4Q & Full Year FY24/25 Financial Results Briefing

Good morning, analysts, investors, and members of the public. Welcome to Maple Tree Pan-Asia Commercial Trust, or AMPAC Analyst Briefing and Live Webcast for our results for the fourth quarter and the full year, FY 2020-25. I'm Liei, and today for our results briefing, we have the polling speakers. They are Ms. Sharon Lin, Chief Executive Officer of AMPAC, Ms. Janika Tan, Chief Financial Officer, and Mr. Ko-Wee Leung, our Head of Investments and Asset Management. They'll be presenting our financial results, providing business development updates, and sharing some market insights. Following the presentation, we'll open the floor for Q&A session, where we invite you to ask questions and seek further clarification. Without further ado, I will hand the floor over to our CFO, Janika. Thank you, Liei. A very good morning to everybody. We have just announced our results this morning, so maybe we'll just go to Black State and quickly go through the financials. For the fourth quarter, FY 24-25,

gross revenue was $222.9 million, and MPI, $169.5 million. These were lowered by 6.8% and 7.4% at year-on-year respectively, and this largely reflects the absence of military and insurance contributions along its divestment on 31st July, 2024, and lower overseas contributions. As you may recall, we have digested military and sent our non-call assets on 31st July, 2024, and we have supplied the entire proceed to the reduction of borrowing. Okay, moving on to the OPEC. OPEC improved by 4.9% year-on-year during the quarter, and this was largely due to the military and insurance assessment and lower utility costs, in particular, the Singapore portfolio. Net finance expense for the quarter, 9.4% lower at 51.1 million as compared to fourth quarter last year,

and this was mainly due to the repayment of borrowings using the net proceeds from the divestment of military investment. But this was partly offset by the higher rates on the same dollar, ongoing around Japanese yen borrowing, as our legacy interest rates sort of continued to roll off progressively. So consequently, the amount available for distribution was 103.6 million, and this year, 1.95 cents, now option 0.8% year-on-year for fourth quarter. Okay, moving on to next slide. This shows the contribution by different markets. Singapore properties contribution increased by 1.4% year-on-year, excluding military investment, and this accounted for about 53% to both fourth quarters, portfolio gross revenue and MPI. On a full year basis, MPI reported gross revenue and MPI of 908.8 million and 683.5 million respectively, lower by 5.1% and 6.1% year-on-year.

The higher contribution by Singapore portfolio on a comparable basis, which is without labor change, as well as lower OPEX and net finance costs provided partial offset to the overseas and hit wins, florax hit wins. So consequently, the I am out at the 403 million and BPU 8.02 cents.

Okay, the next few slides are on our portfolio valuation. MPEC's portfolio valuation is approximately 16 billion as the 31st March 2025, excluding the effect from military investment, the portfolio valuation rose 339.4 million or 2.2% from their respective plus available independent valuation either as the 21st March 2024, or in the case of the three Makuhari assets in Japan, as of September 2024. On a year-on-year basis and excluding military investment, the valuation increased by 225.5 million or 1.4%. The overseas properties recorded lower valuation, largely stemming from UB-wise market expectations in greater China, and cap rate and discount rate expansion applied to the sustainable world. Okay, moving on to the next slide. This is the valuation for Singapore property. There's a up-lits of 660 million or 7.9%,

and this more than offset the decline in the valuation of the overseas properties. Singapore's growth was led by VivoCities better performance and tighter cap rate applied by the valuables to VivoCities and the business path admin of NBC. For Japan, the year-on-year valuation decline was largely due to the trip of the fees located in Makuhari in Japan and has been captured in the September results. The current six months change in valuation was largely due to forex impact, while MVP chose some gain due to successful backfilling. Moving on to balance sheet, with the uplift of the portfolio valuation, NAV per unit is now at $1.78 except September 25, and this was higher as compared to March 2024 by 1.7%. On capital management, the deployment of laboratory instance divestment received reduced outstanding borrowings to 6.1 billion,

and together with the higher overall valuation, aggregate leverage ratio improved from 40.5% a year ago to 37.7% as the 31st March 25. With an average all-in cost of debt-making figure at around mid-3, ICR kept at 2.8 times on a 12-month trailing-based fee. During the quarter, MPAT issued a seven-year green bond in March 25, and this extended the average term to maturity of debt to 3.3 years as the March 25. And by the close of the reporting period, MPAT has a financial flat of $1.2 billion in cash and undrawn committer facilities. So this is sufficient for working capital and financial obligation. We will continue to ensure a natural balance sheet hedge by closely align the debt mix with the Chicago Free-Girt distribution of MPAT's AUN, while feasible. Okay, MPAT's debt profile remains balanced

with no single financial year facing more than 23% of debt risk for refinancing. Moving on to risk management. The fixed rate debt portion was lowered from 81.5% to 79.9% during the quarter. Without the seven-year fixed rate bonds issued in March 25, the percentage of fixed rate debt would be at 76.6%. So at about 80% of our debt on fixed rate, every 50-bit exchange investment rate is estimated to impact the DPU by 0.1 cents per annum. And lastly, at the close of the quarter, approximately 90% of MPAT's expected distributable income was derived from or has into same dollar. The next slide is on the total return. So for this year, the total return from capital and dividend payout is 3.9%. And last but not least, on the distribution detail,

VCD is to receive April 25 and the payout date is on 6 June 25. With that, I will now hand over to William. Thank you. Good morning, everyone. Maybe let's move on to the occupancy performance. So you can see that the portfolio occupancy has declined very slightly since December 2024. That's largely driven by the Japan properties where there were a number of non-renewals at the Gilead and Macquarie area. But then moving on to the small price sets. So for MPC occupancy, now it's less than 91.2%. There have been a number of non-renewals in the current year in the financial that just passed and most of those bases are still in the process of being leased out. The experience over the last three to six months has been tenders have been taking a far longer time to make decisions and commitments are typically a lot further into the future.

We may hope that it's actually due to the fact

that it remains on a year-on-year basis. Gateway plans actually lost a little bit of, and so while they have both assets to provide, we will at least see a little bit of habeas going forward as the Changjiang area does face a little bit more. And properties, this is largely due to the combination of leases from the single-tenant property,

the non-renewal of the master leases at MPP. For Pinnacle Gangnam, one of the price spots in the portfolio currently taken part, except for a small retail unit in basement two. And we expect them to continue performing. Okay, moving on to special reversion. So, NBC, the Singapore properties in general have performed a lot better. NBC, VOCT and M-TOW in particular have seen healthy rental reversions. Festival continues to see negative rental reversions. That's also been pressured because of the current trade tensions and the potential impact on the economy of both Hong Kong and China. The China assets, as we mentioned previously, where it mentioned in previous been

negative rental reversions, market rentals have been, well, we have managed to contain this to negative 9%. The reality is market rentals are quite a bit, quite a bit more passing than those in the past used to sign the flawless per day, RMB per day, including now actually the $3.50 to $4 range. So for Japan, that's again, actually due to the stakeholder building and the master leases of MPP. Whereas Pinnacle Gangnam continues to perform well. In the rental reversion is largely due to the office, where due to the run up in office fees.

Just a quick note on this expiry profile. So on portfolios, 2.2 years, number of office have quite a large chunk of purchase coming out for renewal in the current, in current FY2526. And we are in negotiations with all of these tenants. In the current indications are that most of these tenants will be new in their leases, although one or two of them might have something.

China continues to be challenging. We can generate for Japan. While we have signed up a good number of these, some of this is actually some of the continued in the building and rental reversion that was mentioned earlier, continues to be. So moving on to the performance. So Shoppered Traffic is down very marginally against the year on year, whereas Tenant Seals year on year. Tenant Seals has been that if you have been to the more recent years, we have had quite a lot of SA and Huntsman Works ongoing and that's contributed significantly more downtime

this current financial year than against the previous financial year. Looking at SA and Huntsman Works. So for basement two, we had one phase as well as to increase the number. Or phase two, which we had started a few months ago, that's currently ongoing and will largely be completed. Most of the spaces have already been completed out, just a few more leases left to finish. So this slide just gives you a few of the tenants that we have signed up over the current quarter, as well as some of the A&P activities. Moving on to Festival Walk. Festival Walk has largely been,

firstly, peace travel from China into Hong Kong, although that hasn't really translated into Tenant Sales. If you look at the Hong Kong tourists, while the number of arrivals have increased, they're only on the day trip have decreased, Tenant Sales continuously, fairly new. So the mall continues to improve the tenor mix.

A number of new tenants that we've brought in in that are running marketing activity means very popular as well as with the staff in Hong Kong. We can come to the end of the presentation. We're now ready to take a question

and also raise your hand to the team to like to allocate the terms accordingly. And for the online participants, we invite you to send your questions to the online text base. So first, we have Terrence for J.T. Morgan. Terrence, you may go ahead. Thanks so much, Sharon and Peeb. This is Terrence Ki from J.T. Morgan. I just wanted to ask on Japan occupancies, especially for NDP and Makahari. Is this the load that we are seeing? Any more vacancies expected for FY26? Okay, the FGN property, as we have announced and shared with the market, that your tenancy will end in 2026. So in terms of valuation, we are thickening down. In terms of the number, in the occupancy, when you see the number, come to 2026, there will be a drop due to Fujitsu.

But valuation-wise, we have taken majority of the valuation down already for the asset. In terms of master leases, all the master leases for MDP. Have they? Yes. So the master leases for SACLE. Okay, we have two master leases that we share with two big ones, which is SACLE and Fujitsu. SACLE, we have already taken down both, the assets we have taken down the fail. Occupancy is showing up already, or has shown up for the SACLE asset, which is now called MBT, okay, that's the building. Now for Fujitsu, it's 2026. Valuation taken down, but the occupancy, you will see it coming down in 2026. Okay, thanks. And in terms of the negative reversions, how should we expect reversions to trend for the overseas assets,

especially for Festival Walk China and Japan? Okay, I think if you look at our entire portfolio reversion, if we look at the whole portfolio is a positive three, over three over percent, and that is led by P4C. Okay, the rest of the overseas are in a single-digit. Okay, if we're talking about Hong Kong and China, we're talking about single-digit. I think right now there is still a little bit of uncertainty, okay, but I think we're trying to keep the, and try not to expand this negative and mental reversion beyond what we are seeing. Yeah. Thank you. And finally, for me, just another ask on the capital distribution, this 7.7 million, can I ask how much has been utilized and how much remains to be distributed? Can you repeat your question again, Terence, please? No, 7.7 million. I understand that there's a 7.7 million capital distribution

from the balance allowance from the divestment and maple tree answer. No, I think you got it wrong. We do not distribute any divestment gain on maple tree answer. If you are referring to our footnote in the financials in the SGFNet on that allowance that's relating to maple tree answer, I think this is something to do with the tax because we used to claim capital allowance from maple tree answer, and some of it have not been claimed. And under Singapore tax, you got the claim off. So it's a deduction from our DI, and then we just adjust it in the DTC adjustment. It's in our profit, so we just adjust it to our DI. So effectively, we are not paying out anything. Okay, that's fine. Thank you so much. It's just a book classification. We are not paying out anything. Yeah. Okay, that's fine.

Thank you. I'll leave it to the rest, thanks. Thank you. Thank you, Terence. Can we have Jheri-Lin from DBS next? Hi, good morning, Terence and everyone. This is Jheri-Lin from DBS. I think the majority is operations-led.

Okay, thank you. Maybe one more, I think, to turn it back to the trade-wall tensions. Any expected tenant vacation or any talks of preterm within the platform? Not that we're well, but I think we'll give you a bit more color in the exact, because I think generally, we are not the first asset class that will be hit in terms of tensions. But when there is uncertainty, all companies will be a little bit slower or a bit more cautious in their consumption of office space. Okay, so I think we are expecting a slower decision-making, but I think we will take the lead from what we see, how it all pans out with other sectors, then it will slowly trigger down, sorry, flow down to our asset class. Okay, so I think we will share a bit more

on the specific markets that we're in and we'll see how the tenant fees and how they are affected. Okay, so maybe let's start with Singapore. If you look at our Singapore portfolio, and here we're talking about office MPP. We'll talk about retail side later. So for office MPP, if you look at it, the majority of our tenants are in the IT sector, financial sector, as well as we've got a fairly healthy portion of government tenants as well. Looking through the portfolio, we feel that the likelihood for softness is probably from the shipping and transport sector. We saw this during the last round of trade wars in the 2017 to 2018 period, where a lot of our shipping tenants actually had a bit of weakness and we had a number of non-renewals. Currently, it's still early days. None of the tenants have come to our

tenants potentially for us seeing a little bit of slowdown in terms of their sector. It's probably as much from uncertainty than it is from direct.

Moving on from Singapore, the country that is most greatly affected is likely to be China. Two assets with quite different performances. Look at Shanghai. Shanghai is operations that are largely supporting manufacturing also. We, however, do have a number of US companies in the in in in Sanrio Plaza and some of the tenants are looking at downsizing when their leases expire, but that's largely related to the slowdown of the economy in China rather than direct impact of the pensions. The Beijing office market is in some ways insulated,

that's largely because during the previous round of trade tensions, most of the a lot of the large American tenants within our building have actually already. The market now has, we haven't heard in particular from any other tenants, we touch base with our largest tenant that was largely was more that the slowing China of the mobile market has been a bigger impact on them than the so far for the Japan portfolio. We aren't seeing anything as well. In Korea, our tenants within the building are largely serving the local market, not so much export related. So moving on to the two retail assets, I think usually we do see the retail assets

performance slightly stronger when there's a certain amount uncertainty while their and luxuries and discretionary items were as long as groceries and that we tenants are very good where we generally do not have luxury tenants. For festival work, however, the larger picture really has been really continues to be and the connection with China is easy. Actually, China remains fairly easy and there will still be a small, there will still be a amount of spending which will, that's why as Sharon mentioned,

we do expect the negative reversions to be best probably in the same ranges as we continue to see. I mean, in general, when there is uncertainty, retail spending discretionary side and that does benefit both of our malls slightly because of the fact that they are not the high end malls are located in festival case located within a largely residential area. And we do have that here in Singapore for diversity as well. And we do expect that impact from. So the other point that our leasing colleagues are dealing with, tenants are prospects are a little bit more slightly decentralized,

but near enough, there is a differential that will place us that is a little bit more uncertain. They become more cost-conscious and that's where I think our officers will. Thank you Sharon, we know for the very good color and taking the time to share. Yeah, thank you. Can we have Derek term for a moment standing next? Derek, over to you. Hi morning, just sort of a follow up on the investment gains from Ensign. So would you consider paying out the investment gains to short PPU, especially as you've mentioned the pressures on PPU?

No, okay. I think from the start, we did say that we are not we are not distributing the gains. We're keeping our keeping it before to improve our balance. I mean, right at that time, our gearing was of certain level and I think we're successfully brought up to a super comfortable zone at 37. I think we will see along the way and assess future if there is any potential future positive gains from divestment, we will we may consider. But for Ensign, no, we have we have decided that we will keep it to strengthen our balance sheet. Yeah, maybe let me add on on that 7.7 million interview that you see in the SGXNAC that relates to Ensign's capital allowance. So if taken off from my

taxable income, so I have to do it through capital distribution to balance it out. So we are not distributing any capital gain from the Ensign's bag. Yep, got it. Understood. And could I also ask on the MPC Google backfilling progress, where we are right now? So for the two flaws that Google gave up during the previous new world, we are currently still marketing the space. There are a number of tenants who are looking at it. But the reality is the spaces which are large have very, very few tenants looking at it currently. We have been engaging the one or two potential tenants for at least three to six months already. And we're still working with them on when they can take over as well as what spaces they are eventually finally going to take. We mentioned earlier, decision making

has slowed down quite a lot. And a lot of tenants tend to be a lot more cost conscious currently, cost conscious going forward. Right. What is the percentage progress done? For the two flaws that Google gave up. Yep. Currently nothing. But both flaws are being looked at by tenants to be taken up in their entirety. Understood. And we've come to you, you spoke about tenants moving from CBD to business park cheaper to a business area. Could you give a flavor of where which industries they are from? So we have a fairly wide range. I've got shipping companies, I've got financial institutions, I've got the usual IT companies as well. FMCG even. Not quite fast moving. But definitely is across all sectors.

When CBD rentals start to cross $13, $14, it becomes a little bit more uncomfortable for them in terms of taking out spaces. Most of the tenants will start looking at what the more cost effective solution. In some cases, they will split offices, which we have seen, taking front office spaces in the CBD as well as taking back office spaces or mid office spaces here. I mean, the types apply in the CBD does help to, when that happens, rationalize the office. Got it, answered. And just one last question. At Vivo City, what is the current occupancy cost and when will these double digit versions come normalized back to single digits?

Okay, I think 10 over percent of the virtual version is actually very, very high. Okay, these are really high. And I think we are consistently being able to do so. But I think we have to be a little bit more muted in our actions going forward, depending on which other leases is coming up. So a lot of the rental reversions are due to changes in trade. Okay, changes in trade or improvement in tenancy type within the same trade. So that's where the team has been able to capture such decent rental reversions. For example, we had one restaurant that was there with us for 10 years. It was the bottom three and there was just a switch of a tenant to a better operating one. The rental reversion was a very decent job. So I think Vivo itself,

these are my worries. I think we have seen that domestic spending will continue when there is such a form of uncertainty in the market. On top of that, we are also improving ourselves operationally with all the AEIs. I think if you have gone to Vivo recently, you have seen how we have reconfigured all the kiosks. And the kiosk is increasing the numbers using removing our customer service office and also using common area spaces to better utilize the floor space to create an LA. The look, feel, MNE, flow, penalty makes even toilet provisions are all included in the full upgrade. The other one, the other AI that we are doing, which is the conversion of car parks and reconfiguring the space into retail, that will be quite interesting

because that is the front of where the MRT ingress ingress is. Strict to the mall. So, penalties have been signed up successfully. It will be very nice. The whole look, feel, amenities will all be upgraded. So, I think this is Vivo City's major plus point. We have a big space. We have never stopped over 10 years in continuously upgrading the space, be it for revenue or be it for beautification and look, ambience spaces. So, rental reversion, of course, the team is, will be very measured, okay, where there is potential to move. They will move. But I think we, I cannot guarantee that we will all be doing 10 over percent every year. Actually, if you look at the market, 10 over percent rental reversion is

consistently is not, I've not seen it in most of the other malls. Okay, so I think Vivo City is a little bit one off. Yeah. Occupancy card is always been who break around 20. So, while we move up the thing, we will still have to try to move the sales. So, this round, I think we are tracking retail sales, okay, but we have not significantly over the retail sales index is because we trash a lot of units at basement too. When we trash the units at basement too, it means that we are not trading. So, when we do the sales comparison, we do not remove when they are, when they are undergoing AEI. So, the way impact does it is at ease, okay? So, we do not remove when we are doing AEI and calculate the sales on a per square foot basis. So, technically, we are not comparing on a light for light basis, but we are still tracking retail sales index,

even though we have trashed a lot of units for asset enhancement works at the basement too. So, the short answer to you is, we are still around the same occupancy cost. Wendy.

Sherry, do you have another question? May I use one for now?

Okay, it's all right. Next, we have Brendan. Brendan, nice to have you again. Over to you. Good morning. Good morning. Hey, good morning, Sharon. Yes, it is. All good. Yes. Can you comment a bit on BMW and TACE? For BMW, do you think it's... BMW is very there. He's still in our China office, occupying our major. His lease is still 2028. BMW is still there. Okay. We renewed the lease about two over years ago in December. So, we still... And the lease is still 2028. TACE. TACE is still there. We have renewed the lease. So, I think in terms of operations, they are quite stable as of now.

Does BMW have any preterm clause? I think it's a fine contract. Nobody has a preterm clause. Anything you want to preterm, it must be negotiated. Not allowed, you can negotiate with us, but not allowed in the contract. None of our contracts allow you to preterm. Only Japan. Because Japan is rolling leases, right? So, rolling leases by nature, they are allowed to preterm.

The rest of the market is very still in Singapore. They cannot just walk away. Okay. So, I assume for BMW, they should remain. They are there. I can just tell you that they are there. They are still there. They have many, many, many BMWs in the Gateway Plaza Park. Okay. Okay. And just going back to the first of the walk, I think we earlier mentioned that the sales has bottomed up and as for the negative rent reversion, right? How long more do you think that could continue? Especially given the current tariff war? Okay. You see, I predict the general economy at this moment, okay? Right now, everything is a little bit volatile. It changes. But for retail itself, I think when you see the Hong Kong dollar slightly weakening,

which is technically US dollar, I believe spending will be tilted back a bit more to Hong Kong. Our sole consumption is going on, but consumption has some leakage into some terms. So, the Hong Kong dollar strength, has some bearings to it. So, for me, I can't tell you when the whole world is going to change or when we're going to see the bottoming up. Now, is it feeling a little bit of pressure? I think entire Hong Kong is. But a good thing about festival war is one, in terms of retail sales, even though it's negative, we are a lesser negative than the general Hong Kong retail sales. So, it means it is performing better than the general retail in Hong Kong. So, when will I turn? I think a good first step that I will see immediately when the Hong Kong dollar weakens a little bit, again, Chinese Yuan or whatever, then that's where you see the spending, I believe will tilt back a bit to Hong Kong.

But generally, where is it going to start flying? It's a bigger economic question. Okay, it's a bigger question in terms of where Hong Kong will lie as a financial sector. Okay, so that I think is anybody's guess today.

Okay, just one last one on valuations in China, right, you've taken them down quite a bit this quarter. Do you think that that's probably the worst that we have seen? Okay, the overseas asset, okay, is it a huge drop? It's a reflection of the operation. Okay, if you talk about really very huge drop, like 30, 40, no, no, no, it's not in that scale. We have not dropped in that manner. Okay, so I'm not saying that overseas drop is directly linked to the operation. China, Hong Kong drop, there is a portion of cap rate expansion. Okay, so are we going to see depending on where the operation goes, I think China, there will still be a little bit of weakness in terms of valuation.

Hong Kong itself is majority of the drop is due to the cap rate. Okay, now where the cap rate will continue to expand, it will depend on where the valuables face it at the end of the time. This round, they did 10 bits, okay, 10 bit expansion. So it may continue, we're not sure. But what we see ourselves in terms of our financial strength today, after selling and selling and all, our plus our Singapore holding up strongly, our total value actually has gone up by the strength of our 60% portfolio, which is helped by Singapore. Singapore has gone up and a 60% of portfolio, it brings our gearing to about 37 ish. So it won't be able to withstand any shocks, okay, in terms of any major cap rate changes. I'm not saying there will be any major cap rate changes,

but if there is for China or greater China, our portfolio will be able to withstand that. Okay, so I think our financial strength today can take us to withstand the next one two years, if there is any changes in cap rates. Okay, so valuation, even if it drops, it will be a reflection of the softening of operation in China. Okay, but we will be able to withstand based on our current capital structure. Okay, it is back here Sharon. All good for me. Thanks so much. We get it.

Thank you, Brendan. Shin, good morning. Over to you, Nga and Shin.

Explain a bit about the cap rate compression for Singapore, especially for NBC and Bebo. Okay, Bebo itself, if you look at it, our running cap is high force. Okay, so the marginal cap rate compression, if you look at the past deals, is better than what it is. The valuers really have no choice. They really have to give it to me because there was transaction. Okay, but majority of Vivo valuation gain is operation. It's operation. The 10-bit doesn't get me to that. 600 million, 500 million. 500 million. It is majority the operation. Now, NBC is due to transactions. They have done a mixture. They typically valuers will have to take in transaction cap. And they will be a bit measured in terms of maybe adjusting market rent down a bit.

Then there was a mixture of that. So the reason behind the changes is majority market transaction left and our own operations being positive for retail.

Second question is on cost of debt. If you look at the debt that's expiring versus what you're signing, what's the expected cost of debt for the next financial year?

Currently, I think we are going down or going down and then quite stable this few days. I would think it will be around this level, mid-trees for the next class one. Would it be able to share what's the average expiring debt cost for the next year? Actually, average expiring debt cost for the next year is not quite meaningful because some of it we hash, some of it we swap. So what I can tell you is for this coming year, financial year, the fixed rate debt is actually at about 2.62.7% on a blended basis. So when that get rolls off, it will be referred to as a floating rate. And the majority of the fixed rates that is expiring in first quarter are all below the current market rate. So there will be some increase. But we are also working hard talking to the bank to renegotiate the margin

and doing a lot of whatever things that we can do within our portfolio to bring down the cost of debt. So that the question is the impact of when lower rates, IRS roll off, it will impact in our books. So at the same time, we are also seeing a margin going down because we have been going back to renegotiate. Hopefully that can offset each other and then we can keep it at about 3 over mid-trees continue to be at mid-trees. Okay, got it. Thank you. Thank you, Darshan. Derek from DBS. Over to you, Derek. Hi. Good morning. Can you hear me? Yep, we can hear you. Yeah. Hi. Hi. Good morning, Sharon and team. I just had two questions, right? First one is on your way. All right. Could you give us a bit more color whether this year for the retail office business part type of expiries, are you expecting any churn or downsizing? Maybe some thoughts around there given the current climate.

So that's my first question. Yeah. Okay. So my second question back to what Tanchan has asked, right? So I think, Janika, you have kept interest rates pretty stable and you're still guarding for flat station. Just wondering whether are you being a bit conservative on your front end? Because you have moved from come to China, right? And China is going down. Singapore is going down. So rightfully I thought that that may be the best. Thank you for doing my job.

Thank you for asking that question to my CFO. Okay, let me take the answer. I have a question. The interest rate. Oh, sorry. Interest rate is more important. Yeah, yeah. So I just wondered maybe what you think you feel. 3.5 is 3.4 or 3.6 also mean, right? Okay.

But essentially, we should expect that your interest rate should have people. That's how we should look at it, right? No, no, no, no, no, no. We do have interest rates so at high rate at the moment and it's going to only drop off next two years after much we need to invest. So when that says the interest rate cannot go down too much, okay, then when after much we need to invest, when all our high interest rates sort of expire and we roll, then that will see that. I depend on the market. If the market is same as today, then you will see it's going down. Then I can safely tell you it's a low low tree. But at the moment, not yet. I got to gradually manage the high interest rate that we high interest rate sort that we have in our portfolio. Keep it cool. The mid trees that I promised you. Got it. Great. So you're saying that so just follow up, you mentioned that if interest rates remain at current level, you potentially could go in at low trees.

How should you look at it?

Okay. What is low trees? Yeah, it might be 10, 15% lower than what we have now. Okay. Okay. Okay. Yeah. Put it that way. Put it that way if assuming all my debt repriced today and based on today's market rate, it will be around 3.3%. 3.2 plus 3.3%. Got it. Thank you. That's very good, Carla. Thank you. Thank you. Sorry. On your side, please. Interest rates swap high interest rates on my portfolio. I know. You won't be too bullish yet. Just some thoughts around. Keep us surprised. Yeah. Thanks. Thanks. Okay. Then maybe let me just comment quickly on the way that we're at least expiring. Generally, for retail leases, we aren't seeing any significant changes to these durations. Larger tenants are still signing slightly longer leases. The majority of retail leases are still three years. And we have a small component of shorter leases within our portfolio. That's largely unchanged.

The bigger changes will probably be on the office side. For office, if you look at our previous quarters, and in fact, going back a few quarters, you'll see that our office bill has come down slightly. That's largely due to the passing of time, where we have a number of, we have quite a large chunk of office leases expiring in FY26, FY25 and FY26. And because those leases lastly haven't been renewed yet, their slightly shorter durations have brought down our bill slightly. Looking at the negotiations with the office tenants currently, we do see a lot of the tenants where previously they were assigned five-year leases are now largely more looking at three-year durations. I still have five-year renewals. I still have four-year renewals as well. But the tenants that previously had five-year leases are potentially asking us for three years rather than five years. The office bill will come down slightly.

In terms of the second part of your question, in terms of where you're asking about downsizing and the like, unfortunately, we do have a little bit of that. You mentioned that the market remains uncertain. The ability for tenants to continue the whole large spaces, especially in the current uncertainty, the larger tenants have retained a number of tenants have actually given up space. A good example last year, we still have a few of these tenants going forward that are asking for slight reduction of space upon their renewals. But for these large tenants, there's not a huge amount of space. We're talking about maybe 5% and 20% of space being given up. And it's only for a small proportion of the tenants within NBC in particular.

If you go to Shanghai and Beijing, then that already becomes quite different. For Shanghai, we do have tenants who have been asking for 50% reduction in spaces. But again, that's still a minority. The bigger challenge in Shanghai actually has been non-renewal tenants that because the market rentals have been poor and because there's a lot of supply within the market, we do have a lot of churn within the tenant mix. Although the property has done fairly well, we have brought occupancy up from where it was. It was low, it was actually high 70s about a year ago. We are now about 86% there about for Shanghai. We have a little bit of that, the same issue in Beijing as well, where we do have tenants who have given up 50% of space. And there is also a little bit of competition between landlords for tenants. But for that building, we have managed to maintain our occupancy quite healthy, also around the east. Also around the mid 80s. Okay, thank you.

Sorry for that, but just one more. For NBC, are we going to see stable or negative reversions? Or just one of negative? I'm just curious.

Passing rentals, market rentals, market rentals have remained fairly stable all around the mid six range. Where the reversions will come is depending on where the tenant and where the tenant is the one that is being renewed and what deer rentals were. Within the port, there are a number of tenants where unfortunately there will be a little bit of negative reversions. Okay, maybe I'll give you another perspective. Our tenants have switched out a tenant. Let's compare switching out a tenant and a negative reversions.

Just for example, an 8% or 8% rental reversion negative may sound like a catastrophe. Okay, but if you look at what does that translate into the number of months for a lease hub, we are talking to over months. Would I be, on a casual basis, I may be better off as compared to switching another tenant because switching another tenant, the likelihood of it being back to back and not giving rent free is absolutely out of this door. In a typical business, pleasers reside where they give fixed out rent free and the handover unit is never so perfect. So I think I will say that for business clients at all, I really prefer them to stay. My cash flow is definitely better. And anything that is single digit is nothing to worry about.

It's even better than I switch tenant and get a positive reversions. That is from my operations perspective. And in terms of how, maybe I'll share the other point that leads to your question pertaining to our lease expiry. The term to maturity in terms of our lease. The field of our top 10 by virtue of next time, they are coming closer. So good thing is one of the top 10 tenants in NBC is renewed. Okay, so that has been said. It will improve the lease expiry profile and have degrees for NBC. So I think when you look at rental reversions, especially for business partner, changing a tenant, you see the percentage.

Typically, we have to give minimum three to four months plus a certain downtime because we cannot back to back today. I think back to the key tomorrow, I hand out the key to another tenant. In terms of cash flow impact, it is worth in my pocket on that basis. So if I can renew and the rental reversion is slightly negative, I'm more than happy to do so because overall on a casual basis, I'm better.

Okay, very clear. Thanks everyone. Thank you.

Thank you, Jerry. Can we quickly move on to Jonathan? Yeah, thanks for taking my question. Lots of leases expiring for the next two years. You have mentioned potential weakness in Shanghai and Beijing. Are there other markets that could also have potential weakness in terms of downsizing or non-renewal? And maybe you can share in terms of quantum how some of that weakness could be. A second question relates to, I think, an earlier question on occupancy costs for festival work. I think we missed out answering that part of the question. Thank you. What we asked. Oh, I think, okay, you go ahead. Let me just, so in terms of significant risk in the portfolio, I think some of this is really flagged before in previous quarters.

One of the bigger risks within the portfolio actually is the non-renewal of Fujitsu at the FGM building in Makuhari, Japan. So when that occurs towards the end of this current apply, then there will be a drop in occupancy for Japan portfolio and the corresponding reduction in revenue and property income. For the current, if so, moving on to other geographies, Korea is fairly stable. Actually doing quite well now. That building is back up to 100%. We are, for Hong Kong, the office component has got a small more vacancy for the other tenants within the building. Most of some releases were signed quite recently and especially for the inter-tenant at the festival office that extends all the way out to 2030. If we move on to Singapore, M Tower has a little bit of, will have a little bit of occupancy reduction towards the end of this current FY.

One of the tenants has flagged that they were moving out. Actually they have flagged the moving out for more than two years already, moving to their own used building. For NBC, we are in negotiations with majority of the tenants which are, we have really sparked a negotiation with majority of tenants which are expiring in the going forward financial year. And for the majority of them, they have not indicated that they are downsizing. There is one tenant that potentially may and we are still working through the details with them. But their downsizing is not significant. It's not like 50% reduction. Okay, then I think the last question you had was on festival works occupancy costs, right? That's also in the 20% range, fairly consistent of what it was in the previous financial year.

Thank you. Thank you Jonathan as well. Next we have Joy.

Hey, my name is Sharon. And a few questions. First of all, just on NBC, you mentioned about few non-renewals. Can I just get a bit of a sense as to the reason of non-renewals? Is it cost or just? Those are the previous financial years. So Google gave up two floors, right? Then you know that we have no new ones.

No new big ones are there. Small small ones, those like those hard floor, one floor tenants which doesn't impact the portfolio that significantly. Okay, and for those small ones, they're moving out because of cost. Some of them are moving out because of cost. There's nobody that say that we are closing down the Singapore operation and therefore we have to exit NBC. We haven't heard that in quite a while. But there have been some which are consolidations where they have like three or four different officers and they were looking to consolidate. Like I mentioned for BJA VLs, largely cost as well as the expansion issue. Then there were a few other tenants which are largely driven by cost and consolidation. Okay, cool. In the occupancy rate, I can take it as the current physical occupancy rate. For NBC, the difference between the committed and physical occupancy is very smaller.

Okay, great. And then second one on Vivo, you mentioned that the valuation is largely on operational. So does that mean that once your AEA is completed, we can expect another one round of meaningful revalor? Okay, it will all depend on that. If you see the MPI going up, which is typically the reflection of the rental reversion, then that will slowly be taken into the valuation. But they will always deduct the capital expenditure that we spend on the model.

If it goes up, it will go up. Yeah, if it comes up, the operation will come down. Got it. But if you say big cap rate changes, big cap rate changes, unlikely. Because there is no deal, so on that front, the valuation will not likely move. I see. And then just lastly, sharing your role on your press release, that person targeted opportunities, could you just elaborate a little bit more on the targeted opportunities? And I guess also on divestment opportunities in other markets as well. Okay, I think when we talk about opportunities, very simply, okay, without reading my press release, very simply, okay, we always review the constitution of our portfolio. Now, if there is opportunities to sell and we see that there is a reason to sell,

we will consider doing it. So I think what we have done last year, and since is indication of how of capitalizing on certain opportunities when the opportunity comes by. Okay, so we are not here to have assets. If we find that there is good purpose for doing so, we will continue. So I think we are very sharing that we will continue to do whatever that we said, which is to recycle where possible. But of course, recycling for commercial is a little tougher because our asset size are chunky. But that doesn't stop us from thinking of how to dissect and capture the opportunity when it comes. So I think maybe, I would like to share for the whole of the year, just in summary, what have we done well? What are we worried about? What have we not done well? Okay, maybe I talk about what we think that we have done well first.

Number one, the valuation increases well-supported by operations is a definite positive. 60% of our portfolio is stable. In terms of MPI contribution, Singapore is about 60 over. 60 is about 60. And that is a very, very stable piece. Okay. And that leads to bringing down the worries of last year of our 40% gearing down to 37. Now, what does this 37 mean to me? 37 mean to me is number one, investors stop making about my gearing. Two is I have enough buffer to withstand any shocks in this unstable market. Okay. Right now globally, I would think that there's some shakes. Okay. How your cannot interest or cap rate, I think we still don't know. Certain parts have shown signs of expansion in cap rates.

So valuation, I think we're done well. Led by operation. Better operation. Two, the other thing is we also actively recycle. Which capitalizing on answer with a gain and lowering or gearing also. That is our two retail models. You may say that Hong Kong is weak, but I would say that we are big retail sales. We are better than, better negative than the general negative in the market. Okay. So on the basis, I would say, camera structure is stronger. We are done what we can. Operationally, we push what we can. But we are not immune from the slight weakness in the China market and Japan assets that we have. Now, so where are the downs? Japan, I think we have said enough about Japan. Of our issues with the anchor tenant.

We have actively taken down our valuation. Okay. So the books have already registered the leaving of our two master leases. And Japan is about less than 10% of our entire portfolio. So what we can do, we have done. Okay. Control the old facts, control the gay facts, bring down the veil. Japan, we have done what we can as a manager. Hong Kong. Moving to our Hong Kong retail. We kept our occupancy high. Although the whole market is a bit weak, we push on to make sure that our occupancy is kept. Render reversion, a bet that is a negative is a negative in the market. Where we see the sun is there is still consumption. Hong Kong dollar, if it weakens, it will be a benefit to festival work.

But generally, we are not performing behind Hong Kong retail market. Okay. China. China itself, everybody hears a lot of bad news, trade tensions, whatever. It's not new to us. It's not new to China at all. Okay. So in terms of operations front, our stability comes from occupancy. If you see our occupancy, even though it has dropped, it's way ahead of market. Okay. We may be in the 80s, market is 70s. Okay. So I would say that although we are negative, same story, we are performing better than the market. So those are our, if you ask me where our focus is, our down points are our overseas softening, but we are performing the market, be it on the occupancy or be it on the sales front for the retail part. Now, as a manager, I cannot control the macro. We can control our ops, we can control our costs, we can control our spending, and we can

control and push other AI plans to gain further revenue when we see opportunities like for people. So I think generally that sums up for what we have done for the year.

So I guess going forward next year, we probably acquisition or sizable acquisitions to offer a card. Is that fair to say? I think right now depends on what acquisition and the size.

Today, I would say Singapore acquisition, five fields. Okay. Our gearing 37, I think most of the acquisitions for the last 10 years, you need a bit of gearing to push up for a mission. Because your underlying portfolio that historically is actually higher yielding than whatever that is selling in the market. Yeah? So if you were strictly looking at accretion and know the quality of the asset that you're bringing in, typically higher quality means lower yield, then you will need gearing. Okay? So I think we, I would say that if you want to achieve a mission, it will be slightly tougher. But I am not against the idea of improving the quality even at neutral. Okay? Sometimes we are too fixated on certain things.

And yeah, I think what I'm saying is I'm okay even with neutral. Is a higher quality asset? And in that scenario, would you be happy to trade, let's say partial state of your sizable assets for those? Oh, okay.

I think we have a whole, I will share with the market. Yeah. Vivo and MBC is synonymous to impact. Okay? As of now, there is no plans of any digressment. They are poor to us. Okay. Yeah. Okay. If you say others, I do not know what you mean, significant others. Yeah. We will consider if the price is right. Yeah. Okay. Cool. That's very clear. Thank you, Sharon, for sharing. Thank you, Joy. Last, we have Rachel from Aquari. Rachel, please. Hey, hello. Hi, morning. Finally, just very quick question. So I think firstly, Fujitsu's occupancy, how much, sorry, Fujitsu's non-renewal, how much would it form in your lease ex-fineries for this year? No, next year, thank you. 2026.

So the 12.7%. And you won't show up this year. 2026 or 2027? No, it's 2026. Out of that 12.7%, which is maybe about 2%. 2%. Yeah, it should be a little bit less than 2%. Oh. It should be a little bit less than 2%. Okay, got it. And one more is Japan. Your Japan asset, are you looking, do you need to do AEI or anything, or any color or nothing, you want? So for the Japan asset, it's a number, we do do a little bit of AEI. The buildings are, the buildings in particular, the Macareons are a little bit old. So we do have plans to do more cosmetic type of work to just improve the building.

That and the fact that, like I said, because they're old, then they will always be upgrades and replacements that need to be done over the course of the life. Okay, but demand is just off the earth. Now, I think I said your question, can you repeat? Oh, Japan needs to demand, is it still soft or is it? Oh, so interestingly, okay, so I had to split it between the Makuhari assets and the rest of the rest of Japan, right? So the Makuhari leasing demand actually has been improving slightly. We're not looking like leaps and bounds out, but at the very least, we're able to assign a number of decers. We do have a little bit more demand. In the past, I never saw, we never saw tenants that were like, there were more than 50, 60 Zubo.

We actually now have tenants that are looking at spaces at the 100, 200 Zubo range. So there is a little bit more interest in the Makuhari market. The leasing demand for the rest of our Tokyo assets still remains strong. Even when they are non-renewers, we generally able to backfill the spaces, either even before the tenant leaves or not significantly long period after the tenant moves out.

One last one, Shabai, would you use the capital gains or the investment gains to do Shabai-Bai? My investment all used to be paid on the we are able to do so, but doesn't mean that we will do so. We will balance between keeping or gearing to make sure that because every 100 million is a point of effect and are positive to the CPU, no doubt. But we will balance that and decide along the way that. But as of now, I would say immediately no, but we have the capability of doing so. Is Shabai-Bai? Yeah, I think if I may add on, if we need to, we can do. We can do. Okay, thank you so much. Have a great day. Thank you so much. Just a final question from our online professor, Mrs. Balim.

He asked if you could share a bit more colors on Japan portfolio, lead expiring in the coming year. I believe the question actually refers to is asking about the lead expiry outside of the three makuhari assets. So I'll answer that. So for the rest of the assets, the largest challenge is actually our HP building. And that's got a commitment all the way to 2030. For the remaining assets, they are always expiring here and there. And I think the most significant one is where we have a single tenant building at the TSI in Ikebukuro. That asset, the lease expiry is coming up and we are in negotiation as a tenant. So far, we're still waiting for them to come back to us. Whether they are going to stay or going to give up your space, or going to leave the building entirely. So that one is still...

In any case, all of these assets are fairly small. In the case of Ikebukuro, it's significant. Okay, I think in short, what will be material will be HP. Here's a pocket lease and that is to 2030. The rest is part and parcel of business. And individually, very, very small. But if you say anything that will be significant, it will be HP lease. But that lease is to 2030.

Thank you, everyone. I would like to thank everyone for finding time to join us today. If you have further questions, feel free to reach out to us. Anytime, we'll be happy to take them on the site. Thank you so much. And have a good day ahead. Goodbye. Thank you. Thank you.