwell European Real Estate Investment Trust (SGX:CWBU)
Provenance: automated speech recognition (asr) of the issuer's public webcast recording
Source recording: https://investor.stonewegeuropestapledtrust.com.sg/misc/Stoneweg_Europe_Stapled_Trust-1H_2026_results_briefing.mp4
Official record: https://investor.stonewegeuropestapledtrust.com.sg/financial_results.html
Presenters: Mr. Simon Garing — Chief Executive Officer and Executive Director, Mr. Shane Hagan — Chief Operating Officer, Ms. Elena Arabadjieva — Chief Operating Officer and Head of Investor Relations
Words: ~8,758

Unofficial machine transcript. Prepared by SMID Research from the issuer's public results webcast recording by automated speech recognition, without a full manual check: expect mis-heard names and figures. There is no speaker attribution: the source recording carries no diarisation, so cues are shown as timestamp and text only; timestamps refer to the recording. Not a company publication. Cromwell European Real Estate Investment Trust's own investor relations page (https://investor.stonewegeuropestapledtrust.com.sg/financial_results.html) is the authoritative record. Copyright in the briefing rests with Cromwell European Real Estate Investment Trust; contact contact@smidresearch.com for corrections or removal.

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[00:00:04] Good afternoon and welcome to the Stoneveg Europe Staple Trust's first half 2026 results briefing. We will begin with remarks from the CEO of the Manager, Simon Gering, followed by a presentation from the management team. We'll then open the floor for Q&A. During Q&A, please click the raise hand button to be placed in the virtual queue. Alternatively, you can submit text questions via the Q&A feature. Now I will hand across to the CEO of the Manager of the Stoneveg Europe Staple Trust, Simon Gering. Simon, over to you. Thanks Kyara and good morning and thank you to all of us for joining today at our first half results discussion and a bit of a strategic update as well.

[00:00:49] So if we turn to page two of the first half results presentation, CERT's 2.2 billion euro portfolio is predominantly freehold logistics and light industrial assets located across Western Europe. The portfolio is highly diversified, supported by nearly 800 tenants and a long-weighted average lease to expiry of 4.9 years, providing the resilient and visible income streams. The Netherlands remains our largest country exposure at approximately 30% of the portfolio, reflecting its importance as a key European logistics hub and the strength of its high-tech and export-orientated economy. Our assets are concentrated in major gateway cities and strategic logistic corridors, including Amsterdam, Paris, Milan, Frankfurt and Copenhagen. Overall, CERT has built a large-scale, high-quality European logistics platform that continues to deliver the stable cash flows, while our emerging data center development portfolio provides an additional avenue for long-term growth and value creation.

[00:01:50] So before we get into the results, I'd like to take a step back and summarise CERT's transformation over the past three years. This is a story of a REIT that has undergone a meaningful reset and emerged in a structurally stronger position. Today, CERT is in a materially stronger position. Logistics, light industrial and data centres now represent the majority of the portfolio. Our balance sheet has been strengthened with no material refinancing requirements until 2030 and distributions have stabilised. CERT has a new and aligned sponsor based in Europe in the SWI Group or Stoneveg. Looking ahead, we see multiple pathways for future value creation, including rental growth across the logistics portfolio, asset enhancement and redevelopment initiatives and substantial growth from our data centre development strategy while continuing the capital recycling that we've been undertaking for the last three to four years.

[00:02:47] This morning, we also announced that discussions are underway with our sponsor SWI Group regarding various strategic governance and organisational initiatives that will further enhance alignment, simplify the platform, including the potential internalisation of the REIT manager and the asset management platform to create long-term value for security holders. I should add that no definitive agreement has yet been reached and any proposal would remain subject to local laws, regulatory and security holder approvals. Watch this space as they say. Against that backdrop, let me now turn to the first half results. Turning to page 4, the right-hand chart shows the current portfolio mix, designed to capture steady and growing income from logistics and substantial growth potential within our data centre options.

[00:03:38] The left-hand chart shows our medium-term allocation targets, continuing our pivot to logistics and data centres and funded by the steady sell-down of our office portfolio. Logistics and light industrial already represent the largest asset class at 56% of the portfolio and we target to increase this asset class to around 70% by 28%. We remain constructive on this sector, supported by strong structural demand, healthy occupier activity and continued positive reversion across our key markets, while also leaning heavily on our platform's value-add DNA in this sector. Alongside this, data centres provide an additional growth pillar within the stapled trust structure. Our dual-track approach, combining investments in Aonix with selected conversion opportunities within the REIT's existing portfolio, provides a pathway to increase data centre exposure from 7% today to around 15% to 20% over time.

[00:04:37] At the same time, we continue to reduce office exposure from 45% back 3 years ago to now 35% today with a target range of 15% to 25% by 2028. Overall, the portfolio is becoming increasingly concentrated in sectors where we see the strongest long-term growth opportunities in both income and value, and where we feel we have a competitive and scale advantage. Having covered the portfolio strategy, let's talk about the first half results specifically on slide 5, which demonstrate the strength of StoneVed's local teams and the benefits of the strategic actions we've taken. I'm pleased to report that the first half 2026 distribution per security is €0.642, up 1.4% year-on-year, and remains consistent with the Board's DPS guidance for the full year to be broadly in line with that of last year.

[00:05:37] Operationally, performance remains steady. Like-for-like NPI increased 1.3%, supported by continued strength in our core assets and core portfolio, while distributable income and DPS remain slightly ahead of the prior period. NAV per stapled security remained broadly stable. Leasing activity, as you can see with the key stats here, was healthy during the half, generating positive rent uplift and supporting occupancy increases across the portfolio. And our balance sheet is in very good shape, which enabled a small but a creative buyback. Turning to capital recycling, we continued to execute on our portfolio repositioning. We acquired a 35 million logistics facility in Wandixvene near Rotterdam at a meaningful 8% discount to both valuation and 37% below reinstatement cost.

[00:06:32] We also invested €50 million into AONIX via providing a mandatory convertible instrument. I'll discuss more of these features later. Importantly, both investments are accretive to DPS. On investments, we completed the sale of Riverside Park, a Warsaw office asset, at a 5% premium to VAL. This transaction is consistent with our ongoing efforts to reduce non-core office exposure and further reinforces the pivot towards logistics and light industrial. Turning to slide 7, CERT has now delivered its fifth consecutive period of portfolio valuation growth, despite a period marked by geopolitical uncertainty and higher interest rates. The portfolio valuation is up 23 million, or 1.1% in the half, driven primarily by growth in passing rents and overall market-rank growth across the portfolio.

[00:07:29] The gains were not surprising, led by our logistic assets. Our jewel in the crown, Park de Dock in Paris, is now our largest asset by valuation at over 180 million, increasing by 9 million during the period, again as higher passing rents and new leasing activity continue to support the value creation. This asset has almost doubled the value from our original purchase price. Our other very strong performing asset, Wehrmacht, which is a last-mile park in Amsterdam, also performed well, contributing a 3 million euro uplift, again on the back of record-level rents. Within the office portfolio, Hug Support in The Hague, now our second largest asset at 177 million, recorded a 3 million valuation gain,

[00:08:19] again driven by early indexation of the largest tenant, National Medellanders, new lease which commences in 2027. Navesa in Italy also delivered a 2.2 million uplift, supported by positive indexation and a reduction in leasing incentives. Overall, the valuation results demonstrate the quality of the portfolio and our local Stonebeg team's ability to drive value through their active and experienced asset management. So beyond acquisitions and divestments, we're continuing to create value through targeted asset enhancement and redevelopment initiatives across the portfolio. The slide here shows three examples. As mentioned previously in The Hague, we're working alongside NN on an ESG-led repositioning that will transform this asset into one of the most energy-efficient and employee-focused and friendly buildings, directly supporting the tenant's strategy.

[00:09:17] Construction is expected to commence in the first quarter of next year, with completion targeted by mid-2030. Importantly, this initiative has already supported rent reversion of more than 50% with the new 20-year lease, which commences from the start of construction, not at the end. In the UK, we're expanding our relationship with Thorn Lighting at Spennymore through a new 15-year lease running to 2039. The project includes the development of an adjacent new warehouse and rooftop solar installation, with an estimated yield on cost of 6.3%. And lastly, at Rudekata in central Amsterdam, we have secured an irrevocable master plan for a premium office redevelopment adjacent to the Amsterdam Central Station.

[00:10:05] Construction should be ready to begin in the second quarter of next year, well within the current tenant's demand in this part of the cycle for this type of premium product. Turning to sustainability and governance as my last slide for the opening remarks, I'm pleased to report that we've met or exceeded all three sustainability-linked KPIs embedded into our financing framework, covering green lease Scope 3 tenant commitments, Bream or LEED certifications and our annual Gresby score. We have almost achieved half of our 2030 greenhouse gas emission reduction targets, although there remains more work to do on reducing energy intensity across the portfolio. These efforts continue to be recognised externally.

[00:10:55] In the latest Singapore Governance and Transparency Index announced only a few days ago, CERT ranked amongst the top six REITs and business trusts in Singapore and now has placed in the top 10 for seven consecutive years, reflecting our long-standing commitment to strong governance, transparency and stakeholder engagement. In addition, MSCI recently upgraded CERT's ESG rating from single A to double A, with CERT recognised as a leader among more than 500 real estate management and service companies globally. Together, these achievements reinforce the progress we are making in strengthening both the sustainability and governance foundations of the platform. So with that, I'll now hand over the presentation to our Head of Finance, Hui Chen,

[00:11:42] to give you more details on the financial results for the half. Thank you, Hui Chen. Thank you, Simon. Good afternoon, everyone. I'm pleased to present CERT's results for the first half. The figures on this slide are on a consolidated basis and include both the REIT and the business trusts. Further details are available in the financial statements released earlier today. The first half net property income was €65.4 million, down 2.3% year-on-year, mainly due to the impact of asset divestments. Excluding this effect, the underlying operating performance remained resilient. In particular, when taking into account the 2 million contributions from our investments in AONEX, NPI was broadly in line with the first half of 2025.

[00:12:36] On a light-for-light basis, NPI increased by 1.3%, driven by the continued strength of the logistics and light-industrial segment. Excluding Parisian, which was reclassified from the office sector, NPI from this segment increased by 2.7%. Interest costs were 5.2% higher due to higher borrowings. Our cost of debt remained stable at 3.9% compared to 3.86% a year ago. Distributable income was in line with the first half of 2025. Distribution per stupid security increased by 1.4%, supported by the securities buyback program, which contributed approximately 1% to DPS growth. The waterfall chart on slide 12 shows the key movements in the distributable income

[00:13:35] compared with the prior corresponding period. Encouragingly, strategic initiatives increasingly contribute to earnings growth. Contributions from AONEX, the Netherlands acquisition and stronger logistics operations largely offsets the earnings impact of asset sales completed under the portfolio repositioning program. This demonstrates the progress we are making in recycling capital from lower growth and non-core assets into investments that offer stronger income and value creation. At the same time, interest costs have largely stabilised. This slide sets out the key dates for the first half distribution. The distribution reinvestment plan remains suspended because CERT continues to trade at a discount to net asset value.

[00:14:32] Although we are encouraged to see this discount narrowing, the business trust will not make a distribution at this stage as its investments have yet to generate positive cash flow. Accordingly, the first half DPS of €6.642 will be paid entirely from the REIT whose distribution policies remain unchanged with a minimum payout of 90% of distributable income subject to board approval. Moving to the balance sheet on slide 14, here you can see the REIT, the BT and the Stippard Group combined balance sheet. As at 30th June, 2006, such balance sheet remains in a good liquidity position with €45 million of cash and only €30 million drawn against the €200 million revolving credit facility.

[00:15:28] Total assets increase following new investments in the first half while NAV per security remains largely stable. Overall, the balance sheet continues to provide flexibility to execute our strategy for maintaining investment-grade credit metrics. I am pleased to report that CERT's credit metrics remain comfortably between all bond, lenders and rating agencies' requirements, supporting our investment-grade ratings from Fitch and S&P. During increase during the first half as capital was deployed into new investments but remains below board limits and is expected to moderate as capital recycling initiatives continue. Interest coverage ratio on a trailing 12-month basis is 3 times calculated based on CERT's EMTM programme.

[00:16:23] These remain well above our covenant requirements, rating agency metrics and MS limits. With 90% of our debt fixed or hedged, the impact of interest rate movements on interest expense and distributions is expected to remain limited. A 100-basis point increase in interest rates would have only a minimal impact on ICR. The key takeaway is that the balance sheet remains appropriately structured for both resilience and growth while preserving access to multiple funding sources. This slide illustrates the strength of our debt maturity profile with no material refinancing requirements until 2030. CERT remains well-insulated from short-term volatility in debt markets.

[00:17:18] I will now pass the portfolio highlights to Elena. Thanks, Wicheng. Turning to slide 18. The quality of CERT's portfolio is underpinned by a highly diversified tenant base of approximately 750 tenants across 930 leases. More than 90% of our tenants are multinational corporations or government-related entities providing strong credit quality and resilient cash flows. Importantly, tenant concentration remains low, with no single tenant contributing more than 4% of headline rent and our top 10 tenants accounting for just 22% of portfolio income. The diversification continues to be a key source of resilience, particularly in the current uncertain geopolitical environment. Moving to slide 19.

[00:18:16] Portfolio occupancy in the first half increased to 93.7%, up 110 basis points since December 2025. Western Europe continued to perform strongly with occupancy of 94.7%, while Central Europe stabilized at 84.4%.

[00:18:39] logistics and light industrial continue to perform strongly, supported by healthy leasing demand and positive rent reversion across key markets. Rent reversion remains in the very high single digits at 9.6% of the first half, reflecting the resilience of the underlying leasing markets. During the period, we signed or renewed approximately 96,000 square meters of leases, representing close to more than 8% of the portfolio on the back of continued tenant demand from high-quality, well-located assets. As the chart shows, both occupancy and rent reversion have remained resilient. Rent growth remained within normal historical ranges and with the portfolio still around 4.6% under-rented, we continue to see scope for further income growth.

[00:19:35] We also remain on track to maintain occupancy at around 95% throughout most of 2026. As you can see from the leasing slides on slide 21, leasing activity during the quarter was focused on a number of sizeable transactions across Denmark, France and the Czech Republic, with long-term new leases contributing to a blended rent reversion of 10%. These transactions highlight disciplined asset management and our continued ability to drive rental growth, reduce vacancy and enhance the quality and security of portfolio cash flows. Staying on this sector but looking beyond our own portfolio, on slide 22, you can see that European logistics fundamentals remain supportive. However, manufacturing activity remained resilient

[00:20:29] and continues to support demand across our markets despite a more uncertain macro backdrop. According to recent data from Cushman and Wakefield, rent growth remains intact as shown on the chart on the bottom right. Limited new warehouse supply and steady demand for manufacturing and B2B distribution occupiers support this trend. Green Street continues to forecast logistics rental growth of 3.2% per annum over the next four years, outperforming both retail and office sector. Overall, market conditions align with our high conviction for the sector over the medium term. Moving to the office sector, as you can see on this slide, we have for the first time split performance across our high-quality office assets

[00:21:24] in the Netherlands and Nerveza 21 in Milan and the remaining non-core office assets. Our office strategy remains focused on retaining high-quality core asset as a store of good value and yield while reducing exposure to non-core properties over time. Leasing activity in the sector was selective during the first half with the management prioritizing occupancy and talent quality. Occupancy remained about 95% across our core portfolio in the Netherlands and Italy while whale increased to 4.9 years following the AB&M lease renewal in Konigskade. Rent reversion was negative 4.1% on a relatively small sample size largely due to a lease renewal in Poznan in Poland where rents were reset to market levels

[00:22:17] together with occupancy-focused leasing in our finished assets. The office portfolio remains approximately 9.8% under rented providing opportunities to capture upsides through lease events and asset enhancement initiatives over time. And for my last slide for this section, the pan-European market data continues to support our focus on high-quality, well-located office assets. As you can see from the chart on the left, since 2019, European CBD vacancies have increased to just 220 basis points to 4.9%. This compares to the 500 basis points increase across the broader office market to 9.5%. This buffocation reflects the ongoing flight to quality with occupiers increasingly favoring prime, centrally-located buildings.

[00:23:14] The same trend is also evident in rental performance. As evidenced from the chart on the right, prime office rents continue to grow in the second quarter increasing 1.2% quarter-on-quarter and 4.5% year-on-year, demonstrating that demand for quiet quality CBD office space remains resilient despite the broader macroeconomic backdrop. This again reinforces our strategy of concentrating on core office while continuing to reduce exposure to non-core properties over time. Now back to Simon to talk about our growth strategy and data centers. Thanks, Elena. So we will turn to a couple of pages now on our DC strategy which represents an additional growth pillar complementing our logistics platform. The objective is straightforward.

[00:24:05] Maintain the income characteristics that investors expect from the REIT portfolio while introducing selected opportunities capable of generating stronger long-term NAV and earnings growth. Importantly, this is designed to enhance the existing strategy, not replace it. Logistics remains the foundation of the portfolio while data centers provide exposure to some of the most compelling structural growth drivers in Europe. Together, this creates a balanced model combining income, growth and long-term value creation with adjacent asset classes. A key element of our growth strategy is participation in AONIX, our sponsor Stoneveg's pan-European data center platform. Through this investment, CERT gains exposure to opportunities that are typically unavailable to listed REIT investors

[00:24:54] who typically have the opportunity only to buy the completed property, not generate the profits on the way through. The platform currently comprises five projects across Europe and is progressing through key development milestones, including expanding the amount of power to be connected. We're now over two gigawatts of power. The Dublin project is expected to begin generating rental income to one of the US leading hyperscalers during the second half of this year, marking the transition from development phase to now a phase of income generation with more substantial development to occur. And Relainer and I visited the site in June as the US hyperscaler tenant was fitting out while the power has been connected.

[00:25:40] This project is fully leased to a leading US hyperscaler for cloud and will be the largest in the Dublin region, one of the core flap D markets, and to put the project in context on completion will be four times the power load of a recent data center SREIT purchase. Our initial investment has already benefited from milestone driven valuation growth. You can see this in the business trust balance sheet that we Chen took you through and provides participation in what we believe is a significant long-term development opportunity. And this really lies in the scale of the sponsor platform and the potential to participate with their support.

[00:26:19] And in total, this pipeline sitting inside Aonix has a development value of more than 30 billion euros with targeted yields on cost of 12 to 15% at stabilization. The slide on 27 outlines the distinct roles within our two Aonix investments and how they both support both DPS and NAV growth. The original 50 million euro equity investment that we made last year is primarily focused on long-term value creation through participation in the equity returns of the data center projects. Based on the latest independent valuation assumptions, the investment continues to target a pre-tax pre-fee IRR of above 25% over the life of the projects. The second 50 million investment, which we contributed earlier on this year,

[00:27:13] was structured differently and is designed to balance income and growth. It generates an already fixed 7.25% annual cash coupon supporting immediate distributions while also providing future participation in the upside of the Aonix investment through conversion into ordinary equity at a material discount to the NAV at that time. Based on current assumptions, the investment is targeting a pre-tax pre-fee IRR of approximately 12 to 17%. These two investments sit at different points on the risk return spectrum with the same underlying assets. And together they provide CERT investors with exposure to the large-scale European data center development pipeline. So looking ahead, our focus is execution. The portfolio repositioning undertaken over the past three years

[00:28:07] has created a clearer strategic direction. The next phase is about translating that positioning into sustained income growth, value creation and improved market recognition. So in conclusion, our strategy remains straightforward. We continue to allocate capital towards sectors where we have the highest conviction and strongest competitive advantages, namely Western European logistics and pan-European DCs. Logistic remains the core income engine of the portfolio supported by the high occupancy, the positive rent reversion and the long lease duration. And adjacent to this, our DC initiatives provide the additional growth engine. We also continue to progress AEI and redevelopment initiatives within the portfolio designed to improve asset quality, support the rental and NAV growth as we have a track record of doing so.

[00:29:01] One of the pillars of our operating model is our experienced local teams on the ground in each country where we have been operating for over 30 years. From a balance sheet perspective, we remain well capitalized with no material refinancing requirements until 2030 and the flexibility to continue executing our strategy. Our margins continue to shrink as our lenders and the bond markets continue to see the progress we're making. In parallel, the board and sponsor are evaluating a range of strategic and organisational initiatives. These discussions may include changes to lowering management fee arrangements, ownership structures, incentive frameworks and a potential internalisation of the REIT manager and the asset management platform.

[00:29:45] While discussions remain ongoing and no definitive agreement has been reached and would in any case be subject to customary approvals, the objective of any proposal would be to improve margins, be accretive to distributions and generate additional long-term value for security orders. And based on current market conditions and barring unforeseen circumstances, the board reiterates its distribution guidance that FY26 DPS should be broadly in line with FY25. Thank you for your attention and we'll now be pleased to take any questions. So Kyara, please open the lines up. Thank you. Thank you, Simon. We'll now begin the Q&A session. As a reminder, to ask a question, please select the raised hand button to be placed in the virtual queue.

[00:30:32] For those of you who have dialled in, please select star 9 to raise your hand and star 6 to mute or unmute. Alternatively, you can submit text questions via the Q&A feature. Both of these options can be found at the bottom of your Zoom screen. Our first question comes from Vijay. Vijay, please go ahead and unmute yourself to ask your question. Hi, afternoon. Simon, Elena and Hochan. I mean, congrats on a pretty strong set of numbers, actually. I mean, pretty healthy numbers. I have three sets of questions. Maybe I'll take it one by one. My first question is in terms of portfolio metrics. Quite a good improvement in terms of portfolio metrics,

[00:31:11] both in occupancy and rent reversion. What can we expect for second half, and especially what drove the big occupancy jump in office markets in Finland and France? Yeah, thanks, Vijay. And a lot of the credit obviously goes to the local teams on the ground. In terms of the office portfolio in Central Europe, that's really on the basis of leasing activities, as per Elena's remarks. And in Paris, where we only have two smaller assets, again, a few leases move the needle there. The second question, sorry, the first question was rent reversion, guidance. So the guidance is, so firstly, our result is above our expectation in the first half.

[00:32:11] So that would not be in our guidance for the second half. But that's not to say we couldn't, again, surprise on the upside. We've had a history of having quite strong rent reversion that comes in above our own expectations each time. I think one of the key charts here on the office side in particular is the low vacancies in European prime office. We're still below 5%. We're generating very good rent growth. Now, while this half we only leased 10,000 square metres, it's a very small sample size, but generally across the board, like for like NPI growth in offices is stable. From a logistics perspective, we're getting almost double GDP growth in rent

[00:32:59] and in line with inflation. So still very good demand. I wouldn't say as strong as it was coming out of COVID where there was a big rush by the large 3PLs to get set, but it's still very pleasing. Got it. So you can still expect some growth. Yeah, and as a reminder, all of our leases have some form of CPI indexations. So we are running at slightly elevated inflation numbers, around 3%, coming down a little bit to 2.6. That will drive rent growth as well, not just the good fundamentals supply down, vacancy down, but there's also the indexation for all of our leases. Got it.

[00:33:44] Second, in terms of your portfolio rebalancing plans, I noticed that you're planning to rebalance your portfolio, doubling your data centric exposure from here to potentially tripling it. Will this all come via Aonix? Are you looking at third party acquisitions of data centers at this point of time? And maybe can you also guide us in terms of what's your divestments, targets? I mean, this rebalancing would also include divestments, right? I mean, what's your divestments for targets for what's possibly office and logistics segment? Yeah, so firstly, in one of our charts, you will see, and we spoke about this in the March quarter, we've identified up to sort of 10, 11 assets

[00:34:22] that lend themselves to conversion to data centers on our own balance sheet. So out of our 96 assets, with the help and cooperation of our sponsor, who's very well equipped on the data center development side, given their own portfolio in Aonix, they're certainly lending a lot of support to help us with our own feasibility within our own portfolio. So we don't actually have to invest a lot of capital other than blood, sweat, and tears, and a little bit of planning to convert a number of these opportunities into much higher valued assets even before doing any development. So just simply getting power supplied, contracted, permitted, getting the zoning in one particular property,

[00:35:11] we're going, this is now our third year of trying to change the zoning, so we're getting closer to approvals there. Just allowing to do developments. We've put up a sort of a graphic here on page 38 that shows what an old last mile asset can be turned into, one of the most modern exciting data center opportunities where we're adjacent to a waste to energy power plant. And on the other side, an offtake arrangement can be made to sell the heat from our data center into one of the largest central district heating suppliers to this major city. So a lot of the growth in our target,

[00:35:55] from the 7% today to the sort of 15 to 25, is actually in blood, sweat, and tears and not having to go out and buy assets. That's not to say we wouldn't look into the sponsor's pipeline. The sponsor is very keen given they've got a material stake in us as well to see some of these frankly, extraordinarily high returns that is available for data center developments. So we think the office portfolio is a store of value. We've demonstrated, we've been able to do this pivot without really elevating gearing levels through the recycling, disciplined recycling to help fund our growth initiatives. Our average asset size is roughly 25 million euros.

[00:36:47] I'm not going to say it's easy as taking money out of the ATM that would be giving a disservice to our transaction teams, but certainly a lot more liquid to be able to sell a 5 million building here, a 10 million building there and being able to match as best as we can the timing of disposals to recycle the capital into the pipeline of opportunities that we see in front of us. Got it. Thanks. Just one last question. I think on your big news on the incentive framework as well as internalization plans, maybe can you guide us in terms of what drove these conversations and what can unit holders expect in terms of fees?

[00:37:26] Would it be safe to say they would be better off from wherever we are at this point of time and what's the timeline? Thank you. Yeah. So Vijay, as one of the diligent analysts, you will recall page 311 of the 2017 prospectus that says after the first nine years of listing, the manager is to re-engage on the fees before the next 10-year contract is renewed by the manager. So we have a positive obligation now to enter into discussions in order to perform the responsibilities of the 2017 prospectus. So you can imagine that while we're undertaking that fee discussion, there are other options that are also potentially being explored

[00:38:21] with the support of the sponsor to see how do we enhance dividends, improve margins, improve alignment, and really create a wider universe of investors that can potentially look at the REIT, recognize what we're doing within the REIT, and be comfortable on the next 10 years that the structure is appropriate for the next 10 years. It's not to say the structure today wasn't appropriate for 10 years ago, but the world is moving on. We want to continue to future-proof the portfolio and future-proof the structure. The stapling of the business trust last year was a step towards providing value for security holders. We're always contemplating what to do next

[00:39:14] to continue to enhance returns, drive the share price higher, close the gap to NAV, deliver on portfolio, but also from a margins perspective, how do we improve the margins? And one aspect of that is really addressing the cost of operating the REIT on behalf of the unit holders. So whatever we do over the coming months will require a lot of diligence, work with regulators such as MAS and shareholders, but it's really for the positive outcome of all shareholders. Thank you, and look forward to hearing more. Thanks. Thanks, Vijay. Thank you. Our next question comes from Dale. Dale, please go ahead and unmute yourself to ask your question.

[00:40:00] Thank you. Hi. Morning, Simon and team. Can you hear me? Yes, Dale. Good morning to you. Good morning, Simon. Congrats on the good results. Yeah, just wanted to echo what you shared with VJ now looking forward to more updates on this review. I just wanted to turn my attention to the capital management plan in terms of the interest rates, inching up slightly, in terms of where the gearing is currently. Just wanted to follow up. How are we thinking of gearing at this level and then to be expecting you to step up on more divestment and what kind of assets or what kind of market are we adding?

[00:40:47] Yeah, thanks, Dale. Good question. Yeah, I mean, as Wechan said, our average effective interest rate was effectively the same as a year ago, despite the increase in the interest rate markets. So the 90% of our debt being fixed and hedged really is a part of having gearing at the top end of the board policy range is that we've protected both the cost side of the debt, but also really importantly, we'd have no debt maturing until 2030. So we're not worried about refinancing in the next three, four years. It's not an issue for us. So when you combine the maturity of the debt with the fixed nature of the debt,

[00:41:37] we're comfortable at the top end of the board's range of 35% to 40%. Our interest cover is very adequate. And you can see that in the performance of our bonds. Our two bonds are a very public indicator of the 180 investors in our two bonds as to what they think of our credit, not just Fitch and S&P, who also provide investment-grade credit ratings. Okay, okay. I was actually looking at it. I was just comparing the metrics on Q on Q basis rather than Q on U. I realized versus one Q it hinged up slightly. So I just wanted to understand what was the main point of the debt.

[00:42:23] Yeah, so 10% of the debt is floating and rates are higher across most of the world. And how should we expect guidance towards the end of the year? Should we be expecting it on this level? Yeah, again, this chart on page 16 highlights that we're 90% fixed and hedged through to October 27. So those percentages on this chart reflect the point in time when the hedges roll off. Yeah, yeah. Okay, got it. Okay, and my second question is, you know, on this redevelopment of Ruda Khan, I think you shared that, you know,

[00:43:20] early next year we should see some progress on that. Just wondering if you could share a bit more in terms of the value in terms of, you know, what are we expecting in terms of upside and how soon can we be pricing it in? Yeah, so we're really thrilled with the almost final designs, as I said, has been irrevocably approved from a zoning perspective. We've just got one last box to tick, so we would expect to get the full clearance to go ahead from December this year. We have a tenant in place until first quarter next year, so we couldn't start demolition now anyway. So we've got, you know, months of buffer here anyway.

[00:44:08] This is a type of asset that we've mentioned before that could be better served being developed in the business trust. As you know, in Singapore Rules in REECS, we're not supposed to develop to sell, we have to develop to own for at least three years. Whereas in Netherlands at the moment, there's a substantial tax subsidy, and this project could be as much as 17 million euros for us to develop and sell within the three years. So this is an asset that's been considered to move into the business trust and therefore having limited impact on the earnings out of the REIT. And as the business trust is not paying a dividend,

[00:44:52] then it doesn't impact the dividend of the REIT. Quantum of dollars, we've mentioned before, this is likely to be just over 100 million euros. And we're highlighting here on the first, on page eight for the first time, a targeted yield on cost of six and a half percent. Property like this today would sell for around five, four and three quarters to five.

[00:45:21] Okay, that's all for me for now. Thank you. Thanks, Dal. Watch this space. Thank you very much. Our next question comes from Meng who asks, the 180 million cash is held at the BT with 122 million held in investment assets. Please help us understand what the cash will be, will be used for and what are the underlying investments, please. The cash held at the BT is 185,000. So that is mainly kept for, you know, to pay the operating expenses, like the invoices. It is not hard to find. I think there's a typo in the question because it's only 185,000 of cash versus 122 million of investment assets.

[00:46:19] Thanks, Meng. Thank you, Simon. The second part of the question is the underlying assets. That's where we carry the two investments in the AONIX. So as I mentioned in my pre-prepared remarks, we've invested 100 million and those investments are carried, particularly the equity investment, the first 50 million. That's carried at valuation, which is 72 million or 71 and a half million. So we are showing a profit of 22 million already on the 100 that we've invested. Thank you, Simon. Our next question comes from Carl Loon, who asks, pursuant to the separate announcement this morning on Sternberg Europe Stable Trust and Sponsor, considering measures to enhance value,

[00:47:10] can you please elaborate on what sort of measures are being considered and the key measures being pursued to enhance shareholder value? Is the REIT considering privatization? Carl Loon, thank you very much for the question. Very similar to the one asked earlier. So just very quickly to repeat, at the end of nine years since listing, we are required to provide market fee review before the 10-year extension of Sternberg's management contract can occur. So as part of the review of what today is market, we're also taking the viewers to, okay, well, let's look at all options around the management platform, around the organizational structure, and take this as an opportunity to really review

[00:48:03] what is future-proofing the REIT over the next 10 years. What's a more modern and more shareholder-friendly structure and regime than what we have presently, which was fine for nine years ago, but today it's really an opportunity to reassess, listen to investors, which obviously we have a very active engagement process, and really filter all of these suggestions, ideas, business operating models from around the world, where a global investor's heading. We'll take all of this into account, but I can tell you we're very excited about some of the options that are on the table, and that includes the internalization of the REIT. In terms of your second question around privatization,

[00:49:00] that is not under consideration. That's not part of this process. We are a publicly listed REIT, so anyone can buy us at any point in time. That would be up to you as the investor to determine what is a fair price for the REIT. Today it trades at X. We see examples of logistic REITs in other parts of the world and even here in Singapore trading closer to their NAV, and that's what we're trying to achieve in our strategies, get as close to the current NAV as possible. We won't stop there. Our intent is to continue to deliver more value in the portfolio than is currently recognized by the valuers.

[00:49:44] So first step, drive the share price higher through higher earnings growth and higher valuations. Thank you. Thank you. Our next question comes from Pow Ang, who asks, who says, sorry, congratulations on the great performance. Is the 41.9% gearing ratio a comfortable level at any long-term target of gearing ratio? Thanks. Yeah, sure. Good question again. Yeah, the board policy remains unchanged at 35% to 40% net gearing. So we're slightly above that, but in the scheme of where we are with our actual debt profile, we're comfortable to be at that top end of the range. We are expecting asset values to continue to increase, particularly in our core portfolios.

[00:50:35] That will help bring down the LTV. And secondly, we've still got a number of assets targeted for recycling. So again, we've got quite good visibility on some asset sales that we would expect to close in the coming months. Thank you. Thank you. Our next question comes from Charmaine, who asks, can you share more on timing and structure for the potential manager internalization specifically whether it covers both the REIT manager and the BT trustee manager and whether it would involve a payment to the SWI group given their 28% stake. How would any internalization cost interact with your 35% to 40% gearing target and the Euro 205 million redevelopment pipeline?

[00:51:29] I also noted that the gearing has been above the target so far this year. Are we expecting it to continue to stay above the stated range? Thanks, Charmaine. A number of questions there. Let me just deal with the last one because this has come up a couple of times. So we are committed to our gearing policy range of 35% to 40%. It will go up and down, as it has in the last seven years where we've always had that policy and we've always finished the year within those limits. As I just mentioned before, we continue to sell assets and bring that down. In terms of your more detailed questions

[00:52:12] on our strategic announcement today, I think it's a little bit soon to answer those specific questions. As I mentioned, we have to come to an agreement anyway before November 21st or the 21st of November. So that is something that we're working towards and we would try and answer your question with watch this space. There's a number of permutations in what you're asking, which makes it difficult to answer. But yeah, it's probably best if we say watch this space. Yeah, let's leave it at that for the time being. Thanks, Charmaine. Thank you. Our next question comes from David who asks, as the €500 million bond becomes mainstay of financing,

[00:53:02] would you expect all in interest rate to inch up in the coming years to 2031, please? David, the good thing about the bonds is they're fixed. So the rate does not change of that bond or indeed our $300 million bond, which we issued this time last year. So they're issued at fixed rates. Really, it's the hedging that's been put in place for some of the debt that rolls off in 2030. So that debt then becomes subject to whatever the refinancing rates are or the swap rates are at that point in time in 2030. Thank you. Thank you. Our next question comes from Ada who asks,

[00:53:50] thanks, Simon and team. Two questions from me. Firstly, what drove the almost year-on-year doubling of tax expenses in the first half of 2026? Apologies. And secondly, is there a timeline for strategic discussion and can we expect an outcome by CERT's 10-year anniversary? Ada, the doubling of tax expenses, I'm looking at Wichenhi was because last year we received a refund from the published tax authorities. Is that correct? The tax expenses comprise current tax and deferred tax. I believe the increase is mainly from the deferred tax. For current tax, we are seeing it's largely in line with the first half of 2025. The effective tax rate remains around 10%.

[00:54:37] So we do not expect any increase in current tax expense. In terms of deferred tax, when the deferred tax expense is mainly on provisions made on the competitive tax and it's subject to the movements in the tax deprecations. Also, there are some tax losses that expired during the quarter and it has no impact over PPS. Ada, we've just shown on page 11, what we've done is we've broken out the tax from the P&L to show to Wichen's point that the operating tax expense if you want to put it that way is unchanged. The deferred tax, the capital gains tax is a theoretical tax that if we were to sell the assets

[00:55:33] at the current value, we have to pay capital gains tax in those markets. So we have to book the deferred capital gains tax in anticipation of selling the asset. So our NAV of two euros or two euros is after we deduct the provision for potential capital gains tax. So that's why we also provide you the EPRA measure of NAV which is before the capital gains tax. This is another benefit of having debt within our structure because that does help minimise that 10% tax expense so we can boost the dividend. So gearing in our case, investing in markets where there is income tax is actually very tax effective.

[00:56:28] So if investors are worried at 41%, there's risk there. Well, we would also say there's return there because it lowers our tax expense. Just something to note. It's not the main reason we're comfortable with debt at 40% that is one aspect. In terms of the timeline, I think we've mentioned a few times we need to get something affirmed up before mid-November and so we would expect to be able to be in a position to announce something prior to then, again, subject to regulatory approvals should we decide to go down a path of something like internalisation which would require MAS and other local regulatory approvals.

[00:57:16] Thank you. Thank you. Our next question comes from Aditya who asks, on slide 12, there is Euro 203 cents DPU from AONIX equity investment. Given the DC are not yet operating, where do these incomes derive from? Yeah, thank you. So the first thing is the MCL is providing income. So that's the convertible loan, the interest on the loan. And the income from the equity investment that's being generated from the loan from the REIT into AONIX. So it gets lost on consolidation. Thank you. Thank you. And a follow-up from Aditya. Do we have a plan on perpetual securities as it will enter rates reset in November?

[00:58:11] Aditya, it's probably too early to give you firm guidance. We monitor it regularly. We get quotes from our investment bank advisors every two weeks. So we have a good sense as to what the costs would be today if we were to issue a new perp in the traditional form of issue a perp to repay another perp. Sometimes that's a bit of a roundabout way of dealing with matters. As you're familiar, but perhaps others aren't familiar, there is no change in the margin on perpetual securities. It's only on the base being reset. And if we go back to when we issued the perps, there is virtually no change in the underlying base rate

[00:59:03] at that point in time versus what would be on a new perp today. So we've got multiple options. What I like about this security is it is a perpetual security. It's treated by MAS and IFRS as equity. The rating agents treat part equity, part debt. But watch this space. We will continue to monitor it and ensure the appropriate decisions are made at that time. You mentioned November in your question. I've also mentioned why November is also an important month for the strategic outcome, which we would obviously hope to or plan to make announcements, appropriate announcements prior to that date anyway. So again, you could imagine whatever we do to improve

[00:59:49] the margins of the rate would improve the pricing of our debt and of the perpetual. So in a way they're linked. Thank you very much, Simon. Our next question comes from Carl Loon who asks, in this results announcement, there is a data center strategy on slide 38. 10 plus sites have been identified as data center conversion candidates. Can we understand whether this conversation is self-operated or to extend asset valuation only? What sort of capex will be required and what are the funding sources? If self-operated, will the asset conversion have, has many material impacts on dividend distribution in the next two to four year conversion cycle

[01:00:42] or will it manage in stages to minimize dividend distribution? Carl Loon, again, it's a really core part of our strategy with our sponsor that has very deep expertise as a NVIDIA preferred partner and cloud provider. So it's got a lot of expertise in this market. Let me give you an example. We have six smaller light industrial logistic assets in Paris with recent changes and focus on data center fast tracking. If we apply for power and planning for smaller, and I say smaller in today's terms, but still quite large in historic context of less than 15 megawatts, we can fast track the approvals without having to invest much capital.

[01:01:34] To give you an idea, today, these six assets may on average be worth somewhere between 10 and 15 million euros as logistic properties. If we can achieve the planning and the permitting, then that asset can go up almost two to three times in value without even having to do the project ourselves. So just the land value goes up. So again, this comes to the earlier question about how do you get to a 15% weighting in data centers? Well, in part, that's just from doing the blood, sweat and tears of converting some of these assets from a planning perspective, not having to do the development. To give you an idea, rough rule of thumb is in Europe,

[01:02:17] it costs around 10 million euros per megawatt to then build a data center, and is currently valued at around 20 million per megawatt. So still much lower value in Europe than say in Singapore where a recent transaction was over 60 million per megawatt. So it's still a much more affordable place for hyperscalers and cloud providers in Europe, which as a reminder, 70% of the energy in Europe is either renewable or nuclear and is not relying on the same extent of fossil fuels. And so we don't have the same sort of disruption with what's going on in the Middle East than say here in Asia where we're a lot more reliant on global gas and oil trade.

[01:03:05] So ultimately, we could sell those assets just on conversion without doing the developments, or we could do the developments ourselves, again, depending on our cost of capital at the time.

[01:03:18] Thanks, Carolyn. Thank you, Simon. That brings our Q&A session to a close. I will now hand back to Simon for closing remarks. Terrific. Well, thank you, everyone, again, for your engagement and for your investment and support with the REIT and the strategy, which we're trying to make as straightforward as possible, which is pivoting continuously to logistics and light industrial where our results today demonstrate that that is a successful strategy. And with the adjacency of the data center development opportunities, there's another option, another leg of growth. Our balance sheet is in really good shape with very long-term debt with a high level of fixing. We have the boots on the ground,

[01:04:05] the very experienced local teams. And sort of in parallel, we're now in discussions with the sponsor around improved fee arrangements or indeed we go into an internalization structure where we would provide the costs at cost rather than the fees and therefore improve the margins and dividends and enhancing alignment. So we're working through that. We've got a few months to bring that to fruition, again, subject to regulatory approvals. So in conclusion, while all of this is still going on, the board has reiterated the DPS guidance to be broadly in line with last year, which based at today's share price would imply an approximate 8.4% distribution yield

[01:04:58] and around a 20% discount to our NAV. So thank you, everyone. Have a great day. Thank you.