Q4 2026 Mapletree Pan Asia Commercial Trust Earnings Call

Speaker #1: Good morning, everybody, and members of the public. Welcome to Mapletree Pan Asia Commercial Q2, or MPAC's analyst briefing and live webcast for results for the fourth quarter and financial year ending 31 March 2026.

Teng Li Yeng: Good morning, everybody and members of the public. Welcome to Mapletree Pan Asia Commercial Trust, or MPACT's Analyst Briefing and Live Webcast for results for Q4 and financial year ending 31 March 2026. I'm Teng Li Yeng. I have the pleasure of hosting today's results briefing. Allow me to introduce our speakers for today. They are Ms. Sharon Lim, Chief Executive Officer of MPACT, Ms. Janica Tan, Chief Financial Officer, and Mr. Koh Wee Leong, our Head of Investment and Asset Management. They'll be presenting our financial results, providing business development and updates, and sharing market insights. Following the presentation, we'll open the floor for Q&A session, where we invite you to ask questions or seek further clarification on our results. Without further ado, I will hand the floor over to our CFO, Janica.

Speaker #1: I'm Yiying, and I have the pleasure of hosting today's results briefing. Allow me to introduce our speakers for today. They are Ms. Sharon Lin, Chief Executive Officer of MPAC; Ms. Jannika Tan, Chief Financial Officer; and Mr. Koh Wee Leong, our Head of Investment and Asset Management.

Speaker #1: They'll be presenting our financial results, providing business development updates, and sharing market insights. Following the presentation, we'll open the floor for a Q&A session, where we invite you to ask questions or seek further clarification on our results.

Speaker #1: Without further ado, I will hand the floor over to our CFO, Jannika.

Janica Tan: A very good morning. For FY 2025-2026, this was a year of deliberate reshaping of MPACT. Three non-core assets were divested, two in Japan, completed in August last year, and in February we completed the divestment of Festival Walk Tower, the office tower of Festival Walk. All proceeds were deployed towards debt reduction, strengthening MPACT's financial foundation. In relation to the divestment of Festival Walk Office Tower, a divestment loss of SGD 10 million and a balancing charge of SGD 8.3 million on the capital allowance previously claimed on Festival Walk Tower was recorded in Q4 FY 2025-2026. Okay, now let me quickly go into the results. Q4 gross revenue and NPI were SGD 210.7 million and SGD 95.6 million respectively, lower by 5.5% and 5.9% year-on-year.

Speaker #2: Very good morning. At SY2526, this was a year of deliberate reshaping of MPAC. Three non-core assets were divested—two in Japan, completed in August last year—and in February, we completed the divestment of Festival Walk Tower, the office tower of Festival Walk.

Speaker #2: And all proceeds were deployed towards debt reduction, strengthening MPAC's financial allocation. In relation to the divestment of Festival Walk Office Tower, a lot of divestment of $10 million and a balancing charge of $8.3 million on the capital allowance, previously claimed on Festival Walk Tower, was recorded in the fourth quarter FY25/26.

Speaker #1: Okay, now let me quickly go into the results. Fourth quarter gross revenue and NPI were $210.1 million and $160 million, respectively, lower by 5.5% and 5.9% year-on-year.

Speaker #1: This was largely due to lower overseas contributions. Unfavorable effects arose from the weaker Hong Kong dollar and Japanese yen, as well as the divestment effect from the two Japanese assets and the Festival Walk Tower.

Janica Tan: This was largely due to lower overseas contribution, unfavorable effects surrounding from weaker Hong Kong dollar and the Japanese yen, and the divestment effect from the two Japanese assets and the Festival Walk Tower. Singapore's gross revenue and NPI grew 1.8% and 2.1% year-on-year respectively, led by VivoCity as well as from other office properties. OpEx-wise, it's down 4.1% year-on-year, mainly due to reduced operation and maintenance expenses and lower utility expenses. The lower contributions from operations were partially offset by interest savings from lower interest rates on Sing dollar and Hong Kong dollar borrowings, as well as on loans repaid using the divestment proceeds. Distributable income for the quarter, SGD 100.2 million and DPU 1.90 cents, which were 3.3% and 2.6% lower as compared to Q4 last year.

Speaker #1: Singapore's gross revenue and NPI grew 1.8% and 2.1% year-on-year respectively, flat for LIBOR City as well as from other office properties. OPEX-wise, it fell 4.1% year-on-year, mainly due to reduced operation and maintenance expenses, and lower utility expenses.

Speaker #1: The lower contributions from operations were partially offset by interest savings from lower interest rates on Singapore dollar and Hong Kong dollar borrowings, as well as on loans repaid using the divestment proceeds.

Speaker #1: Distributable income for the quarter was $100.2 million, and DPU was 1.90 cents, which were 3.3% and 2.6% lower as compared to the fourth quarter last year. If we exclude the one-off balancing charge, which I mentioned earlier, the DPU would have been 2.04 cents, which is 4.6% higher year on year.

Janica Tan: Without the one-off balance interest, which I mentioned earlier, the DPU would have been 2.04 cents, which is 4.6% higher year-on-year. Moving on to the full year results. Gross revenue and NPI were SGD 867.3 million and SGD 664.4 million, down 4.6% and 4.3% year-on-year respectively. Similarly, this reflects lower overseas contribution, the divestment effect, and asset impact. Singapore's gross revenue and NPI, excluding Anson, which we divested in last financial year, grew 2.3% and 4.1% year-on-year respectively. Interest expense were SGD 186.8 million, lower by 15.3%, mainly due to interest savings from lower interest rates on Sing Dollar and Hong Kong Dollar borrowings and loans repaid using the divestment proceeds.

Speaker #1: Moving on to the full year results, gross revenue and NPI were $867.3 million and $654.4 million, down 4.6% and 4.3% year-on-year, respectively.

Speaker #1: Similarly, this reflects the lower overseas contribution to divestment effect and effects impact. Singapore's gross revenue and NPI, excluding Anson—which will be divested in the last financial year—grew 2.3% and 4.1% year on year, respectively.

Speaker #1: Interest expense was $186.8 million, lower by 15.3%, mainly due to interest savings from lower interest rates on Singapore and Hong Kong dollar borrowings, and loans repaid using the divestment proceeds.

Speaker #1: The lower interest expenses, combined with the better Singapore contribution, more than cover the lower overseas contributions. Distributable income for the year was $421.4 million, and DPU was 7.97 cents, both marginally lower than last year.

Janica Tan: The lower interest expenses, combined with the better Singapore contribution, more than cover the lower overseas contributions. Distributable income for the year, SGD 421.4 million. DPU 7.97 cents, both marginally lower than last year. Without the balancing charge, DPU would have been 8.11 cents, 1.1% higher year-on-year. This Singapore portfolio deliver a 4.1% higher contribution to NPI. Singapore portfolio now accounts for more than 60% to both group's gross revenue and NPI. Liberty recorded a 7.6% growth in full year's NPI, despite the AEI disruption anchoring Singapore's performance. We did a full year valuation at 31 March 2026. MPACT total portfolio valuations were SGD 15.2 billion based on the independent valuation.

Speaker #1: And we felt the balancing charge. DPU would be 8.11 cents, 1.1% higher year on year. Okay. Okay. The Singapore portfolio delivered a 4.1% higher contribution.

Speaker #1: To NPI and Singapore portfolio now accounts for more than 60% of both group's gross revenue and NPI. Liberal City recorded a 7.6% growth in two years' NPI, despite the AEI disruption anchoring Singapore's performance.

Speaker #1: Okay. We did a full year valuation at 31 March 2026. So MPAC's total portfolio valuation was $15.2 billion. Based on the independent valuation, and on a same-store basis, this is 2.1% lower year on year.

Janica Tan: On a same store basis, this is 2.1% year-on-year. Singapore's valuation uplift of SGD 278 million or 3.1% year-on-year largely offsets the SGD 301.7 million operational valuation decline in the overseas portfolio. The overseas portfolio was further impacted by a SGD 301 million of FX effect, resulting from a stronger Singapore dollar against Hong Kong dollar, Japanese yen, and Korean won. Excluding this FX impact, the total portfolio valuation would have been broadly stable. The higher valuation of the Singapore portfolio was driven by Liberty, which recorded a 5.4% uplift on a year-on-year basis, with the remaining Singapore assets holding steady. On the overseas valuation, these were lower year-on-year, driven by FX impact and softer market contributions in Greater China and Makuhari sub-market of Chiba in Japan.

Speaker #1: Singapore's valuation uplift of $278 million, or 3.1% year on year, largely offsets the $301.7 million operational valuation decline in the overseas portfolio. The overseas portfolio was further impacted by a $301 million FX effect, resulting from a stronger Singapore dollar against the Hong Kong dollar, Japanese yen, and Korean won.

Speaker #1: Excluding this effect impact, the total portfolio valuation would have been broadly stable. The higher valuation of the Singapore portfolio was driven by Liberal City, which recorded a 5.4% uplift on a year-on-year basis.

Speaker #1: With the remaining Singapore assets holding steady. On the overseas valuation, these were lower year on year, driven by FX impact and softer market contributions in Greater China, and the Makuhari submarket of Chiba in Japan.

Speaker #1: Moving on to the balance sheet, with the divestment, the lower valuation, and the lower borrowing, MPAC's NAV per unit decreased from $1.78 a year ago to $1.73 as at 31 March 2026.

Janica Tan: Moving on to balance sheet. With the divestment and the lower valuation and the lower borrowing, MPACT NAV per unit decreased from SGD 1.78 a year ago to SGD 1.73 at 31 March 2026. Okay. Moving on to capital management. Gross outstanding borrowing, SGD 5.7 billion. This is following the repayment of Hong Kong dollar loan with the proceeds from the Festival Walk Towers investment. Leverage ratio improved to 36.5%, with the average cost of debt declined to 3.16% per annum and whereby strengthening the interest coverage ratio to 3.2 times on a 12-month rolling basis. These improvement were driven by proactive debt management, supported by the lower interest rate conditions.

Speaker #1: Okay. Moving on to capital management, gross outstanding borrowing is $5.7 billion. This is following the repayment of the Hong Kong dollar loan with the proceeds from the Festival Walk Tower's divestment.

Speaker #1: Leverage ratio improved to 36.5%. Weighted average cost of debt declined to 3.16% per annum, thereby strengthening the interest coverage ratio to 3.2 times on a 12-month trailing basis.

Speaker #1: This improvement was driven by proactive debt management, supported by the lower interest rate conditions. So, the average term-to-maturity of the debt profile was three years by the end of the financial year.

Janica Tan: The average term to maturity here on debt profile was 3 years by the end of the financial year. Okay. By the end of the reporting period, MPACT has a financial flex of approximately SGD 0.9 million in cash and undrawn committed facility, ensuring sufficient liquidity for working capital and financial obligations. We will continue to ensure a natural balance sheet hedge by closely aligning the debt mix with the geographical distribution of MPACT's AUM where feasible. MPACT's gross debt profile remain well distributed with no more than 23% of debt expiring in any financial year. Okay, we have started to work on the refinancing for FY 2027, 2028, and the SGD 265 million PERPS will be refinanced using bank borrowings. This will bring our gearing post the refinancing of the PERPS to approximately 37.6%.

Speaker #1: By the end of the reporting period, MPAC has a financial flex of approximately $0.9 million in cash and undrawn committed facility, ensuring sufficient liquidity for working capital and financial obligations.

Speaker #1: We will continue to ensure a natural balance sheet hedge by closely aligning the debt mix with the geographical distribution of MPAC's AUM, where feasible.

Speaker #1: MPAC's gross debt profile remained well distributed with no more than 23% of debt expiring in any financial year. Okay. We have started work started to work on the refinancing for FY27-28, and the 255 million curves will be refinanced using bank borrowings and these will bring our gearing post the refinancing of the curves to approximately 37.6%.

Speaker #1: On risk management, to hedge against interest rate volatilities, we continue to keep our fixed rate debt above 30%. As at 31 March 2026, the fixed rate debt stood at 71.5%.

Janica Tan: On risk management, to shield against interest rates volatilities, we continue to keep our fixed rate debt above 50%. As at 31 March 2026, the fixed rate debt stood at 71.5%. Forex remains volatile against Singapore dollar, so approximately 95% of our foreign source distributable income were hedged into Singapore dollar based on the rolling four quarter basis. Okay, on the total return. The total return for the year was 12%, comprises of 5.6% appreciation in capital and 6.4% in distribution. We remain focused on driving sustainable performance through market cycles. Okay. On this slide, it shows the distribution detail. DPU for Q4 was 1.900%. Unitholders can expect to receive the distribution on 17 June and the book closure date is on 28 April 2026.

Speaker #1: Forex remains volatile against the Singapore dollar. So, approximately 95% of our foreign source distributable income was hedged into Singapore dollars based on a rolling four-quarter basis.

Speaker #1: Okay. On the total return, the total return for the year was 12%, comprising 5.6% appreciation in capital and 6.4% in distribution. So we remain focused on driving sustainable performance through market cycles.

Speaker #1: Okay. This slide shows the distribution detail. DPU for the fourth quarter was 1.90 Singapore cents. Unitholders can expect to receive the distribution on 17 June, and the book closure date is on 28 April 2026.

Speaker #1: Okay. With that, I shall now hand over the time to William. Thank you.

Janica Tan: Okay, with that, I shall now hand over the time to Koh Wee Leong. Thank you.

Speaker #2: Okay, good morning, everyone. I'll just run through some developments on the portfolio and give you a bit of color on the performance of the assets.

Koh Wee Leong: Okay. Good morning, everyone. I'll just run through some developments on the portfolio and give you a bit of color on the performance of the assets. On occupancy, you'll see that occupancy on a year-on-year basis remains largely stable, even taking into account the impact of the divestment of the three assets. That's largely driven by improvements at MBC, which has offset the lower occupancy in China and Japan. For MBC, you will see that we have improved the occupancy slightly. There has been a number of new signings at the property that includes a fairly large IT company, which will be taking up a substantial amount of space, close to about 3 floors. That's a tenant that will at least commence towards the end of the calendar year.

Speaker #2: So, on occupancy, you'll see that occupancy on a year-on-year basis remains largely stable, even taking into account the impact of the divestment of the three assets.

Speaker #2: That's largely driven by improvements at MBC, which has offset the lower occupancy in China and Japan. So, for MBC, you will see that we have improved occupancy slightly.

Speaker #2: There have been a number of new signings at the property, including a fairly large IT company, which will be taking up a substantial amount of space—close to about three floors.

Speaker #2: And that's a tenant that will at least commence towards the end of the calendar year. Some of the other leasers will start their—will commence slightly earlier, but still looking at July or the September type of timeframe.

Koh Wee Leong: Some of the other leases will commence slightly earlier but still looking at July, August, September type of timeframe. Drilling down to the two slightly more problematic geographies. For China, occupancy remains fairly constant against December, but has dropped against a year ago. That's largely driven by the economic, macroeconomic factors in China, together with a significant amount of supply, particularly in Shanghai. That's caused the leasing to be fairly weak, and we can talk a little bit about the rental reversions in the next slide. For Japan, we have been seeing declining occupancies in the Japan portfolio, largely due to non-renewal of the master leases.

Speaker #2: Drilling down to the drilling down to the two slightly more problematic geographies. So for China, occupancy remains fairly constant against December, but has dropped against a year ago.

Speaker #2: That's largely driven by the economic macroeconomic factors in China, together with a significant amount of supply, particularly in Shanghai. That's caused leasing to be fairly weak, and we can talk a little bit about the rental reversions in the next slide.

Speaker #2: For Japan, we have been seeing declining occupancies in the Japan portfolio largely due to non-renewal of the master leases. So we already had two rounds where Seiko had left SII Building, and we had an NTT UD give up their master lease at MBP; those were in the last two years.

Koh Wee Leong: We have already had two rounds where Seiko had left SII building, and we had NTT UD give up their master lease at MBP. Those were in the last two years. As at 1 April, Fujitsu would have terminated Fujitsu's master lease at FJM, which would have ended. This number as at 31 March would have dropped down. These are 71.5% as at 31 March, would have dropped down to 57.1%, if you took into account the ending of Fujitsu's master lease at FJM. Okay? For the other assets, the occupancy remains fairly constant and strong. Moving on to rental reversion. Rental reversion on a portfolio basis is flat.

Speaker #2: On 1st of April, Fujitsu would have terminated their master lease at FJM, so this number as at 31st March would have dropped down.

Speaker #2: This 71.5% as at 31st of March would have dropped down to 57.1% if it took into account the ending of Fujitsu's master lease at FJM.

Speaker #2: Okay. So for the other assets, occupancy remains fairly constant and strong. Moving on to rental reversion, rental reversion on a portfolio basis is flat.

Koh Wee Leong: The Singapore properties improvements in rentals, particularly at VivoCity, has helped to offset our continuing weakness in the overall China as well as in Japan. Okay? Moving on, these expired profiles improved slightly from the previous year, particularly driven by lease renewals at the office properties. Okay? I think one thing. Go to the next slide. One thing that we should mention is that post the close of the quarter, we actually managed to renew one of the largest tenants at mTower, so that helped to push out this expired profile because their lease was from a very long-term basis, more than five years. Okay. Moving on to the next slides.

Speaker #2: Singapore properties' improvements in rentals, particularly at VivoCity, have helped to offset the continuing weakness at Festival Walk, China, as well as in Japan.

Speaker #2: Okay. So moving on, these expiry profiles improved slightly from the previous year, particularly driven by lease renewals at the office properties. Okay. I think one thing—let me go back to my slide.

Speaker #2: So, one thing that we should mention is that, post the follow-ups of the quarter, we actually managed to renew one of the larger tenants at MBC.

Speaker #2: So that's helped to push out the lease expiry profile because that lease was on a fairly long-term basis, more than five years. Okay, so moving on to the next slide, there's been a lot of questions around utilities costs and the impact of the Iran conflict.

Koh Wee Leong: There's been a lot of questions around utilities costs and the impact of the Israel conflicts. We have taken risk mitigation measures to try and limit the impact. Earlier in the month, we had extended our utilities contract. If you recall, the Singapore utilities contract was originally signed to October 2026, and we were looking for suitable opportunities to extend out the contract. Given the current market volatility, it was interesting to find out that we could actually extend the contract at substantially the same rate as what we had entered into for the current contract.

Speaker #2: So we have taken risk mitigation measures to try and limit the impact. Earlier in the month, we had, earlier in the month, we had extended our utilities contract.

Speaker #2: So, if you recall, the Singapore utilities contract was originally signed to October of 2026, and we were looking for suitable opportunities to extend out the contract.

Speaker #2: Given the current market volatility, it was interesting to find out that we could actually extend the contract at substantially the same rate as what we had entered into for the current contract.

Speaker #2: So that's given us a little bit of stability. But because of the longer-term uncertainties as well as the market's perception that this conflict will be will not be relative will not be will not be long drawn, we had locked-in rates only for one year.

Koh Wee Leong: That's given us a little bit of stability. Because of the longer term uncertainties as well as the market's perception that this conflict will not be long drawn, we had locked in rates only for one year. For the period 1 November 2026 to 1 November 2027, we have locked in rates at substantially the same as what we are currently paying for the Singapore portfolio. The second year we have locked rates to float, and that's to potentially take advantage of changes in the market as we go forward.

Speaker #2: So for the period 1st November to 1st November, 26th of October 27th, we have locked-in rates at substantially the same as what we are currently paying for the Singapore portfolio.

Speaker #2: The second year, we have allowed rates to float, and that's to potentially take advantage of changes in the market as you go forward.

Koh Wee Leong: Certainly if we have a bit more certainty as to how things will be moving, whether up or down, then we have the option to fix the contract for the second year as well. Singapore accounts for about two-thirds of the utilities expenses for the portfolio. For the other assets, there generally are not so many opportunities to do what we have done in Singapore, which is to do long-term fixes on the utilities rates.

Speaker #2: Certainly, if things start to—if we have a bit more certainty as to how things will be moving, whether up or down, then we have the option to fix the contract for the second year as well.

Speaker #2: So Singapore accounts for about two-thirds of the utilities expenses for the portfolio. And for the other assets, there generally are not so many opportunities to do what we have done in Singapore, which is to do long-term fixes on utilities rates.

Speaker #2: But that being said, the other geographies tend to be a bit less seem to have not been seem to have not seem to have not seen significant increases in utilities rates despite the fact that most of the geographies have fuel-related components in their utilities formulas, utility rate formulas that allow the that allow the utilities providers to pass on some increases in fuel rates.

Koh Wee Leong: That being said, the other geography tends to be a bit less seem to have not seen significant increases in utilities rates, despite the fact that most of the geographies have fuel-related components in their utility rate formulas that allow the utility providers to pass on some increases in fuel rates. That's largely due to the fact that most of the other geographies have got substantially less oil and gas in their electricity generation mix. We'll continue to monitor.

Speaker #2: That's largely due to the fact that most of the other geographies have got substantially less oil and gas in their electricity generation mix.

Speaker #2: So we'll continue to monitor. And one thing that, across the portfolio, we will be doing is to reduce electricity usage—whether that's by optimizing chiller performance, increasing the set point for air conditioning, or implementing early turn-on and later turn-on, early turn-off.

Koh Wee Leong: One thing that across the portfolio we will be doing is to reduce electricity usage, whether that's by optimizing chiller performance, increasing set point for air conditioning or implementing later turn on and early turn off, yeah, for air conditioning and other building services. Hopefully that will allow us to limit the impact of the utilities increases going forward. But bear in mind, a lot, most of these measures are fairly incremental. At best, we're talking about 2% to 3% improvement in electricity usage. Okay, moving on. Let's talk through VivoCity.

Speaker #2: For air conditioning and other building services, so hopefully that will allow us to limit the impact of the utilities increases going forward. But with that in mind, most of these measures are fairly incremental.

Speaker #2: At best, we're talking about a 2% to 3% improvement in electricity usage. Okay, so moving on, let's talk through VivoCity. In terms of shopper traffic year-on-year, that's seen a good 3.6% increase.

Koh Wee Leong: In terms of shopper traffic year on year, they've seen a good 3.6% increase, and our tenant sales is up 3.7%. Bearing in mind that throughout the early part of last year, we had a fairly large chunk of basement two down for asset enhancement. In the next slide, you can see the completed basement two asset enhancement. This was fairly substantial. Phase one had changed the kiosks on the as you come out of MRT on the left side. On phase two was a conversion of some of the car park spaces to retail, and that's as you come off MRT on the right side. Okay.

Speaker #2: And on tenant sales, it's up 3.7%. Bearing in mind that throughout the early part of last year, we had the whole of Basement 2 down for asset—a fairly large chunk of Basement 2 down for asset enhancement.

Speaker #2: So in the next slide, we give—you can see—the completed Basement 2 asset enhancement. This was fairly substantial. Phase one had changed the kiosks as you come out of MRT on the left side.

Speaker #2: And on phase two was a conversion of some of the car park spaces to retail. And that's as you come off the MRT, on the right side.

Speaker #2: Okay. So that delivered a fairly healthy ROI of 10%, and that's definitely enhanced the retail experience, as well as improved the tenant mix in Basement 2.

Koh Wee Leong: That delivered fairly healthy ROI of 10% and has definitely enhanced the retail experience, as well as improved the tenant mix in basement two. We continue to refresh the tenants throughout the mall, both in terms of new concepts as well as getting tenants to revitalize their spaces. The previous quarter, Chinese New Year celebration was the key highlight for our AMP. That's drawn in a good amount of traffic. Because Chinese New Year was fairly late last year, we could have our Chinese New Year events run for a little bit longer, and we definitely see better performance on that basis. Moving on to Festival Walk.

Speaker #2: So moving on, we continue to refresh the tenants throughout the mall, both in terms of new concepts as well as guesting tenants to revitalize their spaces.

Speaker #2: Previous quarter, Chinese New Year celebration was the key highlight for our AMP, and that's drawn in a good amount of traffic. And because Chinese New Year was fairly late last year, we could have our Chinese New Year events run for a little bit longer, and we definitely see better performance on that basis.

Speaker #2: So, moving on, the Festival Walk. Shopper traffic—we did see an improvement year on year. But tenant sales still remain fairly weak. I think for Festival Walk, what you will see is that Hong Kong in general has had some improvement in tenant sales.

Koh Wee Leong: Shopper traffic that we did see an improvement year-on-year, but tenant sales still remain fairly weak. I think, while you will see that Hong Kong in general has had some improvement in tenant sales, that's in retail sales. We feel that that's largely been driven by improving tourism in the territory. Fortunately or unfortunately, Festival Walk is not a tourist-centric mall. So you will see that most of those improvements have accrued to retailers and retail malls in the Tsim Sha Tsui and Central Area. Moving on.

Speaker #2: That's in retail sales. That's largely that we feel that that's largely been driven by improving tourism at in the territory. And unfortunately or unfortunately, festival walk is not a tourist-centric mall.

Speaker #2: So you will see that most of those improvements have accrued to retailers and retail malls in the Tsim Sha Tsui and Central area. Moving on to, moving on, so we do see a number of new tendencies in the mall.

Koh Wee Leong: We do see a number of new tenancies in the mall, and this has helped to refresh the mix within the mall, especially on the F&B front. Okay. Shopper engagement continues to be key at Festival Walk, and I believe that that's actually contributed to improving the shopper traffic at the mall. These are some of the events that we have planned at the mall. One positive development. This is a current ongoing space reconfiguration, the small AEI at Festival Walk. We reconfigured the space for one of the anchor fashion, fast fashion tenants, and split the space into six different concepts.

Speaker #2: And this has helped to refresh the mix within the mall, especially on the F&B front. Okay. So shopper engagement continues to be key at Festival Walk.

Speaker #2: And we believe that that's actually contributed to improving the shopper traffic at the mall. So these are some of the events that we have run at the mall.

Speaker #2: One positive development, we have done this is a current ongoing space reconfiguration, a small AEI at festival walk. We reconfigured the space for one of the one of the anchor fashion fast fashion tenants.

Speaker #2: And split the space into six different concepts. The work is currently ongoing, and that's still to complete by second quarter. The outgoing rentals for the— the outgoing rent— hello?

Koh Wee Leong: The works are currently ongoing and are expected to complete by Q2. The outgoing rentals or the outgoing rent. Hello? It says my microphone is muted. Hello?

Speaker #2: Hello? You say my microphone is muted. Hello?

Speaker #1: Yeah, I can hear you. Yeah, I can hear you.

Teng Li Yeng: Yeah. I can hear you.

Koh Wee Leong: Mm-hmm.

Teng Li Yeng: Yes. Can hear you.

Koh Wee Leong: Okay. The ROI that we expect to deliver will be close to 50%, for this reconfiguration exercise. Okay. Last but not least, we would just like to update that we have completed the divestment of Festival Walk's office component, earlier in the quarter. Okay. Sharon Lim will likely just update on some of the other tenancies. Okay.

Speaker #2: Okay, so the ROI that we expected to deliver will be close to 50% for this reconfiguration exercise. Okay. Last but not least, we'd just like to update that we have completed the investment of Festival Walk's office component earlier in the quarter.

Speaker #2: Okay. And let me see if I can just update on that some of the other tendencies. Okay.

Speaker #1: Thank you, Jennifer and William. We're now ready to take your questions. For our analysts, may I trouble you to raise your hand on the platform?

Teng Li Yeng: Thank you, Jonathan and William. We're now ready to take your questions. For our analysts, may I trouble you to raise your hand on the platform, and I'll unmute you when you can ask your question. We kindly request that you clearly state your name and company before asking your question. For online participants, you may submit your questions through the Textade platform. First, we have Terence from JP Morgan. Terence, please unmute yourself and ask your question.

Speaker #1: And I'll unmute you when you can ask your question. We kindly request that you please state your name and your phone before asking your questions.

Speaker #1: For online participants, you may submit your questions through the text-based platform. So first, we have Karen from J.P. Morgan. Karen, please unmute yourself and ask your question.

Koh Wee Leong: Mm-hmm.

Terence Khi: Yes. Thanks, Sharon Lim. Yeah, congrats on the results. If I may ask on AEI plans, thanks for starting the AEI works at Festival Walk. Perhaps maybe you could share a little bit more as to whether you have further AEI plans for the broader Festival Walk and perhaps for VivoCity. The second question from me, you divested 3 assets this year. Gearing stands at about 36.5%, and even after the refinancing and the PERPS, you still do have a bit of gearing head room left. Would like to ask whether you'll be looking to redeploy some of the proceeds into investments going forward. Thank you.

Speaker #3: Hey, thanks, Lee. Yeah, congrats—congrats on the results. Yeah. If I may ask on AEI plans—thanks for stopping the AEI works at Festival Walk.

Speaker #3: Perhaps you could share a little bit more on whether you have further AEI plans for the broader Festival Walk and perhaps for VivoCity.

Speaker #3: And the second question from me: you divested three assets this year. So gearing stands at about 36.5%. And even after the refinancing of the perps, you still do have a bit of gearing headroom left.

Speaker #3: So, I would like to ask whether you'd be looking to redeploy some of the proceeds into investments going forward. Thank you.

Speaker #2: Okay. Hi, Karen. So in terms of asset enhancement, let's take the first let's take the asset enhancement question first. So I think we have mentioned before.

Koh Wee Leong: Okay. Hi, Terence. Let's take the asset enhancement question first. I think we have mentioned before, and it's something that was quite surprising to us when we took over the Hong Kong asset. We have had a number of asset enhancement plans, which we have been toying around with for the last two to three years, and it's taken quite a while to get approvals going. One key AE, asset enhancement, which we are working very hard on is actually the reconfiguration of the cinema at Festival Walk.

Speaker #2: And it’s something that was quite surprising to us when we took over the Hong Kong asset. Development planning in Hong Kong seems to take a fairly long time.

Speaker #2: We have had a number of asset enhancement plans, which we have been toying around with for the last two to three years.

Speaker #2: And some of them are, and it’s been—it’s taken quite a while to get approvals going, get approvals going. One key asset enhancement which we are working very, we are working very hard on, is actually the reconfiguration of the cinema at Festival Walk.

Koh Wee Leong: I think we have mentioned before the cinema trade in Hong Kong seems to be a lot weaker than here in Singapore. We are concerned that there may be a shakeup in the industry and might result in some tenants drop, some tenants weakening. Hence, we have been planning on what we can potentially do with the cinema space. Those are currently still ongoing. Once we are ready to proceed with the asset enhancement, we will make the necessary announcement. For VivoCity, well, yes, we can move a little bit faster. The truth is that we have done most of the low-hanging fruits, right?

Speaker #2: I think we have a—may I mention before—the cinema trade in Hong Kong seems to be a lot weaker than here in Singapore.

Speaker #2: And we are concerned that there may be a shakeout in the industry, and it might result in some tenants dropping, some tenants weakening.

Speaker #2: Hence, we have been planning on what we can potentially do with the cinema space. And those are currently still ongoing. And once we are ready, we will make a once we are ready to proceed with the asset enhancement, we will make the necessary announcements.

Speaker #2: For VivoCity, well, yes, we can move a little bit faster. The truth is that we have done most of the low-hanging fruits, right?

Speaker #2: So, if you recall earlier asset enhancements that were done at VivoCity, you have seen ROIs being a substantially higher number. The other thing that we are a little bit concerned about is that construction costs have been going up.

Koh Wee Leong: If you recall earlier asset enhancements that were done at VivoCity, you will have seen ROIs being a substantially higher number. The other thing that we are a little bit concerned about is that construction costs have been going up. Aside from the AEI that we currently completed, it was already something like close to SGD 50 million in terms of costs. We are expecting that any AEIs that we will have to do in the future will be substantially more expensive. Those are decisions we will not take lightly.

Speaker #2: Aside from the the AEI that we currently completed was already something like close to 100 close close to close to close to $50 million in terms of costs.

Speaker #2: And we are expecting that any AEIs that we go we will have to do in the future will be substantially more expensive. So those are those are decisions we will not we will not take lightly.

Speaker #2: And we are still evaluating what are the best things that we can potentially do to the mall, bearing in mind that costs are going up, and that, and and that, we have already done quite a lot of AEIs, right?

Koh Wee Leong: We are still evaluating what are the best things that we can potentially do to the mall. Bearing in mind that costs are going up and that we have already done quite a lot of AEIs, right? Practically once every two years, and in some cases, once every year, we have had AEIs at the mall over the last 10+ years. Looking at our gearing and acquisition potentials, I mean if you look to CFOs, you obviously want the gearing to go down even more. We have already done quite a little bit. We have done quite a bit in terms of divestments. We have also managed to...

Speaker #2: Practically, practically once every two years, and in some cases, once every year, we have had AEIs at the mall over the last 10-plus years.

Speaker #2: So, looking at our gearing and acquisition potentials—I mean, if we look to CFOs, you'll obviously want the gearing to go down even more.

Speaker #2: We have already done quite a little bit. We have done a bit on quite a bit in terms of divestments. And we have also managed to—we have, Singapore has also managed to cushion some of the reductions in valuation coming from the overseas assets.

Koh Wee Leong: Singapore has also managed to cushion some of the reductions in valuation coming from the overseas assets. On the operational basis, FX is obviously something that we cannot control, and that's had a bigger impact on our valuation than we would have liked. Have we been looking at acquisitions?

Speaker #2: On the operational basis, FX seems to be something that FX is obviously something that we can not control. And that's that's had a bigger impact on our valuation than we would have liked.

Speaker #2: Have we been looking at the acquisitions?

Speaker #1: Maybe. Yeah. Maybe I helped you. Yeah. Maybe I helped you chip in. Maybe I sum it up for you. In Hong Kong, short-term, next year, the lease renewal for the cinema is coming up.

Sharon Lim: Maybe I-

Koh Wee Leong: Yeah, Sharon, go ahead.

Sharon Lim: Yeah, maybe I help to chip in. Maybe I sum it up for you. In Hong Kong, short term, next year, the lease renewal for cinema is coming up. That's why we are actively looking at reconfiguring. Number one is to contain a smaller cinema. The rest will subdivide, okay? That's the plan. Subdivide, majority will be F&B. The long drawn which we have been taking a while because of regulatory approvals, that is more for the basement. I think we shall not talk about that because a bit long drawn. Moving along to VivoCity. VivoCity this year, you will see we have revamped, continued to revamp now the drop off, okay?

Speaker #1: That's why we are actively looking at reconfiguring. Number one is to contain smaller cinema. The rest will subdivide, okay? That's the plan. Subdivide majority will be F&B.

Speaker #1: The long-drawn process, which we have been taking a while because of regulatory approvals, that is more for the basement. I think we shall not talk about that because it's a bit long-drawn.

Speaker #1: Then moving along to VivoCity. VivoCity this year—you will see we have revamped, continually revamped, now the drop-off, okay? The drop-off point is actually at the back of VivoCity.

Sharon Lim: The drop-off point is actually the back of VivoCity, where we have reconfigured how the cars move and the taxi and drop-off point. At some time, we are still exploring whether the back of VivoCity can become our another front. Nothing is firm, but I think that there should be good traction if we can get the right tenancies. Because we have always been using the back, the drop-off point, like a back-of-house. Technically, half the car park floors actually pass through there. It must be significant, it must be destination tenants that will be able to benefit from that location. We have not found that out, but I think it's a certain train of thought that we are trying to share with you. Okay. Moving along to what we...

Speaker #1: We have reconfigured how the cars move, and the taxi and drop-off point. At some time, we are still exploring whether the back of VivoCity can become our another front.

Speaker #1: Nothing is firm, but I think that there should be good traction if we can get the right tenancies, because we have always been using the back, the drop-off point, like a back of a house.

Speaker #1: But technically, half the car park floors actually pass through there. So it must be significant; it must be destinational trade that will be able to benefit from that location.

Speaker #1: We have not found that out. But I think it's certain trade or thought that we are trying to share with you. Okay. Then, moving along to what we—our gearing is comfortable.

Sharon Lim: Our gearing is comfortable, okay? Took us a lot of effort. I think we are very, very comfortable with our gearing. We'll continue to explore, as long as it makes sense to the portfolio. But we'll be very careful in terms of certain countries. We will definitely avoid China, for the time being. I think the weakness will still be continuing. Singapore looks like a good base, but in terms of transactions, it's very limited. We will continue to explore, but we'll be careful in terms of overseas market, in terms of acquisition. Yeah. Thanks.

Speaker #1: Okay. It took us a lot of effort. I think we are very, very comfortable with our gearing. We'll continue to explore, as long as it makes sense to the portfolio, but we'll be very careful in terms of certain countries.

Speaker #1: We will definitely avoid China. For the time being, I think the weakness will still be continuing. Singapore looks like a good base, but in terms of transactions, it's very limited.

Speaker #1: So, we will continue to explore. But we'll be careful, in terms of overseas markets, in terms of acquisition. Yeah. Thanks.

Speaker #3: Thank you.

Koh Wee Leong: Thank you.

Teng Li Yeng: May I invite Jonathan Koh from UOB Kay Hian to ask your question.

Speaker #4: May I invite you, Kiang, from CISA, to ask your question?

Jonathan Koh: Just two questions from me. I didn't quite get the MBC negative reversions. Can you explain on that? Secondly, when can we expect China and Festival Walk reversions to bottom? Seems like, with the AEI plans at Festival Walk, this should drag on for a little longer. Is that correct?

Speaker #3: Hi. Just two questions from me. I didn't quite get the MBC negative reversions—can you explain that? And then secondly, when can we expect China and Festival Walk reversions to bottom?

Speaker #3: It seems like with the AEI plans at Festival Walk, this should drag on for a little longer. Is that correct?

Speaker #4: Okay. The MBC, to me, just chipping in on the details. The 'we don't' can handle. The MBC, I would say that it is close to flat.

Sharon Lim: Okay.

Jonathan Koh: Yeah.

Sharon Lim: To me, just chip in and after the details, we now can handle that. The MBC, I would say that it is close to flat. Like I always mention, changing over a tenant, our downtime will be way more than that. 3 months out of 24 months, so 36 months costs you more than 1%. Okay? For MBC, they are big takers, and they are slow in taking up space. So in a way, you hang on to their tenancy, and we got good names. Okay? I'm not bothered when it's a -1%. Okay? I think it is a good number. If I change over tenant, I may get a slightly higher, but you don't see the downtime.

Speaker #4: Like I always mentioned, changing over a tenant—I don't think we have our downtime—will be way more than that. Three months out of 24 months, sorry, 36 months.

Speaker #4: Costs you more than 1% over, okay? For MBC, they are big takers, and they are slow in picking up space. So in a way, you hang on to their tenancy.

Speaker #4: And we got good names, okay? I am not bothered when it's a minus 1 percent, okay? And I think it is a good number.

Speaker #4: If I change over a tenant, I may get a slightly higher [rent]. But you don't see the downtime. You don't see the downtime in this calculation.

Sharon Lim: You don't see the downtime in this calculation, and that will actually hurt your cash flow. Okay? China, expect it to go down for this year too. Okay? I do not feel that it's actually strengthening. We are trying our very best in terms of hanging on to the tenants and trying different strategies, even fitting out certain areas because fit-out cost is not very expensive, basic furnishing costs, so that tenant can just take the bag in and start operating. I would think that is the only way we can just hang on in China. Okay? We are performing better than-

Speaker #4: And that will actually hurt your cash flow, okay? So, China, expect it to go down for this year too, okay? I—I do not feel that it's actually strengthening.

Speaker #4: We are trying our very best in terms of hanging on to the tenants and trying different strategies, even fitting out certain areas, because fit-out cost is not very expensive.

Speaker #4: Basic furnishing cost, so that tenant can just take a, take the bag in and start operating. And I would think that that is the only way we can just hang on in China, okay?

Speaker #4: We are.

Speaker #3: China—will it really be the same magnitude? Will we see the same magnitude of 21 percent for this year?

Jonathan Koh: China, will we see the same magnitude of 31% for this year?

Sharon Lim: At least 10 over, minimum.

Speaker #4: Well, at least at least a at least a 10 over minimum.

Speaker #3: Okay, okay. So, slightly improving lah. Okay.

Jonathan Koh: Okay. Okay.

Sharon Lim: At least.

Jonathan Koh: Slightly improving now. Okay. Mm-hmm.

Speaker #4: I... I... I really can't tell. Yeah. Because the numbers coming in China—as soon as you got a taker, you are happy. The vacancy rate is very, very high.

Sharon Lim: I really can't tell. Yeah. Because the numbers coming in China, as long as you got tenant, you are happy. The vacancy rate is very high.

Speaker #4: And if you stack up, yeah. I think our—I won't be too optimistic with you when it comes to our Chinese assets, yeah.

Jonathan Koh: Okay.

Sharon Lim: If you stack up. Yeah, I think I won't be too optimistic with you, when it comes to our China assets. Yeah. We just try to hang on to occupancy and control our costs, and that's all we can ask for China for the time being. Yeah.

Speaker #4: We just try to hang on to occupancy and control our costs, and that's all we can ask for, for China for the time being.

Speaker #4: Yeah.

Jonathan Koh: Festival Walk with the AEI?

Speaker #3: Festival walk? With the AEI?

Speaker #4: Okay. Festival Walk AEI—if you're talking about its cinema, it's 2027, okay? But work has to be starting now, yes.

Sharon Lim: Okay. Festival Walk, if you're talking about its cinema, it's 2027. Okay?

Jonathan Koh: Oh, okay.

Sharon Lim: work has to be starting now. Yes.

Speaker #3: Okay, just one more last one. With the Japan portfolio occupancy slipping to 57 percent, right, is it fair to say divestments could take a while longer if there's any plans to divest?

Jonathan Koh: Okay. Just one more last one. With the Japan portfolio occupancy slipping to 57%, right, I think. Is it fair to say divestments could take a while longer if there's any plans to divest?

Speaker #4: Okay. If we can divest, we will divest, okay? I think Japan, especially for Makuhari assets, is a tall order. We have done what we can as management, number one.

Sharon Lim: Okay. If we can divest, we will divest. Okay? I think Japan, especially for Makuhari assets, is poor order. We have done what we can as management. Number one, contain the cost. Number two, drop the val as so that it's very negligible. The two buildings are two huge buildings. Adding up, we are talking about SGD 200-ish million. Okay? I think we need to put that into the magnitude in terms of the valuation that's carrying in our books. SGD 201 million is our problem assets in 200 plus in Japan. That is Fujitsu and Seiko building. Yeah.

Speaker #4: Contain the cost. Number two, drop the veil so that it's very negligible. The two buildings—the two buildings are two huge buildings. Adding up, we are talking about $200-ish million.

Speaker #4: Okay? So I think we need to put that into the magnitude, in terms of the valuation that's carrying in our books. $201 million is our problem assets.

Speaker #4: In two hundred plus in Japan. That is Fujitsu and Seiko building. Yeah.

Speaker #3: Okay. Okay. That's—that's—that's it for me. Thanks.

Jonathan Koh: Okay. That's it for me. Thanks.

Speaker #4: Thank you, Liu Kiang. Geraldine from BBS Yonic.

Teng Li Yeng: Thank you, Lui Kean. Geraldine from BNP, you're next.

Speaker #5: Okay. Hi. Morning. Just wanted to ask on the Festival Walk divestment. Are you able to share the exit yield? Is it a low 2 percent?

[Analyst] (BNP): Yeah. Hi. Morning. Just wanted to ask on the Festival Walk divestment. Are you able to share the exit yield? Is it a low 2%, and has gearing already reflected the debt repayment from the divestment proceeds?

Speaker #5: And has gearing already reflected the debt repayment from the divestment proceeds?

Speaker #6: So the the the office yield was in the 3 percent 3 plus percent range. Close to the 3 and a half. The you're asking whether the gearing has taken into account the the repayment of debt, right?

Koh Wee Leong: The office yield was in the 3%, 3+% range, closer to 3.5%. You're asking whether the gearing has taken into account the,

[Analyst] (BNP): Yes.

Koh Wee Leong: Repayment of debt, right? Yes.

Speaker #6: So yes, that's taken into account.

[Analyst] (BNP): Yes.

Koh Wee Leong: That's account.

[Analyst] (BNP): Okay.

Speaker #5: Okay.

Teng Li Yeng: 36.5% is after repaying the Hong Kong dollar loans using the proceeds from the divestment.

Speaker #4: 36.5 percent is after repaying the Hong Kong dollar loans using the proceeds from the divestment.

Speaker #5: Okay, got it. And maybe one more on the — just Festival Walk Hong Kong tenants still seem to be doing quite well this year. So from what you're seeing, are retail landlords a bit more asking in terms of rents?

[Analyst] (BNP): Okay. Got it. Maybe one more on the just Festival Walk. Hong Kong tenant sales seems to be doing quite well this year. In from what you're saying, are retail landlords a bit more asking in terms of rents, or should we still expect to see a lag time between sales and rents?

Speaker #5: Or should we still expect to see a lag time between sales and rents?

Speaker #6: Okay. So I think that, you know, one small bright spot is that it doesn't allow landlords to start moving rentals that significantly. And the other thing also is that the sense is that a lot of this improvement last year was tourism-driven.

Koh Wee Leong: Okay. I think the you know one small bright spot doesn't allow landlords to start moving rentals that significantly. The sense is that a lot of this improvements last year was tourism driven, either by the events that have been ongoing in Hong Kong or the shift in travel patterns by PRCs from other countries to Hong Kong. That has concentrated the improvements. We feel that that's concentrated the improvement in tenant sales to more tourist-focused areas, Tsim Sha Tsui, Central, Causeway Bay, and the like. Those are landlords who may be able to ask for higher rentals than they are currently.

Speaker #6: Either by the events that have been ongoing in Hong Kong, or the shift in travel patterns by PRC's former other countries to Hong Kong.

Speaker #6: That has concentrated the improvements in that we feel that has concentrated the improvement in tenant sales to the more tourist-focused areas, seems not to be central, cost, repay, and the like.

Speaker #6: So those landlords may may be able to to may be able to ask for higher rentals than they are currently. But bear in mind, the last three years, which is the typical duration of retail leases, Hong Kong has been has had a fairly rough time.

Koh Wee Leong: Bear in mind, the last three years, which is the typical duration of retail leases, Hong Kong has had a fairly rough time, and due to that, it's unlikely you'll see positive rental reversion coming through, whether it's our portfolio or others. I mean, some people might be lucky, but we don't feel that's the case. Right. Festival Walk still remains a mall that's very focused on the people who are living around and working around the Kowloon area. It's not a tourist-focused mall. That improvement in the sentiment has not really translated down.

Speaker #6: And that might—that may not, you know, because of that, it's unlikely you'll see positive rental reversion coming through, whether it's our portfolio or others.

Speaker #6: I mean, some some people might be lucky. But we we don't we don't see we don't feel that's the case, right? Festival walk still remains a a more that's very focused on the on the people who are living around and working around the the the the Kowloon area.

Speaker #6: And we we it's not it's not a tourist-focused mall. So that improvement in the in sentiment has not really translated down. What we have been more focused on is actually right improving the trade mix or rather optimizing the trade mix at the mall, getting rid of retail tenants and bringing in concepts which will appeal to the people who are working around and living around the area.

Koh Wee Leong: What we have been more focused on is actually, right, improving the trade mix or rather optimizing the trade mix at the mall, getting rid of weaker tenants and, bringing in, concepts which will appeal to the people who are working around and living around the area.

Speaker #5: Okay. Okay. Understood. So, divergence will be in this ballpark for next year—negative single to 10 percent?

[Analyst] (BNP): Okay. Understand. Reversions will be in this ballpark for next year, negative single to-

Koh Wee Leong: For this current year.

[Analyst] (BNP): -10%.

Speaker #6: Yeah. Yeah.

Koh Wee Leong: Yeah. Yeah.

Speaker #5: Okay. Okay. Thank you.

[Analyst] (BNP): Okay. Thank you.

Speaker #4: Thank you, Geraldine. Rachel from Macquarie, if you may ask your questions now.

Teng Li Yeng: Thank you, Geraldine. Rachel from Aquarian, you may ask your questions now.

Speaker #5: Hello. Good morning, Sharon and team. Can you hear me well?

[Analyst] (Aquarian): Hello. Good morning, Sharon and team. Can you hear me well?

Speaker #4: Yes.

Speaker #5: Yeah, okay, great. Maybe my first question is on interest cost. What's your guidance for FY2027? And could you give us a sense of the perps rate versus the debt rate that you will be getting to refinance the perps?

Teng Li Yeng: Yes.

[Analyst] (Aquarian): Yeah. Okay, great.

[Analyst] (Aquarian): Yep.

Sharon Lim: Maybe my first question is on interest cost. What's your guidance for FY 2027? Could you give us a sense the PERPS rate versus the debt rate that you will be getting to refinance the PERPS?

Janica Tan: Sorry, the first one.

Speaker #4: What is the first question? Interest rate guidance is it will still be above 3 percent. But, but you know, interest rate is very volatile, especially with the Middle East crisis.

Sharon Lim: Interest rate guidance is, it will still be above 3%. You know, interest rate is very volatile, especially with the Middle East crisis. We based on our estimate, it will still be above 3%, hopefully lower than what we currently have here. Say, it will be a low three.

Speaker #4: So, we--we, based on our estimate, it will still be above 3 percent. Hopefully, lower than what we currently have here. It will be a low 3.

Sharon Lim: The PERPS.

Speaker #4: Okay. Perps. Sorry, perps. Currently, the perps we issue are at 3.5 percent, and there's a CCS on it. So we are actually paying, in fact, 2.5 percent over on these perps.

Janica Tan: PERPS. Currently, the PERPS we issue at 3.5%, and there's a CCS on it. We are paying actually in fact 2.5% on this PERPS. If I were to refinance this using borrowings that we have on hand, it will be thereabouts the same as what we have been paying or slightly lower. It depends on how much I fix the drawdown at that point in time. It should be thereabouts the same.

Speaker #4: So if I were to refinance this using borrowings that we have on hand, it will be thereabout the same as what we have been paying, or slightly lower.

Speaker #4: It depends on how much I fix the drawdown at that point in time, so it should be thereabout the same.

Speaker #5: Okay. Can.

[Analyst] (Aquarian): Okay, can.

Speaker #4: And our cost. Our cost already includes the perps cost—the 3.16 percent. Yeah.

Sharon Lim: Our cost-

Janica Tan: Yes.

Janica Tan: Our cost has already reached the PERPS cost. Yeah. The 3.16%. Yeah.

[Analyst] (Aquarian): Okay. Got it. Can I just get an update on your Hong Kong rates? Is it still above the current Hong Kong rates?

Speaker #5: Okay. Got it. Can I just get an update on your Hong Kong rates? Is it still above the current Hong Kong rates?

Janica Tan: What do you mean above our Hong Kong rates?

Speaker #4: What do you mean by 'above our Hong Kong rate'? The current book—Hong Kong.

[Analyst] (Aquarian): Hong Kong debt.

Speaker #5: Hong Kong debt. Yeah. Hong Kong.

[Analyst] (Aquarian): Book Hong-

Janica Tan: Yeah, Hong Kong.

Janica Tan: It's still above. Yeah. We still have some high fixed interest rate swap, which hopefully majority of them will drop off in this coming financial year. Yeah.

Speaker #4: It's still above. It's still above, yeah. We still have some high fixed interest rate swaps, which hopefully the majority of them will drop off in this coming financial year.

Speaker #4: Yeah.

[Analyst] (Aquarian): Thank you. My next question is on just a follow-up on the Festival Walk AEI. If I were to take the cinema space, if you were to break out the cinema space and get a higher rental, will you be able to then cover some of your negative reversions that's coming up from Festival Walk? Essentially, I'm trying to see whether your NPI will flatten out.

Speaker #5: Okay, can, thank you. Then my next question is just a follow-up on the Festival Walk AEI. If I were to take the cinema space—if you were to break out the cinema space and you get a higher rental—will you be able to then cover some of your negative reversions that's coming up from Festival Walk?

Speaker #5: Essentially, I'm trying to see whether your MPR will flatten out.

Sharon Lim: We don't count, we separate the AEI and the rental reversion calculation. Okay? Will one shift the whole mall? I'd say no. Yeah. One AEI shift the whole mall, NPI? No.

Speaker #4: We, we, we, we will not—we don't count, we separate the AEI and the rental reversion calculation. Okay? So, we'll, one, shift the whole mall until it's lower.

Speaker #4: Yeah. One AEI on one AEI shifts the whole mall MPI? No.

[Analyst] (Aquarian): Last, now with your debt gearing or gearing headroom, and HarbourFront redevelopment will be coming up in H2 of the year. What are your thoughts on that?

Speaker #5: Okay. Can. And then lastly, now with your debt gearing—or gearing debt headroom—and HarbourFront redevelopment will be coming up in the second half of the year, what are your thoughts on that?

Speaker #4: What are our thoughts in terms of, you’re talking about investing?

Sharon Lim: What are our thoughts in terms of?

[Analyst] (Aquarian): Mm-hmm.

Sharon Lim: You're talking about investing?

Speaker #5: Yeah. Or would there be any partnership with the sponsor? Yeah.

[Analyst] (Aquarian): Yeah.

Sharon Lim: Harbourfront.

Sharon Lim: Would there be any partnership with, yeah, with the sponsor. Yeah.

Sharon Lim: For the time being, no. Okay. What we are doing is just preparing for certain disruptions, which I think that has been well handled by the leasing team. It's still a ROFA. When the time comes and they're ready, well, then we will reassess the job.

Speaker #4: For the time being, no. Okay? So what we are doing is just preparing for certain disruptions, which I think have been well handled by the leasing team.

Speaker #4: It's still a rover. So, when the time comes and they're ready, then we will reassess again.

[Analyst] (Aquarian): Okay. All right. Thank you. I'll jump back to the queue. Thanks.

Speaker #5: Okay. All right. Thank you. I'll jump back to Q. Thanks.

Janica Tan: Rachel. Rachel, Jennifer here. I just want to correct myself. The 3.16% cost of debt is we start accounting for the PERPS.

Speaker #4: Rachel, Rachel, Jennifer here. I just want to correct myself—the 3.16% cost of debt is because we've started accounting for the perps, okay?

[Analyst] (Aquarian): Oh, okay.

Speaker #5: Oh, okay. Okay. Can—so if you count the perps, it should be lower, or?

Janica Tan: Yeah.

Janica Tan: If you count the perks, it should be lower, or?

Sharon Lim: If I were to add on the PERPS, the 3.16% per annum will be lower.

Speaker #4: It would be, if I were to add on the perps, the 3.16 percent per annum will be lower.

Speaker #5: Okay. Got it. All right. Thank you.

[Analyst] (Aquarian): Okay. Got it. All right. Thank you.

Speaker #4: Thank you, Rachel. Hi, Derry. Derry from London.

Teng Li Yeng: Thank you, Rachel. Hi, Derek. Derek from Citi.

[Analyst] (Citigroup): Hi. Morning. Yeah. Morning. Just sorry, just follow up on the interest rate question. Assuming current rates, what is the outlook for interest rates?

Speaker #7: Hi. Morning. Yeah, morning. Just, sorry, just a follow-up on the interest rate question. Assuming current rates, what is the outlook for interest rates?

Speaker #4: Outlook for.

Janica Tan: Outlook for our

[Analyst] (Citigroup): To come down more. From 3.16% to what?

Speaker #7: Come down by?

Speaker #4: We are from 3.16 percent to— to what? It will still be above a 3, a low 3. Hopefully, maybe another 10 bps off.

Janica Tan: It will be still above a three, a low three. Hopefully, maybe another 10 bps off.

Speaker #7: 10 bids off.

[Analyst] (Citigroup): 10 bps. Oh.

Speaker #4: But you know, interest rate is very, very volatile, so maybe next quarter I can give you another guidance. So for now, it's about maybe around 10 bps off.

Janica Tan: You know, interest rate is very, very volatile. Maybe next quarter I can tell you another guidance.

Janica Tan: Okay.

Janica Tan: now, for now it's maybe about 10 bps off based on the current prevailing market rates.

Speaker #4: Based on the current prevailing market rates.

Speaker #7: Okay, can do. And just on the valuations for Festival Walk, I mean, in local currency terms, that was down close to 5 percent. Do you think the valuers were being pretty aggressive in bringing that down, given that it's fully occupied and probably, I mean, outperforming the rest of the other overseas assets?

[Analyst] (Citigroup): Okay. Can do. Just on the valuations for Festival Walk, I mean, local currency terms, that was down close to 5%. Is that? Do you think the valuers were being pretty aggressive in bringing that down given that it's fully occupied? Probably, I mean, outperforming the rest of the other overseas assets. I guess, does that clear the way for potential divestment of Festival Walk?

Speaker #7: And I guess, does that make it easier—does that clear the way for potential divestment of Festival Walk?

Koh Wee Leong: Derek, if you look at the net property income movements at Festival Walk, the 5% reduction in valuation is actually quite in line. It's actually fairly in line. We have also tried to see what the other valuation movements for retail assets in Hong Kong are. Not many of them are disclosed. From the few that we can see, the majority of retail assets in Hong Kong have gone down 4ish% to as high as 9% over the last year. The 5% reduction for the retail asset is more or less in line with the performance, as well as the market.

Speaker #6: No. Derrick, if you look at the at net property income months at festival walk, is that the the the 5 percent reduction in valuation is actually quite in line for it's actually fairly fairly in line.

Speaker #6: We have also tried to see what the other valuation movements for retail assets in Hong Kong are. Not many of them are disclosed.

Speaker #6: But from the few that we can see, the major majority of retail assets in the in Hong Kong have gone down 4-ish to as high as 9 percent over the over the last over the last year.

Speaker #6: So the the 5 percent reduction for the retail asset is more or less in line with the performance as well as in as well as the market.

Speaker #7: Okay. Can do. Yeah. I mean, I'm just asking; it's difficult to see the comparable transactions. I think Hong Kong Land, they were just floating, like, book value up 5%.

[Analyst] (Citigroup): Okay. Can do. Yeah. I mean, I'm just asking this. It's difficult to see the comparable transactions. I think Hongkong Land, they were reporting like book value up 5%. But I'm not sure what's inside. Yeah, just thought I'll ask on Festival Walk.

Speaker #7: But I'm not sure what's inside, so yeah, just thought I'd ask. I'll ask on Festival Walk. Yeah, thank you.

Koh Wee Leong: Mm-hmm.

[Analyst] (Citigroup): Yeah. Thank you.

Speaker #4: Thank you. Thank you, Derry. Brendan. Hi, Brendan from Citi.

Teng Li Yeng: Thank you. Thank you, Derek. Brendan. Hi, Brendan from Citi.

Speaker #8: Hey. Morning. Morning. I just want to circle back to Festival Walk, right? So if you look at the tenancies for this quarter, it was up year-on-year.

Brandon Lee: Hey. Morning. Morning. I just wanna circle back to Festival Walk, right? If you look at the tenant sales for this quarter, it was up year-on-year. It's been close to like more than two years where I think you've seen this improvement. Earlier you sound very skeptical, right? Is it correct to say that tenant sales hasn't exactly bottomed out?

Speaker #8: It's, it's, it's been a—it's been close to, like, more than two years, right? Since you've seen this improvement. So, and earlier, you—you—you sounded very skeptical, right?

Speaker #8: So is it correct to say that tenant sales haven't exactly bottomed out for Festival Walk?

Koh Wee Leong: For Festival. I think one quarter doesn't make a trend. We are still continuing to closely monitor the performance of the mall and the performance of the tenants. There are some strong points, and there are some strong areas. F&B is still doing fairly well. You know, fashion, some of the tenants, tenant mixes, cosmetics, and the like are still fairly weak in the mall. Those continue to drag down our performance a little bit. You know, this one quarter, we've had some interesting or other, not to say unexpected, but you know, if you look at the

Speaker #6: I I I think one quarter doesn't make a a trend. And we we are still continuing to closely monitor the the performance of the mall and the and the performance of the tenants.

Speaker #6: There are some strong points and there are there are some strong areas. So F&B is still fairly is doing fairly well. But you know, fashion, some other tenants tenant mixers cosmetics and the like are still fairly weak in the mall.

Speaker #6: And those those continue to drag down our performance a little bit. So you know, this this one quarter we have had some interesting or rather not say unexpected but you know, if you look at the if you look at our jewellers and we look at the goldsmith shops within the mall, those have done extremely well and has has definitely contributed to that to that improvement.

Koh Wee Leong: If you look at our jewelers, if you look at the goldsmith shops within the mall, those have done extremely well and have definitely contributed to that, to the improvement. Like I said, a few trades doing very well doesn't quite make the case that overall retail sales are improving within our particular market. We will continue to monitor, and we'll continue to remix the tenancies such that we weed out a bit of the weaker tenants and bring in stuff that people want to spend at.

Speaker #6: But like like I said, a few trades doing very well doesn't doesn't quite make the case that that overall retail sales are improving within within within our our particular market.

Speaker #6: So we will continue to monitor. We will continue to to remix the the tendencies such that we we weed out a bit of the 10 weaker tenants and bring in stuff that that people want to want to spend at.

Speaker #8: Got it, got it. Okay. And also, just to go back a bit further to Derry's question, right? So if you look at the latest valuation for Festival Walk—$20.7 billion, right?

Brandon Lee: Got it. Okay. Also just on back, a bit similar to Derek's question, right? If you look at the latest valuations for Festival, SGD 20.7 billion, right? That seems to be still, like, about 13% above the acquisition price, right? If you look at over the years, the reversions, it's still not correct, right? Do you think at this point in time, it's still looking a bit overvalued for Festival Walk? Based on management value-

Speaker #8: And that seems to be still like or 13 percent above the acquisition price. Right? And and if you look at over the years, the reversions, it is it's it's still not not great, right?

Speaker #8: So, do you think at this point in time, it's still looking a bit overvalued for Festival Walk, based on management guidance?

Speaker #8: Not, not, not on valuation. Not on independent valuers' guidance. Yep.

Sharon Lim: Okay, I'll

Sharon Lim: Not on valuation.

Koh Wee Leong: Okay.

Koh Wee Leong: Not on independent valuation guidance. Yeah.

Speaker #4: Okay. If you look at it as a process, it's done by professional third-party valuers. Okay? So, for that part, I don't think there's any form of interference or manipulation on our part.

Koh Wee Leong: Okay. If you look from as a process, it's done by professional third-party valuers. Okay? That part, I don't think there's any form of interference or manipulation on our part. That's the market value determined by third-party. If you talk about investment climate as per whether it's buoyant and whether this price is something that people will look at, I think overall, most of the investors are still very careful pertaining to Hong Kong. Okay? Your valuation may be there, but investor appetite may be slightly a little bit more cautious than what we in a typical market. The two markets that I see investors very cautious is definitely Hong Kong, and China is topping it. Yeah. I wouldn't say that our valuation is not correct.

Speaker #4: So there's a market value determined by a third party. But if you talk about the investment climate, as per whether it's buoyant and whether this price is something that people will look at, I think overall, most of the investors are still very careful pertaining to Hong Kong.

Speaker #4: Okay, so your valuation may be there, but investor appetite may be slightly a little bit more cautious than what we—in a typical market.

Speaker #4: So the two, two, two markets that I see investors very, very cautious is definitely Hong Kong. And China is topping it. Yeah. So I wouldn't say that our valuation is not correct.

Speaker #4: Our valuation is done by a third party. But the investment climate is not as strong in terms of the pool of investors looking and ready to put more money into Hong Kong and China.

Koh Wee Leong: Our valuation is done by third-party. The investment climate is not as strong, in terms of the pool of investors looking and ready to put more money into Hong Kong and China.

Speaker #8: Got it. Okay. Hey, thank you so much. Thank you.

Brandon Lee: Got it. Okay. Hey, thank you so much. Thank you.

Speaker #4: Thank you very much, Brendan. Jonathan, you're up next.

Teng Li Yeng: Thank you very much, Brandon. Jonathan, you're up next.

Speaker #9: Yeah. Good morning. Good morning, Sharon and management team. So, two questions. First question relates to MBC. You mentioned like one tenant secured during the quarter.

Terence Lee: Yeah, good morning. Good morning, Sharon and management team. First question relates to MBC. You mentioned like one tenant secured during the quarter and then another big one also after the quarter. I presume both are new tenants. Could you give us some color in terms of like the industry they're in, the rental, and then also the size of the lease that they have taken up? For the large tenant that came in after the quarter, if you include that, what would the level of occupancy at MBC be?

Speaker #9: And then another big one also after the quarter. So I presume both are new tenants. Could you give us some color in terms of, like, the industry trade they are in, the whale, and then also the size of the lease that they have taken up?

Speaker #9: And then for the large tenant that came in after the quarter, if you include that, what will the level of occupancy at MBC be?

Speaker #6: Okay. So, the tenant after the quarter was a renewal. That was for more than five years, and rental reversion was actually just a little bit positive.

Koh Wee Leong: Okay. The tenant after the quarter was a renewal. That was for more than 5 years, and rental reversion was actually just a little bit positive. That would have had no impact on the occupancy. Okay? The other tenant, which is a new tenant that took up about 3 floors, and that's contributed to the improvement in MPACT's committed occupancy, that's in the IT trade.

Speaker #6: So that would have had no impact on the on the occupancy. Okay? The other the the other tenant, which is a new tenant that took up about three floors, and that's contributed to the improvement in MBC's committed occupancy.

Speaker #6: That's in the IT trade.

Speaker #9: Okay. Okay. Thank you. And then the for okay. For for the the guy that renewed, could you give us like the industry sector? And also, I have a follow-up on Japan.

Terence Lee: Okay, thank you. For the guy that renewed, could you give us like the industry sector? Also, I have a follow-up on Japan.

Speaker #6: I was just about to say what I mean. So, some of these tenants contribute, actually. So I mentioned that.

Koh Wee Leong: Oh, you're supposed to tell me. This I don't consider.

Terence Lee: Sorry.

Koh Wee Leong: I mentioned that.

Speaker #9: Oh, okay. Okay. So, follow-up question on Japan. I couldn't help but notice that the tenant retention is like 10 percent. Looks extremely low.

Terence Lee: Oh, okay. Okay. A follow-up question on Japan. I couldn't help but notice that the tenant retention is like 10%. Looks extremely low. Is that only unique to the quarter, and then you see some like rebound after that? Could you comment on that and how that affects your outlook?

Speaker #9: Is that only unique to the quarter? And then you see some, like, rebound after that. So, could you comment on that and how that affects your outlook?

Speaker #6: So, the tenant retention in Japan—the low number—is largely driven by Fujitsu. So, the master tenant at FJM, they are not expanding the tenancy.

Koh Wee Leong: The tenant retention in Japan, the low number is largely driven by Fujitsu. Master tenant at FJM, they are not extending the tenancy, so their whole building is going vacant because that tenant has moved out. It's a fairly substantial portion of our portfolio. If you look at our occupancy number, Japan now stands at 75 without assuming we take this FJM out of the equation, the occupancy will be then 57%. It's a fairly substantial impact on the portfolio, and the retention rate is brought down largely because of this tenant.

Speaker #6: So their whole building is going vacant because that tenant has moved out. And it's a fairly substantial portion of our portfolio, if I if you look at our occupancy number, Japan now stands at 75 without assuming we take this take this FJM out of the out of the equation, the occupancy would be then 57 percent.

Speaker #6: So, it's a fairly substantial impact on the portfolio. And the retention rate is brought down largely because of this tenant.

Speaker #9: So, so, so, excluding this sort of high-impact events, normally, why would you expect tenant retention to be for Japan?

Terence Lee: Excluding this sort of high impact events, normally, where would you expect tenant retention to be for Japan?

Koh Wee Leong: It floats quarter to quarter. If you exclude this particular tenant, and we are probably looking, well, last FY, we'll probably be around the 67%. No, actually a little bit lower. Maybe about 50+, 60% mark.

Speaker #6: It it floats quarter to quarter. If you if you exclude this particular tenant and and we are probably looking well, last last FY, we'll probably be around the the 67 60 plus, 70 no, actually a little bit lower.

Speaker #6: Maybe about 50 plus, 60. 60 percent mark.

Speaker #9: Okay, thank you. Thank you for the detailed answer. Sorry.

Terence Lee: Okay, thank you. Thank you for the detail. Sorry.

Koh Wee Leong: Generally, we will expect the number to be a bit higher because in Japan, tenants tend to be a little bit stickier. Aside from the Makuhari assets, most of the other assets' tenants are a little bit stickier. Last year we did have one or two non-renewals in the other parts of the portfolio, which we've actually managed to backfill the space. That will actually have contributed to a slightly lower retention than we had normally expected.

Speaker #6: Generally, we will expect the number to be a bit higher because, in Japan, tenants tend to be a little bit stickier.

Speaker #6: Aside from the Makuhari assets, most of the other assets—tenants are a little bit stickier. But last year, we did have one or two non-renewals in the other parts of the portfolio, which we have—actually, we have managed to backfill the space.

Speaker #6: But that was actually a contributor to a slightly lower retention than we were normally expecting.

Speaker #9: Yeah, thank you. Thank you very much for the detailed response. Thank you.

Terence Lee: Yeah. Thank you. Thank you very much for the detailed response. Thank you.

Speaker #4: Thank you, Jonathan. Sharon, please. Hello. Sharon, please take the question away.

Teng Li Yeng: Thank you, Jonathan. Terence Lee. Hello, Terence, please take your question away.

Speaker #10: Yes, good morning. Terence Lee from UBS. Just a question on the one-off tax charge, that $8.3 million. Let's say if you sell—manage to sell Festival Walk, the retail portion—should we expect another such one-off tax charge that would be flushed into the DPU?

Terence Lee: Yes, good morning. Terence Lee from UBS. Just a question on the one-off tax charge, that SGD 8.3 million. Let's say if you manage to sell Festival Walk, the retail portion, should we expect another such one-off tax charge that would be flowed into the DPU?

Speaker #4: Unfortunately, yes.

Janica Tan: Unfortunately, yes.

Terence Lee: Is there a sense for us to understand what kind of percentage or, you know, applicable tax rate that would be?

Speaker #10: Is there a sense for us to understand what kind of percentage or, you know, applicable tax rate that would be?

Speaker #4: Okay, I do not have that on hand now. I can get back to you. Yeah. But basically, whatever that we charge off now is what we apportion for the office part.

Janica Tan: Okay. I do not have that on hand now. I can get back to you. Basically, whatever that we charge off now is what we apportion for the office part. The allowance was claimed as Festival as a whole. We based on some formula to apportion the office part. Of course, it's also subject to the tax office agreement on the way we apportion.

Speaker #4: Yeah, the allowance was claimed as festival as a whole, so we based it on some formula to apportion the office part. Yeah. But of course, it's also subject to the tax office's agreement on the way we apportion, yeah.

Speaker #10: Oh, okay. So.

Terence Lee: Oh, okay.

Speaker #4: So, I can get back to you. I can get back to you on the amount, but I do not have that on hand. My apologies.

Janica Tan: I can get back to you on the amount, but I do not have that on hand. My apologies.

Speaker #10: Could we not just take the 8.3 million divided by the divestment price for the office portion?

Terence Lee: Could we not just take the SGD 8.3 million divided by the divestment price for the office portion?

Speaker #4: No. No, no, no.

Janica Tan: No, no.

Terence Lee: as a proxy?

Janica Tan: No, no.

Speaker #10: Okay.

Terence Lee: Okay.

Speaker #4: No, cannot. Yeah.

Janica Tan: No, cannot. Yeah.

Speaker #10: Okay. And I guess a separate question. Can you remind us of the FX income hedge policy, and at this juncture, how are forward rates for the coming year looking relative to spot?

Terence Lee: Okay. I guess a separate question, can you remind us of the FX income hedge policy? At this juncture, like how far forward rates for the coming year are looking like, relative to spot? I guess particularly for Hong Kong dollar and JPY.

Speaker #10: And I guess particularly for Hong Kong dollar and JPY.

Janica Tan: I think Hong Kong dollar and Japanese yen outlook is appreciating. I don't know how they are going to appreciate. Hong Kong dollar is depreciating. So far, whatever swap that we have on the books, I think both of them are not the swap, sorry, forward hedge book. Both of them are out of the money.

Speaker #4: I think the Hong Kong dollar and JPY outlook is appreciating, but I don't know how they are going to appreciate. The Hong Kong dollar is depreciating.

Speaker #4: So far, whatever swap that we have on the books, I think both of them are not, not at the—sorry, forward hedge—both, both of them are majority out of money.

Speaker #10: Okay. So is it fair to surmise that there should still be continued FX-related income weakness into FY27?

Terence Lee: Okay. Is it fair to surmise that there should still be continued FX-related income weakness into FY27?

Janica Tan: Based on the hedge on hand, maybe there will be. You... Yeah, that should be.

Speaker #4: Based on the hedge on hand, maybe there will be. But, but, but you... yeah. That, that should be, but you know, interest rate is very, very volatile.

Terence Lee: Okay.

Janica Tan: You know, interest rate is very, very volatile. The reason why we do income hedge is actually to just protect and lock in the rate to ensure income stability. We are not actually speculating the market. That is a risk management. Whatever that the board's guidance set on the threshold, we will just make sure that we monitor and we make sure that we lock in to mitigate risk. It's not so much of speculating and trying to earn from the market, you know. All our hedges is more risk management. Whether the currency will depreciate or appreciate further, we will still make sure that we hedge the necessary threshold, the risk threshold as set by the board to give us stability on the income.

Speaker #4: And the reason why we do income hedge is actually to just protect and lock in the rate to ensure income stability. We are not actually speculating on the market.

Speaker #4: So there is a there is a risk management. Whatever that whatever that the board's guidance set on the threshold, we will just make sure that we monitor and we we make sure that we lock in to mitigate risk.

Speaker #4: It's not so much of speculating and trying to earn from the market, you know. All our hedges is more risk management. So whether the currency will depreciate or appreciate further, we will still make sure that we hedge the necessary threshold, the risk threshold as set by the board.

Speaker #4: To give us stability on the income. And of course, when we hedge, we will look at the market and make sure that we don't go in at a rough time, or at a point in time where the market is really very rough.

Terence Lee: Uh-huh.

Janica Tan: Of course, when we hedge, we look at the market and make sure that we don't go in at a rough time or at some point in time where the market is really very rough. Yeah.

Speaker #4: Yeah.

Speaker #10: Yeah, I guess all in, if I may surmise, the outlook for FY27 DPU—in terms of downside pressures—it's probably from the negative reversions from some of the overseas assets and a bit of pressure from potentially weaker FX rates.

Terence Lee: Yeah. I guess, all in, if I may surmise, the outlook for FY 2027 DPU. In terms of downside pressures, it's probably from the negative reversions from some of the overseas assets and a bit of pressure from potentially weaker FX rates. I guess on the upside forces, that appears to be lower rates for the portfolio, lower interest rates for the portfolio.

Speaker #10: And I guess on the upside forces, that appears to be lower rates for the portfolio, lower interest rates for the portfolio.

Janica Tan: I think we do not provide a forecast, but you know, we have already announced Fujitsu, and that's already SGD 10 million to the books. Yeah. On the other hand, you can get a comfort that the income from Japan will be lower, although it's depreciating. I don't know whether that's a comfort or not.

Speaker #4: I think I think we do not provide a forecast. But if you know we have already announced, which is soon, and that's already a $1, $10 million to the books, yeah, so I I'm I'm not sure how how on the other hand, you can get the comfort that the income from Japan will be lower.

Speaker #4: Although it's depreciating, I don't know whether there's a comfort or not.

Speaker #10: Okay. Got it. Thank you.

Terence Lee: Okay. Got it. Thank you.

Koh Wee Leong: Sorry. Just now, Jonathan asked about the retention rate, not including Fujitsu. It's not 55%. It's actually about mid-thirties. That's due to non-renewals at MBP as well, where some of the remaining leases from the master tenancy, which expired 3 years ago, have actually expired as well.

Speaker #6: Sorry. Just now, Jonathan asked about the retention rate. Not including Fujitsu, so it's not 50-plus percent. It's actually about the mid-30s, around 30-something percent.

Speaker #6: That's due to non-renewals at the at the MVP as well, where some of the remaining leases from the from the master tenancy which expired two years ago those those leases have actually expired as well.

Speaker #10: Yeah, got it. Got it. Thank you very much. Thank you.

Terence Lee: Yeah. Got it. Thank you very much. Thank you.

Speaker #4: Thank you. We do have a question coming in online. Someone is waiting to ask about the impact of online sales on festivals, given that online players have been given heavy subsidies.

Teng Li Yeng: Thank you. We do have a question coming online from online. It's relating to the impact of online sales on fast move, given that online players have been given heavy subsidies.

Koh Wee Leong: If you look at online retail in Hong Kong, it's actually a very marked difference from within China. If you look at online penetration, online sales penetration rate in Hong Kong, we are looking at probably in the sub-10% range. Whereas if you look at the same statistics in China, that's probably in the 40% range. If you look at Singapore, we've actually been stabilized at about the just under 20% fluctuating on a quarter-to-quarter, month-by-month basis. It looks like online retail in Hong Kong has been fairly stable. And there is some inclination that online retailers are being a bit more...

Speaker #6: So if you look at online retail in Hong Kong, it's actually very much different from within China. If you look at online penetration, online sales penetration rate in in Hong Kong, we are looking at probably in the in the in the sub-10 percent range, whereas if you if you look at the same statistics in in China, that's probably in the 40 percent range.

Speaker #6: If you look at Singapore, we've actually been stabilized at about the just under 20 percent fluctuating on on a quarter-to-quarter, month-by-month basis. So it it looks like online retail in in China sorry, in Hong Kong has been fairly stable.

Speaker #6: And it there there is some inclination that the that the online retailers are being a bit more trying to be a bit more aggressive in Hong Kong.

Koh Wee Leong: trying to be a bit more aggressive in Hong Kong. It might be, you know, part of it, part of the reason is the proclivity of the Hong Kong residents to not use online payments that much, also preference to shop physically. I think a bigger chunk. The truth is that the bigger chunk of the impact of retail sales in Hong Kong has been the leakage to Shenzhen. Now, the ability for Hong Kongers to go across the border to shop has probably had a much bigger impact on retail sales performance in Hong Kong than the online impact.

Speaker #6: But it might be part of it. Part of the reason is the proclivity of the Hong Kong residents to not use online payments that much, also a preference to shop physically.

Speaker #6: I think a bigger chunk, but the truth is that the bigger chunk of the impact on retail sales in Hong Kong has been the leakage to Shenzhen.

Speaker #6: The ability for Hong Kongers to go across the border to shop has probably had a much bigger impact on retail sales performance in Hong Kong than the online impact.

Speaker #4: Thank you, William. Just want to double-check again—Terry, do you still have another question?

Teng Li Yeng: Thank you, Wei Leong. Just want to double-check again. Terry, do you still have another question?

Speaker #10: Yes. Just a follow-up to the earlier question. Jennifer, just on the part on the one-off tax issue—right—what is the rationale that this is flushed into the quarter's DPU, as opposed to it being netted off against, as a sort of net divestment proceeds?

Terence Lee: Yes.

Terence Lee: Terry.

Terence Lee: Just a follow-up to the earlier question. Janica, just on the part on the one-off tax issue, right? What is the rationale that this is flushed into the quarter's DPU as opposed to it being netted off against the net divestment proceeds?

Janica Tan: Okay, we asked the same question to our tax consultant, okay? This is considered an operational issue because the allowance was being claimed and offset against the operational income.

Speaker #4: This is something that, okay, we asked the same question to our tax consultant, okay? This is considered an operational issue because the allowance was being claimed and offset against the operational income.

Terence Lee: Oh, okay.

Janica Tan: Now there is a drawback. It should be against operating income. Actually, when we divest Mapletree Anson, there is also a similar kind of balancing allowance and charge. At that point in time, it was allowance. An allowance will reduce our DPU because it's an allowance and we pay off the unitholder via capital distribution.

Speaker #4: So, now that it's a drawback, it should be against operating income. Actually, when we divested Mapletree Anson, there was also a similar kind of balancing allowance and charge.

Speaker #4: But at that point in time, it was an allowance. So an allowance will reduce our DPU because it's an allowance. And we repay, and we pay off the unit holder via capital distribution.

Speaker #10: Yeah. I guess that was my that would have been my next question. Like, why not replace the you know, like, make make unit holders whole in terms of the cap distributions?

Terence Lee: Yeah. I guess that was my.

Janica Tan: But-

Terence Lee: That would have been my next question.

Janica Tan: Yeah.

Terence Lee: Like, why not replace the, you know, like, make unitholders whole in terms of the cap distributions?

Janica Tan: You see it's different from Anson. Anson is reducing, but I'm not paying any money to the tax office. This is different. I'm paying over SGD 8 million to the tax office, Hong Kong tax office. If I were to distribute, I am coming out another SGD 8 million to pay to the unitholder. Having said that, if this is considered a transaction cost, it would definitely net off or charge to a divestment gain or loss. When we claim the allowance, it's net off against the operational income. Now when there's a clawback, it should be against operational income.

Speaker #4: You see, it's different from Anson. Anson is reducing, but I'm not paying any money to the tax office. But this is different. I'm paying a takeover million to the tax office, Hong Kong. Hong Kong tax office.

Speaker #4: And if I were to distribute, I'm coming up with another $8 million to pay to the unit holder. But having said that, if this is considered a transaction cost, we will definitely net off or charge to a divestment gain or loss.

Speaker #4: But when we claim the allowance, it's netted off against the operational income. So now when there's a drawback, it should be against operational income.

Terence Lee: Okay, just to clarify, was there even a choice to distribute capital distributions to make unitholders whole? Or-

Speaker #10: Okay, just to clarify, was there even a choice to distribute capital distributions to make unitholders whole?

Janica Tan: Capital distribution we can distribute, okay? Of course, taxable distribution, tax-exempt distribution, you must have the relevant income, okay. A capital distribution we can if we want. Yes. It's just like if there's any gain or the proceeds from the divestment, if we were to distribute, we will distribute via capital distribution.

Speaker #4: This capital distribution—capital distribution, we can distribute, okay? Of course, for taxable distribution and tax-exempt distribution, you must have the relevant income, okay? But capital distribution we can—if we want, yes.

Speaker #4: It's just like, if there's any gain or the proceeds from the divestment, if we were to distribute, we will distribute via capital distribution.

Terence Lee: Got it.

Speaker #4: So yes, we do have the choice to distribute. But because we are paying the tax office, we have only $8.3 million.

Janica Tan: Yes, we have the choice to distribute. Because we are paying the tax office, we have only SGD 18.3 million. If I'm paying tax office and I'm paying unitholder, we are effectively borrowing to pay.

Speaker #4: If I'm paying tax office and I'm paying unit holder, then we are effectively borrowing to pay.

Terence Lee: Okay. Got it. Thank you.

Speaker #10: Okay. Got it. Thank you.

Speaker #4: Thank you. We do have one more follow-up from Brendan from Citi. Brendan?

Teng Li Yeng: Thank you. We do have one more follow-up from Brandon, from Citi. Brandon.

Speaker #6: Hey, just a couple of household matters, right? Can you share with us the occupancy cost for both FW and P4C?

Koh Wee Leong: Hey, just a couple of housekeeping matters, right? Can you share with us the occupancy costs for both mTower and VivoCity? For both malls, occupancy cost ±20%.

Speaker #2: So for both months, occupancy cost is plus or minus 20 percent.

Speaker #6: Okay. Great. Hey, thank you.

Brandon Lee: Okay, great. Hey, thank you.

Teng Li Yeng: Terence Khi from JP Morgan. Hi, Terence Khi.

Speaker #4: Terry from JPMorgan. Hi, Terry.

Speaker #11: Hey, thanks. Yeah, I just wanted to ask a little bit more on MBC. So you are seeing occupancies improve on a Q-on-Q basis.

Terence Khi: Hey, thanks. Yeah, I just wanted to ask a little bit more on MPACT. You are seeing occupancies improve on a Q-on-Q basis. Maybe could we get a sense of, you know, how soon could we see occupancies move back above, let's say, a 95% handle? On a broader scale, has the war impacted demand for space in Singapore in terms of leasing, both on the office side and also on retail? Thanks.

Speaker #11: So maybe could we get a sense of, you know, what—what—how—how soon could we see the occupancies move back above, let's say, a 95 percent handle?

Speaker #11: And on a broader scale, has the war impacted demand for space in Singapore in terms of leasing, both on the office side and also on retail?

Speaker #11: Thanks.

Koh Wee Leong: Obviously, MBC is already above 95%. We expect throughout the year occupancies will remain around the mid-90s range, ± a little bit. In terms of leasing impact, what the war has introduced is actually uncertainty, and what that causes tenants to do is actually to delay decisions. Right. As it is before the conflict started, all of the tariff issues as well as the uncertainty between US and China has already caused tenants to be cautious about taking up more space or to spend money on fitting out spaces. That has continued. If anything, it's delayed decision-making a little bit more, right?

Speaker #2: So, occupancy at MBC is already above 95%. We expect that throughout the year, occupancies will remain around the mid-90s range, plus or minus a little bit.

Speaker #2: In terms of leasings, leasing impact, what what the what the war has introduced is actually uncertainty. And what that what that causes tenants to do is actually to delay decisions.

Speaker #2: Right? As it is, before the conflict started, all of the tariff issues as well as the uncertainty between the US and China had already caused tenants to be cautious about taking up more space or spending money on fitting out spaces.

Speaker #2: That has continued. If anything, it's delayed decision-making a little bit more, right? In the past, we were probably looking at tenants taking up space six months, nine months, or one year before they move in from the point of signing a lease.

Koh Wee Leong: In the past, we were probably looking at tenants taking up space 6 months, 9 months, 1 year before they move in from the point of signing a lease. Now that's probably gone up by another 1 to 2 months at 1 to 2 months. In some cases, what tenants have been doing is to delay decisions, right? They know they have to make a decision within the next 6 months. They don't have to do it now. They'll just wait another 3 to 6 months. That's really been the key. The other thing is that the impact of the war is likely.

Speaker #2: Now, we are now—there's probably gone up by another one to two months, at one to two months. In some cases, what tenants have been doing is to delay decisions, right?

Speaker #2: They know they have to make a decision within they they have to make a decision within the next six months. They don't have to do it now.

Speaker #2: They'll just wait another three to six months. So that's really been the key. The other thing is that the impact of the war is likely—the impact of the war will affect construction costs, and that will mean that the fit-out costs will likely go up.

Koh Wee Leong: The impact of the war will affect construction costs, and that will mean that the fit-out costs will likely go up. That will then make the tenants a little bit more reluctant to move from space to space. To mitigate that, what we have tried to do is, as far as possible, if we do have departing tenants, and we do have a few, we have tried to retain fit-outs such that we can then use those fit-outs for new tenants. That has really helped to push some of the occupancy for some of the floors. In general, what the result of that is also that tenants are more reluctant to move. It's actually helped to maintain our occupancy and improve the retention rate at MBC.

Speaker #2: That will then make tenants a little bit more reluctant to move from space to space. To mitigate that, what we have tried to do is, as far as possible, if we do have departing tenants—and we do have a few—we have tried to retain fit-outs, such that we can then use those fit-outs for new tenants in. That has really helped to push some of the occupancy for some of the floors.

Speaker #2: But in general, what the result of that is also that tenants are more reluctant to move. So, it's actually helped to maintain our occupancy and improve the retention rate at MBC.

Speaker #11: Okay. Thank you.

Terence Khi: Yeah. Thank you.

Speaker #4: Thank you very much, everybody. May I just do a quick check if there are any more outstanding questions from our participating analysts? If not, I would like to thank everybody again for your precious time and all your questions for today's results briefing.

Teng Li Yeng: Thank you very much, everybody. May I just do a quick check if there's any more outstanding questions from our participating analysts? If not, I would like to thank everybody again for your precious time and all your questions for today's results briefing. Should you have any other questions, feel free to reach out to the investor relations team. Thank you again, and we wish you a great week ahead. Goodbye. Thank you.

Speaker #4: Should you have any other questions, feel free to reach out to the investigation team. Thank you again, and we wish you a great week ahead.

Speaker #4: Goodbye.

Speaker #11: Thank you.

Operator: This meeting is no longer being transcribed.