4Q & Full Year FY24/25 Financial Results Briefing

Thanks for joining us this morning for MIT fourth quarter full year financial 2024-25 results briefing. My TS release is results on 30th April after market clear. We have the management team to present the key highlights of the results. Ms. Lili Li, CEO, Ku-Geng Feng, CFO, and Head of Investment, Ms. Sareen Tam, Head of Asset Management, Ms. Tim Shuk-King, Head of Marketing. Now pass to Lili to present the key highlights of the results. Good morning everyone and happy cooling off day. So no politics talks today. Okay, anyway, we can probably take a break from all the after the past few days talks on politics, right? So let's focus a bit on the results. For this quarter, we used to report a year on year improvement

in terms of the DPU growth, 1% reporting at 13.57 cents.

I think the key contributors to the improvement in the DPU growth is really on the back of the new contributions from the Utsaka data sensor. We see the full year effect this year. And we also have acquisitions which we have completed towards the end of September. As for specific details on the financial, I think we will have given funds to run through that. On the operational front, we are reporting a positive rental revision across all the sectors. I think weighted average about 8.1%. If you look in terms of the range, we are achieving rental revisions of between 1.4% to 12%. I think the high of the range of 12% is actually the revision that has been recorded for our flattered factories. So that is the resilience of the flattered factories as well.

As we have said, I think in the past quarters before, the rental revision is largely due to the fact that these are leases, renewal of leases, which was signed like three years ago during the COVID period. So naturally we... Single digit. As we near the renewal cycle for these leases. On the valuation front, overall we see an increase in valuation by about 2.7%. AUM tottering about nine billion. The highest increase is due to the Japan acquisition, as you can see on the slide. In terms of the Singapore portfolio and US portfolio is actually quite flatish. However, you will note that we do register slight revaluation loss, but that's mainly because we have some capitalized costs involved.

If we look at the cap rate, it remains largely unchanged. We don't really see a significant change in terms of the cap rate. So if I can move on to the maybe portfolio occupancy. The portfolio occupancy slips a bit from 92.1% to 91.6%. Very marginal, deep, but still a deep nevertheless. If you look at the individual portfolio, Singapore portfolio is about flat. I think that is slight. I think just to be specific. Specific, I think if you notice, the light industrial building is actually at the lower occupancy of about 51%. I think that's mainly due to a big country building. But I think I also like to highlight that this light industrial building segment

forms only 0.7% of our overall portfolio. I think one thing which is quite concerned on the committed occupancy at Kalang Way, the high tech part at Kalang Way. So I think we are pleased to say to inform that the committed occupancy as of now for this property is 60.1%. So if you remember the last quarter, we reported a 57%. So that's about uptake of about 3%. So we should be seeing the full year effects of these committed leases coming through soon. Of American portfolio occupancy is reported at 98.2%. If you compare to last quarter, there is a decline from last quarter's 90.3% largely due to the exit of the tenant in Philadelphia. I think that's something that

we have already flaked out in last quarter. I think for the North American portfolio, we continued to work on these spaces, even for like 250 William, if you remember, 250 William is actually a building which is about 50% data center space and 50% office space. So the data center space is really is, I would say fully taken up, but the team continues to work on the office space. And hopefully with some of these new spaces taken up, we will be able to inch our occupancy for 250 William.

In terms of lease expiry, that's about 14.3% of the leases that are expiring in this financial year or in FY2526, mostly from our safe, the factory segment, as well as the USDC segment. For the USDC segment, where it's about relatively long, 6.3 years. I think if you look at what is due for renewal in FY2526, about 3.6%. I think we have also informed during last quarter that about 1.7% has actually confirmed to be non-renewal. I hope and I think that should be it for the remaining of the financial year.

I guess the remaining 1.8% is something that the team have already started work and we are relatively hopeful that the renewal should be there. At any rate, I guess the tenant renewal and backfilling of space is actually part of our business. It's something that the team will always continue to have to work at. So if I move to the next slide,

on some of the measures that we take on to tackle some of these tenant renewal and backfilling of space, generally three prongs, re-letting, repositioning and rebalance. As a background for US, about 60 to 70% of our data center are located in the primary data center market. Again, as I said earlier, the bill for the US leases are relatively long at about 6.3. The recent non-renewals that we have seen so far, I would say many of them will largely deal to tenants, company policies where they review the corporate real estate space requirements. So I think if you look at it, quite a number of them were actually from the enterprise user, for example, the likes of AT&T. For some of the things that we try to do, like we will try to engage them ahead of the renewals, I think this is shown as what we have done for property at Richmond,

where they have actually renewed two years in advance. Of course, we also do try to backfill the spaces. I think this can be,

if this can be backfilling it with new data center operators, or it can also be a non-data center operator, as what is evident is what we have done with Brentwood two months back. I think one thing to note about Brentwood, the good thing is, your rent period should be coming off soon, around June this year, right? So we should be expecting some cash flow contribution coming out from there. Anyway, coming back to what we do as part of our asset management, repositioning is something that we will always consider. This can take in the form of doing a redevelopment or even releasing the properties out as a separate use. Rebalancing is something that we have always been, that we have been looking in the past one, two years. So I'm quite happy to announce that we have actually divested the data center in Georgia. I think for this particular data center,

the lease expiry is coming, it's supposed to come out in August, this in 2025. So this basically, you know, help us to negate part of the effect when it comes to our lease review. And of course, given that we have a diversified portfolio in terms of drug-free, it does help a bit in trying to negate some of these non-rebalances. I think then maybe going for the next segment, I'll have Game Fund to take us through the financials and the capital management side. Good evening, everyone. I'll quickly run through the financial performance of MIT as well as the capital management position. Year on year, our net property income increased to 531 million, largely due to higher contributions from our Japan properties, as well as new leases and renewals across various Singapore property clusters. These were partially offset by loss of income from the divestment of Tungling Hall,

which were completed in March last year. We now renew our leases in North American portfolio and higher property maintenance and marketing costs. Our borrowing cost is lower, 105.1 million, mainly due to repayment of loans that proceeds from Tungling Hall divestment and lower interest on the unhedged floating rate loans. These were partially offset by higher borrowing costs taken on loans for the Japan portfolio. The distribution from joint venture is lower, mainly due to higher borrowing costs from repricing of mature interest rate swaps. Accordingly, our distribution per unit increased by 1% to 13.57 cents. Quarter on quarter, our net property income increased to 131 million, mainly due to non-renewal leases, lower record rates and higher property maintenance costs from the North American portfolio, which were then partially offset by new leases

and renewals across various Singapore property clusters and the full contribution from the Tokyo acquisition. The distribution from joint venture is lower due to higher borrowing costs from repricing of mature interest rate swaps. Accordingly, our distribution per unit decreased by 1.5% to 3.36 cents this quarter. Well, balance sheet remains strong with gearing at 40.1% and interest coverage ratio of 4.3 times. This financial year, we retain about 30 million of cash through DRP, but given the tick up depends on MIT unit price and in the current volatile market environment, we are suspending DRP from this quarter onwards. Our debt maturity profile remains well staggered with average debt duration of 3.2 years. On interest rate management, about 70% of our debt is hatched into fixed rate

with rich hedge duration of 3.4 years. The average borrowing cost for the quarter decreased slightly to 3% largely due to lower floating rate on unhedged loans. However, we continue to see impact of higher interest from repricing of our interest rate swaps or cheering in the coming financial year. For FY2526, we have about 600 million IRS coming in. We expect to be replaced at higher interest rate. But an impact of this is about 10 to 11 million and given that these are all onshore in the US, net of tax year may be about seven to eight million and one third of these will affect,

will give the negative impact to DPU in FY2526. Next we can go on to the outlook. Well, I guess outlook, everybody knows where, don't know where it's going. So one word to describe is uncertain. Every morning I wake up wondering what Donald Trump has done or said as I was sleeping. I think in view of such uncertainty, we have also seen a lot of the economies adjusting their growth rate, their economic growth rate, Singapore included. We do continue to see the risk of higher operating costs and as well as the elevated borrowing costs. But this will continue to exert pressure. It's something that we will need to, that's right through a deal with. Operationally, we will focus on improving our occupancy for both the Singapore and US portfolio.

I think hopefully we can bring up some, we can fill out some new spaces that will be able to each of the providers with some additional cash flow. In the face of the trade theories and the political tension, I think we are going to be a bit more defensive in terms of our leasing strategy. We do need to be, try to be a bit more nimble and flexible when it comes to the leasing terms. I guess our efforts on rebalancing the portfolio through divestments will continue. This will actually help to strengthen our financial flexibility and provide us with more headroom where we can make some acquisition, meaningful acquisition that can provide us with sustainable growth. So I would say we do have our challenges ahead of us, but our portfolio is diversified and we do have relatively strong balance sheet. So we do hope that this can see us through this uncertain time.

With this, we can take questions. This really is game formed. Now we will take questions from analysts. We request each analyst to take three questions. Yes, for the people who take the first question. Yeah, good morning, Lili and Tim. Congrats on the strong rental re-versions and the very low borrowing costs. Can we touch on a few properties that we saw a decline in property values, in particular, Neil Armstrong Boulevard, McKinnon Parkway, Hills and Dales Road, Governor's Hill Drive and Batterway Parkway as well, South Baldwin Road. Can we just get update in terms of, are there future vacancies for these properties? Not necessary for FY26 but 27, because if we look at the big drops

in dropping valuations for March 24, it kind of correlated to the vacancies that you touched on previously. And also, second question I have is, any updates in terms of the properties that Rancho Cordova, note that it seems that JL is trying to sell one of the properties there and the occupancy one of the properties actually seems to drop to 42 and a half from a much higher level. Thanks. Okay, just to answer the first question on valuation, I focused as a list of properties that was being highlighted. Generally for US, we do see, the US valuations are predominantly pretty much cash flow focused. And also when there is upcoming renewables or upcoming vacancy or when the property is vacant, the valuation will actually fluctuate quite a bit. And the other side is true as well. Once we manage to secure any increase

in occupancy or slightly higher rent rates or more committed cash flow, the valuation will actually kick up immediately as well. So as you rightly pied that out, I think one of the last one I heard was Arlington and Bover Road. So that was the one that we, that the tenant have actually moved out and then we have actually wrote down the valuation because the current, the property is currently vacant. So I hope that kind of summarizes why the valuation changes. Then the second question is on the Rancho Cordova tool. I think it's sharp of you to find that JRL is marketing the property. It is currently occupied, all right, but we actually thought that it is not one of our core properties, which is why we are actually running a process to sell. And in order to do that, we were actually had to get a third party broker to help us to market the property to have a wide outreach to potential buyers or investors.

So yes, that's one of the property that we are trying to sell. So the five properties that saw dimension between 10 to 12% decline in property values, is that upcoming vacancies or lower rents? How is driving the drop in valuations? Yeah, well, I think it's probably a mixture of both. Some of the adjustments for valuation may also come from the assumptions used by the valuables. Yes, for market rent. Market rent, how they engage. I think, I don't know, I mean, to be frank, we do have a change in valuables for the portfolio. So that could jolly well also contribute a bit to how the assumptions may differ between valuables to valuables. So it may not necessarily just purely because this is coming up specifically, but it's a combination of quite a few business.

For this particular properties, is the drop in valuation mainly changed in discount rates by the new valuables or is it actual cash flows that's been reduced? Next, so there are some, and there are quite a number that is due to the reduction in terms of the market value. So there is some risk of lower cash flows for some of these properties, not necessarily this year, but in the after years. I think it's still quite early to say at this point, I think this are basically, you're talking about it being due in the next few financial years. So things may change as we have highlighted, things are very fluid at this point. So the renewals, we typically will start talking to them as early as we can. So at this point, we won't really know. Then five questions for me. You want to ask a few questions? The available is one of the slides that we have.

Yeah, this in terms of the, sorry. So I think because just when you're running through the list of properties, just to be clear, some of them are due to vacancy like the one in Arlington, but quite a few are mainly due to the just changes in market range. So it's not because the leasing is weak in future as well, it's just a valuables view. Yeah, I know the value was maybe more conservative than actuality, but we should not be in reality, but just try to understand. Because the vacancies can't correlate as the drop in valuations the year before. So we actually had six to nine months precursor to guidance. But I think we shouldn't assume that all leases when expired will not be received. I think as I have highlighted for this financial year, 1.7% is confirmed on renewal. We don't think that this number will deviate

very significantly for the rest of. So the balance of the 1.8%, I think a small portion has really been addressed with the divestment of not good. Right? The balance of it is something that we are working on and I would say we are quite hopeful. Yeah, and how should we be thinking about distribution of prior divestment gains? We saw the one at Northwood Sparkaway, which I presume is again. Yeah, how should we think about that? Thanks. I think in the first place, okay, if you talk about divestment gain, you know that we have ready for this fourth quarter. This is the last quarter of our distribution for Tumbling Hawk. We have so far not kept any divestment gains

either if you want to put it that way. So for this Georgia data center, DeGane is actually very small. So I think, you know, based on what we have always been doing, it's not likely that we will be distributing it. Good luck with the backfilling. Thank you. We have Derek from DBS to the next question. Hi, morning. Can you hear me? Yes. Yeah, hi, good morning, Lily and Tim. Just two questions for me, right? Firstly, I think Lily, you mentioned about your RAN reversionary outlook for this year. You'll guide us for mid single digit, right? I'm just wondering whether what's driving this small conservative number, just being conservative or are you actually seeing that compressing of the leasing spread going forward? Maybe your answer for this first year. I think it is small from the fact that these are

the past leases that we have been seeing where we record double digit type of rental revision. These are mostly leases which we have taken on during the COVID period. So I think you understand that during the COVID period, a lot of the businesses were facing pressure. So we have actually in our negotiation being a little bit more flexible. So I think this will start off from a low base. So we have been continuously seeing very strong rental revision coming through for the past, I would say about three financial years. So generally, if you look at our Singapore leases, this tends to be on the three to five years type of lease tenure. So I think that is where we think that while looking at the situation, while we think that the rental revision will still continue, will still be positive, we may not be seeing as much growth as what we used to be simply because these leases which were on a low base would have more or less be running out of the cycle.

I see. Okay, but generally, it's too positive for this year. It's a good confidence you'll get that.

Yeah. Okay, okay. Got it. So my second question is on your asset recycling. I noticed that you have been selectively selling assets. So I'm just wondering, given that in the US, it's quite diversified and you've got many properties, there's maybe sub 10 million. Are you actively looking to sell more prior to the lease coming out for renewal? Do you have a guidance on that quantum for us? We are definitely looking at the streamlining portfolio. I think that is something that we have articulated many quarters, a few quarters before that. I think you also understand that our North American portfolio actually acquired largely through three large portfolio acquisitions. With portfolio acquisitions, there are nice property. There are properties that may not be as nice. There are property that were relevant, may not be as relevant right now. So we are actually taking a good hard look

at this lease properties to see what we think may not be as relevant. Of course, some of them would include those that is nearing expiries, which we think that, maybe the renewal potential may not be as high. And of course, this will also include those taken buildings. So I think we remained open as to the options that we have with these properties. But I think suffice to say that the divestments of some of the properties in the US portfolio is definitely ongoing. Okay, how about Singapore? Is Singapore something you're looking at also? I think Singapore the same. You would also appreciate that the Singapore portfolio has generally been there since our IPO time. I think we also earlier on back in about 2023,

we actually pushed out a big 1 billion divestment program which didn't work out that well. So we have kind of take a good hard look at the Singapore portfolio and trying to see what is something that is not as relevant. So I think at the end of the day, what we are hoping to do is for those that is not giving us as much growth or for those which we think we may not be able to extract a lot more value out from it. This will be the potential for candidates for us to divest. And once we divest, basically the proceeds, we can use them for redeployment into new investments. I think that I hope can actually bring our portfolio to deliver sustainable return for our unique groups. Okay, got it, that's all for me. I see a long list of questions. That's all for me, thank you. Thank you. Yep. We have Rachel from Aquari.

Next question. Rachel, if you are speaking, we cannot hear you. Rachel, we can't hear you, Rachel. Hi, can you hear me? Hello. We can hear you, Rachel. Oh, hi. Okay, that's good, thank you. Sorry, I think there's something wrong with my headphone. Okay, maybe just the first question on the average cost of debt. The 600 million that you have guided on the US debt, does that include your JV level? And what's the current average cost of debt for your JV level? Hey, Rachel.

Yeah, so our average cost of debt for this quarter when we mentioned is 3%, please exclude our JV level. But the 600 million IRS coming due in the coming FY, that includes basically total IRS including the JV level. So I will share. So, you know, when I mentioned the per annum impact, 10, 11 million, part of this will actually hit the lower distribution from JV. Oh, got it. Would you be able to share what's the average cost of debt for your JV level? Currently, currently is around three points. I don't think it's very far up from what we are reporting, maybe slightly higher. Okay, got it. Yeah, thanks. And then maybe just the brand would least that you were saying that the revenue period is coming off, roughly what's the percentage of GRI from that asset?

It's on our two million, right? It's on our top 10, there, 1.4%. And then maybe the last one that you see, I will not... Oh, thanks. Maybe just one last question for me. In terms of, I think you have guided some divestments and you're looking at some divestments, but given how uncertain the environment is now, do you see a slowdown in pays in terms of divestments and hence FY 2026 may not reach the kind of divestment that you were hoping for? We have not exactly seen a significant slowdown, right? But I think we think that we should still be able to deliver some divestment. I think probably, hopefully say in the range of 500 to 600. Okay, and this may need a US portfolio

or the Singapore portfolio? It should be a mix. Yeah, I think we don't specifically say I must divest Singapore only or I must divest US only. So I think we will have to manage it as it goes. As you will appreciate, I think divestment is not something that we say we want to get it, right? So we can't really dictate how it will take place. It's a lot of negotiation and progress that needs to and process that needs to be run.

Okay, yeah. All right, thank you so much. I'll give you some of my three questions, thanks. Derek from Morgan Stanley who asked the next question. We can't hear you. Maybe we move. Hello.

Yeah, sorry, hang on, sorry. I just wanted to ask a couple of follow up questions. First one would be on the guidance for non-renewals. Lady, you mentioned 1.7% comfort not renewing this financial year and the balance of, balance 1.8%. Is the 1.7% tele-park in Singapore?

Non-renewals, yeah. Sorry, I was too big. Cut off. It's a name not familiar to me at this point. It's not really my portfolio. Yeah, referring to STT, is it? Yeah. STT, as you see on the chart, should be reflected in the small little pool line that you see the base. So I think for STT, currently they contributed about 1.8% to our gross revenue. So I think with the renewal, I think I probably explained this before, but for STT, the rental actually has two portions. The red one is the base rent. The other one is the rental which they paid on the fit-outs that was done. So what happened is that fit-out, leases will actually drop off this coming financial year. So we do expect the impact to be around 50% of this.

But I think the STT has also been, has extended their leases with us for another 10 years. And there's also a little bit of additional space that's looking up. So I think, all in, I think the impact might be a bit, but I think we should still be looking at about 50% of the 1.8, slightly lesser than 50%. Understood, so that 1.7% and 1.8% numbers that you mentioned really stand from the US portfolio. So for the US one, what I was saying is for FY2526, about 3.6% of the gross revenue is due for renewal, of which the 1.7%, I think we have already said that they are confirmed non-renewers, the remaining of the 1.8%, part of which, of course, Northwood forms sit. So we have already diverse. So I think Northwood contribution is about 0.1.

So we are talking about the remaining of 1.7 of renewals, which we are currently working on. And we think that it should be okay. Got it. Thanks for that. Sorry, I didn't catch the first part of the presentation. And just on, you mentioned cost pressures, higher borrowing costs, higher operating costs. Do counteract such effects, will you be open to, I guess, increasing fees in units? I think at this point, there's no intention to. So what we will try to do is to adopt as, we will try to increase our efficiency and try to improve the margin, trying to reduce the impact on the higher costs. And as for the interest and borrowing costs, I think that's something that we have always been looking at it, trying to see whether there's any way we can. I think in terms of managing the interest costs, we continue to be limbo.

So, you know, for example, last quarter when I speak to you guys, the five year rate was around 4.3%. Currently maybe 3.5, 3.6%. So we continue to monitor this. So for the upcoming IRS deal of let's say 600 million, when we monitor, let's say recently when the interest rate went down to around 3.2, 3.3, we try to catch a bit. So we will not do the replacement, one goal 600 million. We can do a bit of forward start, can do some of the expansion early. Yeah, so we will continue to monitor so that will help to reduce the impact for our DPU. Okay, and what will be all the interest outlook for this FY? So the MIT interest rate for the coming FY maybe around 3.1%,

Okay, got it, thank you. We have Joy from HSBC to ask the next question. Hi, can you hear me? Hi Joy, we can hear you. Yes, thanks. Hey, Lily and team. So first of all, can we just get an update on the US power study? And I think in your slide, you mentioned about redevelopment, are we referring to redevelopment in US or Singapore? Thank you. Redevelopment can be both in Singapore or US, but I think it's very much looking at whether do we have the right composition of it. So, I mean, by that, I mean, there's a lot of factors that goes into in terms of redevelopment. We probably needs to have some level of commitment before we are prepared to do something similar to what we have done in the past for our Kalang way,

where we have at least a certain proportion that is taken up before we will consider doing a redevelopment. Because I think we also have to appreciate that for redevelopment or any projects that is along the line of redevelopment may have certain impacts on our GPU. So I think that's something that we need to balance as well. So in short, whether is it in Singapore or US, we have opened to both. I think you also asked for the power study. I'm glad that you bring this up. There's something that I forgot to talk about now. Okay, but I think for the power study, we are actually in the finalization for the power study for SESCOSATE.

At this stage, based on what we understand, I think the facility in itself, we are able to get accessible power, say around three to seven megawatts. I think currently, you are talking about maybe two to three megawatts. Currently, it's about two to three megawatts. We should be able to get, based on the existing infrastructure, power grid, we should be able to get up to three to seven megawatts. If we want to go further up, I think 20 megawatts is possible within the next maybe three to four years. So I think at this point, we are evaluating the options that we can work with. And at the same time, we are also doing our marketing in terms of the releasing. And I think as with a lot of the other properties we are also open to a divestment for this.

Just follow up on San Jose. I guess if you were to start a redevelopment, what you do on a spec or you will need to secure a tenant before you start development work? I think Peter, I will let Peter take this. Yeah, so essentially we, and I want to really mention earlier, when we undertake redevelopment, it actually creates a lot of downtime and uncertainty as well for us as a portfolio, as a REIT. So we are, I mean, if you look at our earlier redevelopment and the development that we did, most of them are to be to suit. So this probably something similar that we will do for US. And our primary aim is really to have income producing assets. So speculative development, especially if it's a big one, it's not something that we will want to do. But specifically for San Jose, as what Lily mentioned, we do see some upside in the power. I mean, we have done our power study.

We can increase to seven megawatt without much work, but to increase to 12 or up to 20 megawatt, we have to pay some money. So we are also exploring potential sale as one of our repositioning or rebalancing strategy.

So just to clarify, basically up to seven megawatt, there is no payment required or no CAPEX required, right? No payment required. Of course, in terms of internal CAPEX, it's still, you still have to pay. By the way, there's no additional payment that we need to do to the power authority. Is it based on this existing power grid? Yes, correct. Okay. Okay. Cool, that's very clear. And then my second question is on, in terms of a tenant, I don't know if you've done sort of an assessment in terms of exposure to sort of export-related activities and also, you know, in your view, what percentage of the tenants are a little bit on a more vulnerable side?

This is small on the Singapore portfolio. To be frank, it is quite difficult for us to put a number to the tenant's exposure. I think partly you understand that our tenant base is 2,000 over. So for me to try to gather information from 2,000 over tenants, it's not easy. And for quite a number of them, it will be like pulling teeth out of a tiger's mouth because these are actually deemed quite confidential from their perspective, right? But I think what I can say is we have spoken to some of the tenants. Some of the larger tenants, you know, they actually don't see a significant change in terms of their business order and production for, you know, especially for those that is exporting to US. I think a lot of the tenants are actually taking a wait and see position. I mean, nobody really knows what is, what will develop from the trade tariffs. As I said, you know, every morning we wake up wondering what has happened, what has transpired,

what has Donald Trump say or not say, done and not done, right? So I think it is very, very fluid at this point. So quite a number of the tenants will also like, you know, also don't know what to expect. So they have, some of them have, a number of them have actually been saved. You know, I'll just wait and see before we move. The larger tenants actually may not be that impacted, especially those where they have already been preparing to diversify their support chain. So I think the US-China tension is something that is not new to everyone. It has been ongoing for the past years and also arising from COVID, I think everybody learned a bit of a lesson from there. So the bigger tenants have actually, the larger corporates have actually been looking to diversify their own support chain and their supply chain. So I think when the trade tariff comes out, then for them is, well, it does impact us, but we have that flexibility to be able to reshuffle our distribution in terms of the materials,

in terms of the products. So basically what they do is they try to reshuffle and minimize the impact in terms of the cost, right? I think, and interestingly, we do see some inquiries for additional space from some of the existing tenants. Basically this will be the likes of, this will be tenants who are actually exploring that maybe with the trade tariff, if the trade tariff turns out to be what it is, they may be looking at moving some of their operations to Singapore. I think at the end of the day, at this point, Singapore is one of those countries with the lowest tariff rates, right? So we also see that some of the export-oriented tenants, for those that is in the, say, semi-com industry, et cetera, they are actually producing more for the Asian market and not so much for exporting into the US. I think what could be possibly,

for the method, I think what impact everyone is actually the second and third order effects. I think with the tariffs going on, we would expect production costs to increase. So I think that is something that we will have to keep a look up for. Cool, that's very clear. Thank you, Lee. Yeah, sorry, I'm bitter again. So I just want to address Melvin's earlier question on the valuation. After I kind of look at our valuation numbers, those few properties that you highlight, essentially those leases, except, I think the last one you mentioned, at Bowwan Road, actually the valuation has increased slightly, so I probably got that taken. But for the rest of the properties that you mentioned, the valuation dropped, not due to the leases, but it's mainly due to the changes in cap rates and valuables assumed market rents, and so it's a house building. And most of those leases are not going to expire

in the next two to three years. So just to close off that look. Can we have Brendan from CT to ask the next question? Hey, morning, can you hear me? We can hear you. Yeah, hey, great. Just want to talk a bit on your reversion outlook, right? Just confirming that you are lowering it down from high single digit to low to mid? Single mid. Single mid. So we still expect a positive rental revision coming through, but it will not be at as high pace as a double digit. So you have a round mid single bridge.

Okay, and are you open to sharing about the split by the different industrial segments, as well as on the US side? What's the expectation? Because I realized that your gross signing rents have been coming down. Despite the very short market over there. For the Singapore in terms of segments, you have a range of 1.4 to 12%, right? So the 12% is actually contributed by the Flatter Factories. So we see a higher end. And if you look at the historical trending of it, Flatter Factories is the one that has been giving us quite strong rental revisions for the past few years. The one that made the rental revision maybe on the lower end tends to be those that is in the business park and the high tech side. I think that is also reflective of the situation in high tech and the business park,

because of the supply that's coming on the street. So for the US side, I think in terms of rental revision, it is positive, but I don't think we are expecting a double digit rental revision. I think if you look at some of the data that's been put out by the other players, some of the double digit is largely because they are also doing the operation side of it. So for us, our data center is really more on the core and shell basis. I hope that's the thing. Yeah, so basically for US, you're still expecting low to mid, single digit positive as well, but you're still going forward. Is it correct? I think it's the case. We can't really just have a general

revision target like this, because for our US portfolio, quite a lot are actually lock-in leases. And for our better ones are in Northern Virginia, where it's actually one of the world hottest market. Those are actually on very long lock-in leases with extension term that have already on kind of pre-agreed terms as well. So I think this is one of the main reasons why you do not see a very high reversion, but at least we are comforted that those assets are pretty much resilient and will be renewed in that case. So for you then, for some of our other assets that we do not have sufficient power to cater to the new development in the industry, we will then have to undertake power study. And then with that, we will have to sell some of them. So we just want to give a very targeted reversion.

I think you also appreciate that US is actually a much bigger than it is compared to Singapore. So I think there is some varying sector in terms of the market. Yes, that's right. Well, you can take the last piece down something. Yeah. Sure, sure. Just to follow on from the US data center portfolio, right? You know, out of this 3.1 US billion of portfolio that you have, can you sort of give us a rough sense like how much of this you do look at actively selling them? How much of it does have the potential for upgradable power and how much you think it's really sort of much more resilient than the rest? Yeah, because as you already mentioned, there's a fair mix of a lot of things. So could you get a sense on where we should look at the viability of this portfolio in a short-evident term?

Maybe I would say that if you look at this, this attendance mix, of that we have about 20% of the people hyperscale data center services. These are the ones that we thought are very resilient. And of course we have 50, 60% which is power shell data centers. I would say that out of this whole bunch, probably 60 to 70% are pretty resilient. And if you look at our geographical split, right? 60 to 70% are also in tier one market. So for the balance, you know, 20 to 30% are more for domestic, you know, city users and so on. Those are the ones that we see are probably less resilient than the tier one markets. But having said that, you know, they serve its own use as well. So if you're talking about how, you know, the strength of our portfolio in US,

you know, probably the... Sorry, I kind of missed that bit. Sorry, yeah. I think you were cut off something. All right. So, okay, if you look at it from our view or if you look at the pie chart on the right side, the donut chart on the right side, the HyperQ and the colo providers are probably what the current market is driving at, you know, whereby there's AI and more retail type of users. So the weaker part of our portfolio is mainly the enterprise and end user and the other section. Got it, got it. Okay, okay. This is very helpful. And just one last question to add it, right? On the... Yep. We need to also...

Sorry, sorry. Can you hear us, Brendan? Yeah, yeah, yeah. Okay, okay. All right. Maybe I can, if I may also add, if you look at our North America Data Center portfolio, Lease Expiry, okay, at least more than 50, or I would say more than 50% of our leases are actually due in FY30 to 30, FY3031 and beyond. Like, so I think what you're looking at in terms of the more recent expiries, not a small percentage of the total portfolio. Can you also share a bit on your MPI margins for this portfolio, right? Chris, we have seen that coming down there's almost 70% again this quarter. In the past, I think it was always been about 70% so it's 68%, 69%, the kind of normalized number that we should be looking at. Not really.

I think if you look at the MPI margin, historically we have always been around the 73% level, 73, 74% level. I think this quarter it is a bit lower, but you also understand that typically this is the last quarter of the year. There is quite a number of works, the cyclical works that actually happens in that quarter rather than other core. I think if you look at the historical trend of our margin, the last quarter tends to be a bit on the lower side. But if you look at it on a full year basis, on the average, I believe the margin are somewhat relatively consistent. Okay, hey, thanks so much, Lily and Peter. Yeah, thanks, this is very helpful. Thank you, that's it for me. Bill from UDS to ask a next question. Yeah, thanks, thanks. Hi, Lily and Tim, thanks for the presentation. I just have two questions actually.

I think the first one is going back to the expiries in the US that they're 1.7%. I mean, based on currently what you guys are working towards, should we be expecting more conversions or you're just looking to spend a bit of capex and release it? And what kind of capex should we be expecting for the portfolio? You mean for the 1.7%? Yeah, yeah. We are open to all, so basically we keep the options open. So we are working both on releasing for data center basis. Of course, the preference would be if I can list out a data center, that would be my top. If not, then other users is something that is not closed option as well, right? And besides the leasing, of course, as you said, some of them, it possibly may have potential for divestment. Okay, okay. But given that they have already confirmed

that they're not going to renew, are there any advanced negotiations with potential releasing or what should we be expecting for the public? Say that it's not a case of where you get zero inquiries. There have been viewings, there has been some talks. It's really just then trying to see if we can crystallize the talks into confirmed leases or not. But these are things that are still quite fluid and we are working on it. So I think for the 1.7%, we also included the San Jose, right? And that is something that we have done a power study on. So we do hope that that can actually create some interest in the facilities as well. Okay, okay. And got it. Okay, and my next question is on the borrowing costs. I think, Yingfong, you just know, you mentioned that there'll be a 10 to $11 million impact.

I'm assuming this entire 10 to $11 million is the total impact to mint, right? In terms of the high-end borrowing costs? Yes, the per annum impact for the replacement hedges would be around 10 to 11 million, but this is per annum. Okay. There's just another million IRS coming due. I mean, it will come in progressively. Is that why? Okay, got it. But I just wanted to hear your thoughts behind this, right? This 10 to $11 million is based on today's rates, or have you guys actually assumed more big than further interest rate cuts?

I think the market has pricing, let's say, potentially three rate cuts, right? But these rate cuts will affect the short term rates, voting on our unhedged portion. So from that front, we will continue to see some interest savings from our unhedged loans. But when we talk about replacement of the IRS, we will usually use the five year rate. So we have used a current five year rate, maybe 3.5, 3.6%. Okay, okay. So we need to say if the five year rates do actually come down, there could be some slight savings from that, right? Yes. Okay, got it, got it. Okay, that's all from me. Thank you. We have a tension from Gomen to ask the next question.

Can I just check that 1.7% non-renewable other than San Jose, which other assets was included in this? I think San Jose will take the bulk of it. And I think previously we have so highlighted that there is a tenant in 250 regions which has already, which has asked to reduce the office space. The data center space was extended for a longer, for a longer lease period. Okay, got it. The question is on USD exposure and also debt, right? In terms of income hedging, how long is it for? And also given the difference in staying in US borrowing costs, any thoughts about shifting the USD debt to SING? So maybe in terms of the FX front, in terms of managing our FX, we have two parts, right? One is the capital test and is the income hedge. On our capital hedge,

we try to borrow the local currency for natural hedge. So for USD currently maybe about 55 to 58% of our assets is hedged in US dollar borrowing. In terms of the income hedge, for the next 12 months, we have hedged about 57% of our USD income into SING dollar. And on borrowing costs, the thing with USD is that if we borrow onshore, we have the tax shield, you see. So all in all, we are still slightly better off borrowing USD onshore currently. I mean, other than providing us that capital hedge, we also, I mean, net net, we are still about the same in terms of all interest costs. Thank you. Got it, and then? Yeah, sorry. Sorry, Tanshan. I mean, if today we take SING dollar borrowings, right?

And you swap to USD, doesn't really make sense because maybe we need to pay about 150 to 170 bit cost. So net net, we are still better off borrowing onshore. USD. Okay, I understand. Last question on the divestment of five to 600 million. That's the total amount that you're looking at, right? Not what you're looking to achieve for FY26, is that fair? Yeah, I think the five to 600 target is probably the lower bound of what we... I was going to say. It's something that I'm not really dictate at my whims of thinking, right? It will take time. I mean, it takes a lot of work for us to run the process. And even after you get the process, you need to go into your due diligence,

you need to do your negotiation, et cetera. But I think we should be able to, I guess to a five to six million type of a number, it should be something that is achievable for us. Is it achievable in the next financial year? Yes. Okay, got it, thank you. First, if I can do more, if the numbers are correct, if the price is correct, if we can do more and help us to push ahead with our streamlining of portfolio, I think that will be something that is good. I think at the end of the day, what we want is to really build a resilient portfolio that can bring sustainable growth to the unique audience. So whether be it by divestment process is being redeployed into better properties

that give us growth, that can provide us growth in the long run, or even just our streamlining the portfolio and resolving some of the leasing pressure. I think that's something that will be quite good for the portfolio. Okay, thank you. Thanks. Yes. Thank you. Jonathan from UOB asked a question. Yeah, morning, morning. And thank you for taking my question. First question relates to tariff, and you correctly pointed out that reciprocal tariff in Singapore is a lot lower than regional countries potentially. So for the four asset classes that you have in Singapore, high-tech, business park, flattered factory, and stack up ramp up, which segment will be positively affected, which segment will be negatively affected by reciprocal tariff? A second question relates to the very attractive rent

for new leases for high-tech at 337, business park new leases at 3.9. They look much higher than the existing leases. Could you give us some color on how those attractive rents will achieve, and can we infer or read that positively for the trend going forward for these two segments? Thank you. Your first question on which segment will be more exposed, I think that is a very difficult question because really nobody knows what will happen. We are not able to decipher what is the... At the end of the day, what will happen in terms of the trade tariff is something that is still a huge question mark. I would say generally, if you want to look across what if you are looking at your second order, third order effect globally,

or that method globally, prices will go up. Things are going to increase simply because of the trade tariff. So this is what we meant by the second order. So, and kind of effect would affect most of the industries. And I would say if you look at the SEX class, across board the SEX class. But I think we have seen quite some resilience in terms of deflected factories during the trying times. I think if you look at the COVID period, while we say that deflected factories has a lot of SMEs that may be affected, we also recognize that fetter factories are actually one of the lowest cost space that you can find in Singapore. So when times are uncertain, people don't know what to expect and all people are trying to save costs. The lower cost space tends to be something that people would want to look at. So from that perspective, I think deflected factories are relatively resilient. Of course, it doesn't mean that deflected factory tenants will not be affected at all.

There would be tenants who will be affected, but it's just that because it's low cost, we might be able to find some replacement tenant in times to come. So I think with that, we are also a bit, we also keep an eye in terms of the arrears that we have been looking at. I think our arrears numbers throughout the Singapore portfolio tends to be relatively healthy. Generally, you're talking about 0.1% type.

Even during times of COVID, our arrears numbers, I think you'll need to be looking at 1%, 1.2%, which is still relatively healthy. So I think the resilience of the portfolio is there. There's no denying that the trade tariff will have impact, but how much the impact is still a question. As I said earlier on, we have also seen quite interesting things

in the sense that we have inquiries for space from our existing tenants because they are looking to move their operations into Singapore because of the trade tariff. So that is actually somewhat a positive, I guess a positive point for us, but it's always a case of which effect is higher or more, which effect is higher than the other. So I think that is something that remains to be seen at this point. I hope that answers your question. Yeah, high tech and business part, there will be less manufacturing. So would that be more resilient? And then Stackout Brand Park will have more logistic, trade-related activities. Would that maybe be weaker? I think the short answer is probably, we don't think so. Yeah, we don't think so. Okay, thank you. And on the new leases, sorry.

Oh, in terms of the new leases for the high tech, I think a large part of it is attributed to our, to our Kalang Wave. I think that one, if you recall, our Kalang Wave property is actually one which is of relatively, I would say, very good quality. So the kind of rental rates that we have been able to command of it actually shows evidence of it. Okay, and could you give us the latest? Okay, so how much is the annual occupancy for Kalang Wave? How much has improved in the last quarter? Committer occupancy is 60.1%. Last quarter was 57%, so we have an uptake of about 3% point, 3% point. Okay, thank you very much. Thank you. Thank you everyone for joining us. We are mindful that we have exceeded our work.

We will get back to the IR team. Thank you.