Mapletree Pan Asia Commercial Trust

Thank you, Li Yeng. A very good morning to everybody.

We have just announced our result this morning, so maybe we’ll just go to the slide 6 and quickly go through the financials. For fourth quarter FY 2024-2025, gross revenue was SGD 222.9 million and NPI was SGD 169.5 million.

These were lower by 6.8% and 7.4% year-on-year respectively, and this largely reflects the absence of Mapletree Anson's contributions following its divestment on 31st July, 2024 and lower overseas contributions. As you may recall, we have divested Mapletree Anson, our non-core asset, on 31st July, 2024, and we have applied the entire proceeds to the reduction of borrowings.

Moving on to the OpEx. OpEx improved by 4.9% year-on-year during the quarter, and this was largely due to the Mapletree Anson divestment and lower utility costs, in particular the Singapore portfolio.

Net finance expense for the quarter, 9.4% lower at SGD 61.1 million as compared to fourth quarter last year and this was mainly due to the repayment of borrowings using the net proceeds from the divestment of Mapletree Anson. But this was partly offset by the higher rates on the Sing dollar, Hong Kong dollar and Japanese yen borrowing as our legacy interest rates swap continued to roll off progressively.

So consequently, this amount available for distribution was SGD 103.6 million and DPU SGD 0.0195, down 14.8% year-on-year for fourth quarter. Moving on to next slide, this shows the contribution by different markets.

Singapore properties contribution increased by 1.4% year-on-year, excluding Mapletree Anson, and this accounted for about 53% to both fourth quarter’s portfolio gross revenue and NPI. On a full year basis, MPACT reported gross revenue and NPI of SGD 908.8 million and SGD 683.5 million respectively, lower by 5.1% and 6.1% year-on-year.

The higher contribution by Singapore portfolio on a comparable basis, which is without Mapletree Anson, as well as lower OpEx and net finance costs provided partial offset to the overseas and forex headwinds. So, consequently, DI amounted to SGD 423 million and DPU SGD 0.0602.

The next few slides are on our portfolio valuation. MPACT’s portfolio valuation is approximately SGD 16 billion as of 31st March, 2025.

Excluding the effect from Mapletree Anson divestment, the portfolio valuation rose SGD 339.4 million or 2.2% from their respective last available independent valuation either as of 31st March, 2024 or, in the case of the three Makuhari assets in Japan as of September 2024. On a year-on-year basis and excluding Mapletree Anson, the valuation increased by 225.5 million or 1.4%.

The overseas properties recorded lower valuation, largely stemming from the revised market expectations in Greater China, and cap rate and discount rate expansion applied to Festival Walk. Moving on to the next slide, this is the valuation for Singapore property.

There an uplift of SGD 660 million or 7.9% and this more than offset the decline in the valuation of the overseas properties. Singapore’s growth was led by VivoCity’s better performance and tighter cap rate applied by the valuers to VivoCity and the business park admin of MBC.

For Japan, the year-on-year valuation decline was largely due to the three properties located in Makuhari in Japan and has been captured in the September results. The current six months change in valuation was largely due to forex impact, while MBP shows some gain due to successful back-filling.

Moving on to balance sheet. With the uplift of the portfolio valuation, NAV per unit is now at SGD 1.78 at September 2025, and this was higher as compared to March 2024 by 1.7%.

On capital management, the deployment of Mapletree Anson divestment proceeds reduced outstanding borrowings to SGD 6.1 billion, and together with the higher overall valuation, aggregate leverage ratio improved from 40.5% a year ago to 37.7% as at 31st March 2025. With an average all-in cost of debt maintenance level at around mid 3s, ICR capped at 2.8 times on a 12-month trailing basis.

During the quarter, MPACT issued a seven-year green bond in March 2025 and this extended the average term of the maturity of debt to 3.3 years as at March 2025. And by the close of the reporting period, MPACT has a financial flex of SGD 1.2 billion in cash and undrawn committed facilities.

This is sufficient for working capital and financial obligations. We will continue to ensure a natural balance sheet hedge by closely aligning the debt mix with geographical distribution of MPACT’s AUM where feasible.

MPACT’s debt profile remains balanced with no single financial year facing more than 23% of debt refinancing. Moving on to risk management.

The fixed rate debt portion was lowered from 81.5% to 79.9% during the quarter. With regard to the seven-year fixed rate bonds issued in March 2025, the percentage of fixed rate debt would be at 76.6%.

So about 80% of our debt on fixed rate, every 50 bps change in benchmark rate is estimated to impact the DPU by SGD 0.001 per annum. And lastly, at the close of the quarter, approximately 90% of MPACT’s expected distributable income was derived from or hashed into Sing dollars.

The next slide is on the total return. So for this year, the total return from capital and dividend payout is 3.9%.

And last, but not least, on the distribution detail, VivoCity is 25th April 2025 and the payout date is on 6 June, 2025. With that, I will now hand over to Wee Leong.

Good morning, everyone. Maybe let's just move on to the occupancy performance.

So you can see that the portfolio occupancy has declined very slightly since December 2024. That's largely driven by the Japan properties where there were a number of non-renewals, particularly in the Makuhari area.

But then moving on to the Singapore assets, so for MBC, occupancy now stands at 91.2%. There have been a number of non-renewals in the current year, in the financial year just passed, and most of those spaces are still in the process of being leased out.

The experience over the last three to six months has been that tenants have been taking a far longer time to make decisions and commitments are typically a lot further into the future. We remain hopeful that we can bring up the occupancy in the coming financial year, largely due to the fact that the cost pressures for tenants in Singapore are driving them from CBD assets into lower cost locations like MBC.

For VivoCity, occupancy remains strong and a small amount of vacant space largely due to AEIs which are currently ongoing. mTower is the main beneficiary of the increase in occupancy for the other SG properties.

Again, we have been the beneficiary of the movement of tenants out from CBD, looking for slightly lower cost locations. mTower also benefited because we were able to offer smaller spaces.

The building has been multi-tenanted for a long time. Smaller spaces of 1,000, 2,000, 5,000 square feet are easily available.

We have also managed to retain a lot of the deposit from tenants that recently departed and this allowed incoming tenants to reduce their moving costs, making the building a lot more attractive. For Festival Walk, that little bit of vacancy is largely due to the office component of the building.

We had one tenant move out earlier in the year. We had backfilled about 40% to 50% of the space, and we are working to fill up the rest of the spaces.

China remains one of our more challenging markets. If you look on a year-on-year basis, Gateway Plaza actually lost a little bit of occupancy against March last year, whereas Sandhill Plaza has actually improved occupancy slightly.

But while both assets have performed better than most of the market comparables, leasing demand still remains fairly weak, both in Shanghai and Beijing. In particular, for Shanghai, we will likely see a little bit of headwinds going forward as the Changjiang area, being a business park, does face a little bit more pressure due to the trade tensions, which have mainly been focused on manufacturing as well as specifically on semiconductors and microelectronics related industries.

For the Japan properties, this is largely due to the termination of leases from the single tenanted property, Seiko, as well as the non-renewal of the master leases at MBP. For Pinnacle Gangnam, still one of the bright spots in the portfolio, all of the vacant spaces in the building have been currently taken up, except for a small retail unit in Basement 2 and we expect Pinnacle Gangnam to continue performing well over the next one year or so.

Moving on to rental reversion. So, the Singapore properties in general have performed a lot better.

MBC, VivoCity and mTower, in particular, have seen healthy rental reversions. Festival continues to see negative rental reversions.

There's also been pressure because of the current trade tensions and the potential impact on the economy of both Hong Kong and China. The China assets, as we have mentioned in previous quarters, there has been negative rental reversions.

Market rentals have been falling. While we have managed to contain this to a negative 9%, the reality is market rentals are quite a bit below our passing rentals in the past.

Just to give a sense, Sandhill Plaza in the past used to sign leases in the RMB 5 to RMB 6.50 per day per day. Most of the rentals we are concluding now are actually in the RMB 3.50 to RMB 4 range.

So, for Japan, that's again largely due to the Seiko building and the master leases at MBP, whereas Pinnacle Gangnam continues to perform well. This improvement in rental reversion is largely due to office leases, where due to the run-up in office rentals in the Gangnam area, we still have quite a component of the building where the current rentals are below the market.

So we can probably expect to see a positive rental reversion for Pinnacle Gangnam going forward. Just a quick note on lease expiry profile.

So on portfolios, it’s 2.2 years. Retail, same number whereas office and business park is at 2.3.

You will see that we actually have quite a large chunk of spaces coming up for renewal in current FY 2024-2025 and we are in negotiations with all of these tenants. The current indications are that most of these tenants will be renewing their leases, although one or two of them might have some reduction in spaces.

Moving forward on the performance of the office MBP assets. So, Singapore continues to perform well with a slightly increased vacancy at MBC, which we hope to close up throughout this financial year.

China continues to be challenging. Retention rates are fairly low.

We do have tenants who have been moving out to newer buildings, in particular in Shanghai. Whereas for Japan, while we have signed up a good number of leases, some of this is actually some of the underlying leases in the master tenant, which have continued in the building.

And rental reversions continue to be weak, especially in Makuhari. So Korea, I mentioned earlier, continues to be one of the better performers in the portfolio.

So moving on to a review of the lease performance. So shopper traffic is down very marginally against the year-on-year, whereas tenant sales have been down about 2.1% against year-on-year.

Part of the impact on tenant sales has been that if you have been to the mall recently, you have seen that we have had quite a lot of asset enhancement works ongoing and that contributed to significantly more downtime this current financial year than against the previous financial year. Looking at the asset enhancement book, for Basement 2, we had two phases of work ongoing.

One phase is the upgrade of the food kiosks as well as to increase the number. That's largely complete, just a few more kiosks which will be done by the end of this quarter.

For phase two, which we have started a few months ago, we'll be expanding the retail footprint into the car park area. That's currently ongoing and will largely be complete by the third quarter of the year.

Most of the spaces have already been committed out, just a few more leases left to finish up. So this slide just gives you a few of the tenants that we have signed up over the current quarter as well as some of the asset’s AEI activities that are ongoing.

Moving on to Festival Walk. Festival Walk, so the shopper traffic has been up over 5.6%.

I think this has largely been contributed by, firstly, increased travel from China into Hong Kong, although that hasn't really translated into tenant sales. If you look at the Hong Kong tourist statistics, while the number of arrivals have increased, the spend by tourists, either those who have stayed overnight or are there only on a day trip, have decreased quite significantly from what they were doing pre-COVID and even against the previous year.

Tenant sales continue to remain weak. We do think that it's likely that this is starting to flatten out.

If you look at the outbound statistics for Hong Kong, that number actually is starting to flatten out. In the previous months over the past financial year, that could have been easily a 30%, 40% to 50% increase whereas over the last one month or so, that increase has been fairly muted.

So, the mall continues to improve the tenant mix. A number of new tenants that were brought in, as well as a number of pop-up stores that we have put through to the mall.

The mall continues to be very strong in running marketing activities to drive foot fall, and it remains very popular with social media-related events, as well as with the stars in Hong Kong. Okay, so we can come to the end of the presentation.

I hand it back to Li Yeng.

Thank you, Janica and Wee Leong. We are now ready to take your questions.

[Operator Instructions]. So first, we have Terence from J.P.

Morgan.

I just wanted to ask on Japan occupancies especially for MBP and Makuhari. Is this the low that we are seeing?

Any more vacancies expected for FY 2026?

FJM property, as we have announced and shared with the market, their tenancy will end in 2026. So in terms of valuation, we have taken it down.

In terms of the number, in terms of occupancy when you see the number, come 2026, there will be a drop due to Fujitsu. But valuation wise, we have taken majority of the valuation down already for the asset.

In terms of master lease, are all the master leases for MBP…?

We have two master leases that we shared with – two big ones, which is Seiko and Fujitsu. Seiko, we have already taken down.

Both of the assets, we have taken down the WALE. Occupancy is showing up already, or has shown up for the Seiko asset, which is now called MBT.

Okay? That's the building.

Now for Fujitsu, it’s 2026. Valuation taken down, but the occupancy, you will see it coming down in 2026.

In terms of the negative reversions, how should we expect reversions to trend for the overseas assets, especially for Festival Walk China and Japan?

I think if you look at our entire portfolio reversion, if you look at the whole portfolio, it's a positive 3, over 3 over percent and that is led by VivoCity. The rest of the overseas are in the single digit.

If we're talking about Hong Kong and China, we're talking about single digit. Then, right now, there is still a little bit of uncertainty, but I think we're trying to keep and trying not to expand this negative rental reversion beyond what we're seeing.

Finally, for me, I just want to ask on the capital distribution, this SGD 7.7 million, can I ask how much has been utilized and how much remains to be distributed?

Can you repeat your question again, Terence, please?

The SGD 7.7 million, I understand that there's a SGD 7.7 million capital distribution from the balance allowance from the divestment on Maple Tree Anson.

No, I think you got it wrong. We do not distribute any divestment gain on Mapletree Anson.

If you are referring to our footnote in the financials in the SGXNET on the allowance that is relating to Mapletree Anson, I think this is something to do with the tax because we used to claim capital allowance from Mapletree Anson and some of it has not been claimed. And under Singapore tax, you've got a claim off.

So it's a deduction from our DI and then we just adjust it in the DTC adjustment. It's in our profit, so we just adjust it to our DI.

So, effectively, we are not paying out anything. It's just a book classification.

We are not paying out anything.

Can we have Geraldine from DBS next?

I think VivoCity's valuation was a surprise. I was just wondering how much of the AEI that you have done is reflected in this valuation uplift?

Majority is due to operation. I think you see the rental reversion over the years, it has gone up.

So operations contributed majority of it, then with a portion of AEI and a portion of cap rate compression. But majority is operations-led.

Maybe one more. To drag it back to the trade war tensions, any expected tenant vacation or any talks of pre-term within the portfolio?

Not that we're aware of, but I think Wee Leong can give you a bit more color into the exact because I think, generally, we are not the first asset class that will be hit in terms of tension. But when there is uncertainty, all companies will be a little bit slower or a bit more cautious in their consumption of office space.

So I think we are expecting a slower decision making, but I think we will take the lead from what we see, how it all pans out with other sectors, then it will slowly flow down to our asset class. So I think Wee Leong will share a bit more on the specific markets that we're in and where we see our tenancies and how they are affected.

Maybe let's start with Singapore. If you look at our Singapore portfolio, and here we're talking about office MBP, we'll talk about retail slightly later.

So for office MBP, if you look at it, the majority of our tenants are in the IT sector, financial sector as well as we've got a fairly healthy portion of government tenants as well. Looking through the portfolio, we feel that the likelihood for softness is probably from the shipping and transport sector.

We saw this during the last round of trade wars in the 2017/2018 period where a lot of our shipping tenants actually had a bit of weakness and we had a number of non-renewals. Currently, it’s still early days.

None of the tenants have come to us with pre-termination requests. However, we have been in discussions with some of the tenants potentially for expansion of spaces, and at least one of them has come back to us to say that they will renew in situ rather than expand.

So we are seeing a little bit of slowdown in terms of their sector. It’s probably as much from uncertainty than it is from direct impact of the tariffs.

So moving on from Singapore, the country that is most greatly affected is likely to be China. Two assets who have quite different performances.

If you look at Shanghai, Shanghai is a business park asset, and the operations there are largely supporting manufacturing ops or supporting semiconductor-related activities. We, however, do have a number of U.S.

companies in Sandhill Plaza, and while they have mostly continued with us over the last few years, we are in close contact with all of the tenants. We do know that there will be some pullback.

Some of the tenants are looking at downsizing when their leases expire, but that's largely related to the slowdown of the economy in China rather than direct impact of the tensions. The Beijing office market is in some ways insulated, and that's largely because during the previous round of trade tensions, a lot of the large American tenants within our building have actually already left, and most of those vacancies have been backfilled.

So the Beijing market now is a lot more local. There are a lot more local Chinese companies taking up spaces in Gateway Plaza.

We haven't heard in particular from any other tenants about impact of the tariffs. Even when we touched base with our largest tenant, their feedback was largely more that the slowing China automobile market has been a bigger impact on them than the tariffs directly.

So far, for the Japan portfolio, we aren't seeing anything as well. In Korea, our tenants within the building are largely serving the local market, not so much export related.

So moving on to the two retail assets, I think in particular for Singapore, in terms of retail, usually, we do see the retail assets perform slightly stronger when there's a certain amount of uncertainty. People tend to spend less on luxuries and discretionary items whereas non-discretionary spending will usually improve.

And that will definitely be an upside for VivoCity where the majority of the tenants are, where we generally do not have luxury tenants. For Festival Walk, we do think that there should be some positive impact as well.

However, the larger picture really will continue to be that the Hong Kong dollar remains strong and the connection with China is easy. The connection to China remains fairly easy and there will still be an amount of spending which will flow through to Shenzhen.

As Sharon mentioned, we do expect the negative reversions to still be there. We still expect there to be negative rental reversions, but probably in the same range as we continue to see.

In general, when there is uncertainty, retail spending does flip more towards the discretionary side, and that does benefit both of our malls slightly because of the fact that they are not particularly high-end malls and are, in Festival Walk's case, located within a largely residential area and serving the consumption of the people located there. We do have that here in Singapore for VivoCity as well, and we do expect that the impact from tourism is likely to be more muted.

So the other point that our leasing colleagues are sharing is from their dealings in the market today, prospects are a little bit more cost conscious. So that's where I think we sit better today because our offices in Singapore are slightly decentralized, but near enough to town and of decent quality.

And pricing, there is a differential that will place us better Although everybody is a little bit more uncertain, they become more cost-conscious, and that's where I think our offices will be better placed.

Can we have Derek from Morgan Stanley next?

Just want to follow up on the divestment gains from Anson. So would you consider paying out divestment gains to short DPU, especially as you've mentioned pressures on DPU?

I think from the start, we did say that we are not distributing the gains. We're keeping it to improve our balance sheet.

At that time, our gearing was of a certain level and I think were successfully brought up to a super comfortable zone at 37. I think we will see along the way and assess future – if there is any potential future positive gains from divestment, we may consider.

But for Anson, no. We have decided that we will keep it to strengthen our balance sheet.

Maybe let me add on that $7.7 million that you see in the SGXNET. That relates to Anson's capital allowance.

So it's being taken off from my taxable income, so I have to do it through a capital distribution to balance it out. So we are not distributing any capital gain from the Anson divestment.

Could I also ask on the MPC Google backfilling progress, where are we at right now?

So, for the two floors that Google gave up during the previous renewal. We are currently still marketing the space.

There are a number of tenants who are looking at it, but the reality is the spaces which are large have very, very few tenants looking at it currently. We have been engaging the one or two potential tenants for at least three to six months already, and we are still working with them on when they can take over as well as what spaces they are finally going to take.

We had mentioned earlier, decision-making has slowed down quite a lot, and a lot of tenants tend to be a lot more cost-conscious going forward.

What is the percentage progress done?

For the two floors that Google gave up?

Yeah.

Currently nothing. But both floors are being looked at by tenants to be taken up in their entirety.

You spoke about tenants moving from CBD to business park, Singapore business park area, can you give a flavor of which industries they are from?

So we have a fairly wide range. I've got shipping companies.

I've got financial institutions. I've got the usual IT companies as well.

FMCG even. Not quite fast-moving, but definitely it's across all sectors.

When CBD rentals start to cross SGD 13, SGD 14, it becomes a little bit more uncomfortable for them in terms of taking out spaces. Most of the tenants will start looking at what's the more cost-effective solution.

In some cases, they will split offices, which we have seen, taking front office spaces in the CBD as well as taking back office spaces or mid-office spaces here. The type of supply in the CBD does help to push up rentals, and when that happens, more tenants will start looking at ways to rationalize the office spaces.

And just one last question. At VivoCity, what's the current occupancy cost and when will these double-digit reversions come normalized back to single digits?

I think 10 over percent of rental reversion is actually very, very high. Decently high.

And I think we are consistently being able to do so, but I think we have to be a little bit more muted in our actions going forward, depending on which are the leases that's coming up. So a lot of the rental reversions are due to changes in trade, changes in trade or improvement in tenancy type within the same trade.

So that's where the team has been able to capture such decent rental reversion. For example, we had one restaurant that was there with us for 10 years.

He was the bottom three and there was just a switch of a tenant to a better operating one. The rental reversion was a very decent jump.

So I think Vivo itself is least of my worry. I think we have seen that domestic spending will continue when there is a certain form of uncertainty in the market.

On top of that, we are also improving ourselves operationally with all the AEIs. I think if you have gone to Vivo recently, you have seen how we have reconfigured all the kiosks and the kiosk is increasing the numbers, removing our customer service office and also using common area spaces to better utilize the floor space to create [indiscernible].

The look, feel, M&E, flow, tenancy mix, even toilet provisions are all included in the full upgrade. The other AEI that we are doing, which is the conversion of car park and reconfiguring the space into retail, that will be quite interesting because that is the front of where the MRT ingress-egress is, straight to the mall.

So tenancies have been signed up successfully. It will be very nice, the whole look, feel, amenities will all be updated.

So I think this is VivoCity’s major plus point. We have a big space.

We have never stopped over 10 years in continuously upgrading the space, be it for revenue or be it for beautification and look/ambient spaces. So rental reversion, of course, the team will be very measured.

Where there is potential to move, they will move. But I think I cannot guarantee that we will all be doing 10% every year.

Actually, if you look at the market, 10% rental reversion consistently, I have not seen it in most of the other malls. I think VivoCity is a little bit one-off.

Occupancy cost is always hovering around 20. So while we move up the thing, we will still have to try to move the sales.

So this round, I think we are tracking retail sales, but we have not significantly over the retail sales index. It’s because we trash a lot of units at Basement 2.

When we trash the units at Basement 2, it means that we are not trading. So when we do the sales comparison, we do not remove when they are undergoing AEI.

So, the way MPACT does it is at ease. So we do not remove when we are doing AEI and calculate the sales on a per square foot basis.

So, technically, we are not comparing on a like-for-like basis, but we are still tracking retail sales index, even though we have trashed a lot of units for asset enhancement works at the Basement 2. So in short answer to you is we are still around the same occupancy cost, 20.

Next we have Brandon.

Can you comment a bit on BMW and TaSTe? For BMW, do you think that…

For BMW, he's very there. He's still in China office, occupying a major.

His lease is still 2028. BMW is still there.

And we did renew the lease about two over years ago in December, and the lease is still 2028. TaSTe is still there.

We have renewed the lease about two over years ago in December And the lease is still 2028. TaSTe is still there.

We have renewed the lease. So I think in terms of operations, they are quite stable as of now.

Does BMW have any preterm clause?

I think it's a fine contract. Nobody has a preterm clause.

Anything you want to pre-term, it must be negotiated. Not allowed.

You can negotiate with us, but not allowed in the contract. None of our contracts allow you to pre-term.

Only Japan. Because Japan is rolling leases, right?

So rolling leases, by nature, they are allowed to pre-term. The rest of the market is very similar to Singapore.

They cannot just walk away.

So I assume for BMW, they should remain?

They are there. I can just tell you that they are there.

There are still there.

There are many, many BMWs in the Gateway Plaza car park.

Just going back to Festival Walk, I think Wee Leong earlier mentioned that the sales has bottomed out. And as for the negative rent reversion, how long more do you think that could continue, especially given the current tariff war?

I can't really predict the general economy at this moment. Right now, everything is a little bit volatile.

It changes. But for retail itself, I think when you see the Hong Kong dollar slightly weakening, which is tied to the US dollar, I believe spending will be tilted back a bit more to Hong Kong.

I was told consumption is going on, but consumption has some leakage into Shenzhen. So, the Hong Kong dollar strength has some bearings to it.

So for me, I can't tell you when the whole world is going to change or when we're going to see the bottoming out. Now, is it feeling a little bit of pressure?

I think entire Hong Kong is. But a good thing about Festival Walk is, one, in terms of retail sales, even though it's negative, we are a lesser negative than the general Hong Kong retail sales.

So it means it is performing better than the general retail in Hong Kong for Festival Walk. So when will I turn?

A good first step that I will see immediately will be when the Hong Kong dollar weakens a little bit, against Chinese Yuan or whatever, then that's where you see the spending, I believe, will tilt back a bit for Hong Kong. But, generally, where is it going to start flying is a bigger economic question.

It's a bigger question in terms of where Hong Kong would lie as a financial sector, so that I think is anybody's guess today.

Just one last one on valuations in China. You've taken them down quite a bit this quarter.

Do you think that's probably the worst that we have seen?

The overseas asset, is it a huge drop? It’s a reflection of the operations.

If you talk about a really huge drop like 30, 40, no, no, no, it’s not in that scale. We have not dropped in that manner.

I'm not saying that overseas drop is directly linked to the operations. Hong Kong dropped.

There is a portion of cap rate expansion. Depending on where the operations go, I think China, there will still be a little bit of weakness in terms of valuation.

Hong Kong itself, majority of the drop is due to the cap rate. Now, where the cap rate will continue to expand, it will depend on where the valuers place it at the end of the time.

This round, they did a 10 bps expansion. So it may continue.

We're not sure. But we see ourselves in terms of our financial strength today after selling Anson and all, plus our Singapore holding up strongly, our total WALE actually has gone up by the strength of our 60-over-percent portfolio which is helped by Singapore.

Singapore has gone up, and its 60-over-percent of our portfolio, it brings our gearing to about 37-ish. So it won't be able to withstand any shocks in terms of any major cap rate changes.

I'm not saying there will be any major cap rate changes, but if there is for China or greater China, our portfolio will be able to withstand that. I think our financial strength today can take us to withstand the next one, two years if there is any changes in cap rates.

So valuation, even if it drops, it will be a reflection of the softening of operations in China. But we will be able to withstand based on our current capital structure.

Xuan, good morning. Over to you now.

Can you explain a bit about the cap rate compression for Singapore, especially for MBC and Vivo?

Vivo itself, if you look at it, our running cap is high 4s. So the marginal cap rate compression, if you look at the past deals, is tighter than what it is.

The valuers really have no choice. They really have to give it to me because there was transaction.

But majority of Vivo's valuation gain is operations. It's operations.

The 10 bps doesn't get me to that SGD 600 million. SGD 500 million, SGD 600 million.

Okay? SGD 500 million.

It is majority the operations. Now, MBC is due to transactions.

They have done a mixture. Typically valuers will have to take in transaction caps, and they will be a bit measured in terms of maybe adjusting market rents down a bit.

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

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

Currently, I think rates are all going down or went down and then quite stable these few days. I would think it will be around this level, mid-3s, for the next 12 months.

Would you be able to share what's the average expiring debt cost for the next year?

Actually, average expiring debt cost for the next year is not quite meaningful because some of it we hedged, some of it we swapped. So what I can tell you is for this coming year, financial year, the fixed rate debt is actually at about 2.6%, 2.7% on a blended basis.

So when that gap rolls off, it will be reverted to floating rate. And the majority of the fixed rate debt that is expiring in first quarter are all below the current market rate.

So there will be some increase. But we are also talking to the bank to renegotiate the margin and doing a lot of whatever things that we can do within our portfolio to bring down the cost of debt.

So that cushion, the impact of when lower rates, higher hedge roll-off, it will impact in our books. So at the same time, we are also seeing margin going down because we have been going back to renegotiate.

Hopefully that can offset each other and then we can keep it at about mid-3s. Continue to be at mid-3.

Derek from DBS. Over to you, Derek.

I just have two questions. First one is on WALE.

Could you give us a bit more color whether this year for the retail office business type of expiry, are you expecting any churn or downsizing? Maybe some thoughts around that given the current climate.

So that’s my first question. My second question, back to what Tan Xuan has asked right, so I think, Janica, you have kept interest rates pretty stable and you still guiding for flattish.

I'm just wondering whether are you being a bit conservative on that front because you have you have moved Hong Kong to China and China's going down, Singapore's going down.

Thank you for doing my job. Thank you for asking that question to my CFO.

Interest rate is more important.

So I was just wondering maybe what you think it will be.

3.5 is mid, 3.4 also mid, 3.6 also mid, right?

But, essentially, we should expect that your interest rate should have dipped [ph], that's how we should look at it, right?

No, no, no. We do have interest rate swap at high rate at the moment and it's going to only drop off next two years, up to March 2027.

So when that stays, the interest rate cannot go down too much. After March 2027, when our high interest rates swaps expire and we roll then, you will see that.

It depends on the market negative. If the market is the same as today, then you will see it slowing down.

Then I can safely tell you it's a low 3. But at the moment, not yet.

I've got to gradually manage the high interest rate swap that we have in our portfolio. Keep it to the mid 3s that I promised you.

You mentioned that if interest rates remain at current level, you potentially could go in at low 3. Is that how we should look at it?

What is low 3%? It might be 10%, 15% lower than what we have now.

Put it that way. If assuming all my debt reprice today and based on today's market rate, it will be around 3.3%, 3.2%, 3.3%.

I've got high interest rate swap on my portfolio.

I know. You won't be too bullish.

Let me just comment quickly on the weighted average lease expiry. Generally, for retail leases, we aren't seeing any significant changes to the lease durations.

Larger tenants are still signing slightly longer leases. The majority of retail leases are still 3 years.

We still have a small component of short-term leases within our portfolio that's largely unchanged. The bigger changes will probably be on the office side.

For office, if you look at our previous quarters and in fact going back a few quarters, you'll see that our office WALE has come down slightly. That's largely due to the passing of time where we have quite a large chunk of office leases expiring in FY 2025 and FY 2026.

And because those leases largely haven't been renewed yet, their slightly shorter durations have brought down our WALE slightly. Looking at the negotiations with the office tenants currently, we do see a lot of the tenants where previously they were assigned five-year leases are now largely more looking at the three-year durations.

I still have five-year renewals. I still have four-year renewals as well, but the tenants that previously had five-year leases are potentially asking us for three years rather than five years.

So the office bill will come down slightly. In terms of the second part of your question, in terms of where you're asking about downsizing and the like, unfortunately, we do have a little bit of that.

You mentioned that the market remains uncertain. The ability for tenants to continue to hold large spaces, especially in the current uncertainty, is not very high.

While most of the tenants, especially our larger tenants, have retained all of their spaces, that's not the case for all of our tenants. A number of tenants have actually given up spaces.

Google was a good example last year. We still have a few of these tenants going forward that are asking for a slight reduction of space upon their renewals.

But for these large tenants, it's not a huge amount of space. We're talking about maybe 5%, 10%, at best 20% of space being given up and it’s only for a small proportion of the tenants within MBC, in particular.

If you go to Shanghai and Beijing, then that story becomes quite different. For Shanghai, we do have tenants who have been asking for 50% reduction in spaces, but again, that's still a minority.

The bigger challenge in Shanghai actually has been non-renewal of tenants where because the market rentals have been low and because there's a lot of supply within the market, we do have a lot of churn within the tenant mix. Although the property has done fairly well, we have brought the occupancy up from where it was.

It was actually high 70s about a year ago. We are now at about 86% thereabouts for Shanghai.

We have a little bit of the same issue in Beijing as well, where we do have tenants who have given up 50% of space. And there is also a little bit of competition between their lots for tenants.

But for that building, we have actually managed maintain our occupancy at a quite healthy level, also around the mid-80s mark.

Just one more. For MBC, right, are we going to still see stable or negative reversions or just one-off negative?

I'm just curious.

Market rentals have remained fairly stable, all around the mid-6 range. Where the reversions will come is depending on which tenant is the one that is being renewed and what their rentals were.

Within the port, there are a number of tenants where the average rent is actually quite a bit higher than 6.80. So when those leases revert back to market, unfortunately, there will be a little bit of negative rent reversion.

Maybe, Derek, I’ll give you another perspective. Most of our tenants have been with us for, what, 5 years, 10 years and all.

If we were to switch out a tenant, let's compare switching out a tenant and a negative reversion. Just for example, 8% rental reversion negative may sound like a catastrophe.

But if you look at what does it translate into the number of months for a lease term, we are talking two over months. Would I be – on a cash flow basis, I may be better off as compared to switching another tenant because switching another tenant, the likelihood of it being back-to-back and not giving rent-free is absolutely out of this door.

In a typical business, leases we sign, [indiscernible] rent-free and the handover unit is never so perfect. So I think I always say that for business plan and all, I really prefer them to stay.

My cash flow is definitely better. And anything that is single digit is nothing to worry about.

It's even better than I switch tenant and get a positive reversion. That is from my operations perspective.

Maybe I'll just share the other point that leads to your question pertaining to our lease expiry. The term to maturity in terms of our leases, the few of our top 10 by virtue of less of time they are coming closer.

So good thing is one of our top 10 tenants in MBC is renewed. It will improve the lease expiry profile and have de-risk for MBC.

So I think when you look at rental reversion, especially for business park, changing a tenant, you see the percentage. Typically, we have to give minimum three to four months plus a certain downtime because we cannot back to back.

Today, I take back the key. Tomorrow, I hand out the key to another tenant.

In terms of cash flow impact, it is worse in my pocket on that basis. So if I can renew and the rental reversion is slightly negative, I'm more than happy to do so because overall, on a cash flow basis, I'm better.

Can we quickly move on to Jonathan?

Lots of leases expiring for the next two years. You have mentioned potential weakness in Shanghai and Beijing.

Are there other markets that could also have potential weakness in terms of downsizing or non-renewal? And maybe you can share in terms of quantum how some of that weakness could be.

A second question relates to, I think, an earlier question on occupancy cost for Festival Walk. I think we missed out answering that part of the question.

In terms of significant risk in the portfolio, I think some of these, we have really flagged before in previous quarters. One of the bigger risks within the portfolio actually is the non-renewal of Fujitsu at the FJM building in Makuhari, Japan.

So when that occurs after the end of this current FY, then there will be a drop in occupancy for Japan portfolio and the corresponding reduction in revenue and property income. Moving on to other geographies, Korea is fairly stable.

Actually doing quite well now. The buildings are up to 100%.

For Hong Kong, the office component has got a small amount of vacancy. For the other tenants within the building, some of the leases were signed quite recently and especially for the anchor tenant at the Festival office that extends all the way out to 2030.

If we move on to Singapore, mTower will have a little bit of occupancy reduction towards the end of this current FY. One of the tenants had said that they were moving out.

Actually, they have said that they are moving out for more than two years already, moving to their own use building. For MBC, we are in negotiations with the majority of the tenants.

We have really started negotiations with the majority of tenants which are expiring in the current financial year. And for the majority of them, they have not indicated that they are downsizing.

There is one tenant that potentially may and we are still working through the details with them. But that downsizing is not significant.

It's not like a 50% reduction of space. It's probably closer to a 20% reduction.

I think the last question that you had was on the Festival Walk’s occupancy cost, and that's also in the 20-ish-percent range. Fairly consistent for what it was in the previous financial year.

Next we have Joy.

A few questions. First of all, just on MBC.

You mentioned about few non-renewals. Can I just get a bit of a sense as to the reason of non-renewal?

Those are the previous financial years. So, Google gave up two floors, right?

Then you know that FJP…

No new ones.

No new ones, okay.

No new big ones. There are small, small ones.

Those like half floor, one floor tenants, which doesn't impact the portfolio that significantly.

For those small ones, they're moving out because of costs?

Some of them are moving out because of costs. There's nobody that said that we are closing down the Singapore operations and therefore we have to exit MBC.

We haven't heard that in quite a while. But there have been some which are consolidations where they have three or four different offices and they were looking to consolidate.

Like I mentioned, for FJB, that was largely cost as well as the expansion issue. Then there were a few other tenants which were largely driven by cost and consolidation.

And the occupancy rate, I can take it as the current physical occupancy rate, right?

For MBC?

For MBC, yeah.

Well, the difference between our committed and physical occupancy is very small.

Second one on Vivo, you mentioned that the valuation is largely on operational. So, does that mean that once your AEI is completed, we can expect another one round of meaningful reval?

If you see the MPI going up, which is typically the reflection of the rental reversion, then that will slowly be taken into the valuation. But they will always deduct the capital expenditure that we spend on the mall too.

If it goes up, it will go up. Yeah, if it comes down, if he’s the operator, it will come down.

But if you say big cap rate changes, big cap rate changes are unlikely. Because there is no deal, so on that front, the valuables are unlikely to move.

Sharon, you wrote on your press release “pursue targeted opportunities.” Could you just elaborate a little bit more on the targeted opportunities?

And I guess, also on divestment opportunities in other markets as well.

I think when we talk about opportunities, very simply, without reading my press release, very simply, we always review the constitution of our portfolio. Now if there is opportunities to sell and we see that there is a reason to sell, we will consider doing it.

So I think what we have done last year at Anson is an indication of capitalizing on certain opportunities when we see it come, when the opportunity comes by. So we are not here to hug assets.

If we find that there is good purpose for doing so, we will continue. So I think we're just sharing that we'll continue to do whatever that we said, which is to recycle where possible.

But of course, recycling for commercial is a little tougher because our asset size are chunkier. But that doesn't stop us from thinking of how to dissect and capture the opportunity when it comes up.

So I think maybe I'd like to share for the whole of the year, just in summary, what have we done well, what are we worried about, what have we not done well? Maybe I talk about what we think that we have done well.

Number one, the valuation increases well supported by operations is a definite positive. 60 over percent of our portfolio is stable.

In terms of MPI contributions, Singapore is 60%. It's about 60%.

And that is a very, very stable piece. And that leads to bringing down the worries of last year of our 40% gearing down to 37%.

Now, what does this 37% mean to me? 37% mean to me is, number one, investors stop nagging about my gearing.

Two is I have enough buffer to withstand any shocks in this unstable market. Right now, globally, I would think that there's some shakes up.

How you cannot in terms of cap rate, I think we still don't know. Certain parts have shown signs of expansion in cap rate.

So, valuation, I think we've done well, led by better operation. Two, the other thing is we also actively recycled which capitalizing on Anson with a gain and lowering our gearing also.

Third is our two retail malls. You may say that Hong Kong is weak, but I would say that we have beat retail sales.

We are better negative than the general negative in the market. So on that basis, I would say capital structure is stronger.

We have done what we can. Operationally, we push what we can, but we are not immune from the slight weakness in the China market and Japan assets that we have.

So where are the downs? Japan, I think we have said enough about Japan, of our issues with the anchor tenant.

We have actively taken down our valuation. So, the books have already registered the leaving of our two master leases.

And Japan is about less than 10% of our entire portfolio. So what we can do we have already done.

Control the OpEx, control the CapEx, bring down the WALE. Japan, we have done what we can as a manager.

Hong Kong, moving to a Hong Kong retail. We kept our occupancy high.

Although the whole market is a bit weak, we push on to make sure that our occupancy is capped. Rental reversion, a bet that is a negative, is the lesser negative in the market.

Where we see the turn is there is still consumption. Hong Kong dollar, if it weakens, it will be a benefit to Festival Walk.

But generally, we are not performing behind Hong Kong retail market. China itself, everybody hear a lot of bad news, trade tensions, whatever.

It's not new to us. It's not new to China at all.

So in terms of operations front, our stability comes from occupancy. If you see our occupancy, even though it has dropped, it's way ahead of market.

We may be in the 80s, market is 70s. So I would say that, although we are negative, same story.

We are performing better than the market. If you ask me where our focus is, our down points are our overseas softening, but we are outperforming the market, be it on the occupancy or be it on the sales front or the retail part.

Now, as a manager, I cannot control the macro. We can control our ops.

We can control our costs. We can control our spending.

and we can control and push certain AEI plans to gain further revenue when we see opportunities like for Vivo. So I think generally that sums up for what we have done for the year.

I guess, going forward, next year, probably acquisition or sizable acquisitions to [indiscernible]. Is that fair to say?

I think, right now, depends on what acquisition name and the size. Today, I would say Singapore acquisition, far and few.

Our gearing is 37. I think most of the acquisitions for the last 10 years, you need a bit of gearing to push up for revision.

Because your underlying portfolio that historically is actually higher yielding than whatever that is selling in the market. So if we are strictly looking at accretion and not the quality of the asset that you're bringing in, typically, higher quality means lower yield, then you will need gearing.

I would say that if you want strictly accretion, it will be slightly tougher. But I am not against the idea of improving the quality even at neutral.

Sometimes we are too fixated on certain things. And I think what I'm saying is I'm okay even with neutral if it’s a higher quality asset.

And in that scenario, would you be happy to trade, let's say, partial state of your sizable assets for those?

Which one? I think we have always shared with the market Vivo and MBC is synonymous to MPACT.

As of now there is no plans of any divestment. They are core to us.

But if you say others, I do not know what you mean significant. Others, yeah, we will consider if the price is right.

Last, we have Rachel from Macquarie.

Finally, just very quick questions. Firstly, Fujitsu non-renewals, how much would it form in your lease expiry for this year?

No, next year, 2026.

2026. So, the 12.7%.

It won't show up this year?

2026 or 2027?

No, it's 2026. So out of that 12.7%, Fujitsu, it may be about 2%?

2 and a bit. It should be a little bit less than 2%.

And one more is Japan. Your Japan asset, do you need to do AEI or anything or any color or anything?

So for the Japan asset, we do do a little bit of AEI. The buildings, in particular, the Makuhari ones are a little bit old.

So we do have plans to do more cosmetic type of work to just improve the basic outlook of the building. That and the fact that, like I said, because they are old, there will always be upgrades and replacements that need to be done over the course of the life of the building.

But demand is still soft, that area. The Japan leasing demand, is it still soft or is it...?

I have to split it between the Makuhari assets and the rest of Japan. So the Makuhari leasing demand actually has been improving slightly.

We not talking like leaps and bounds but, at the very least we’re able to sign a number of leases. We do have a little bit more demand.

In the past, we never saw tenants that were more than 50, 60 zubo [ph]. We actually now have tenants that are looking at spaces at the 100, 200 zubo range.

So there is a little bit more interest in the Makuhari market. The leasing demand for the rest of our Tokyo assets still remains strong.

Even when there are non-renewals, we are generally able to backfill the spaces, either even before the tenant leaves or not significantly long period after the tenant moves out.

One last one. Share buyback, would you use the capital gains or the divestment gains to do share buyback?

My divestments are used to [indiscernible].

I think we have the mandate. Previously, we didn't.

We are able to do so, but doesn't mean that we will do so. We will balance between keeping our gearing to make sure that – because every SGD 100 million is a 0.6 effect, and are positive to the CPU, no doubt.

But we will balance that and decide along the way. But as of now, I would say, immediately, no.

But we have the capability of doing so. It’s a standby.

I think if I may add on, if we need to, we can do that. We will do.

A final question from our online participant. He is asking if you could share a bit more color on Japan portfolio and its expiry in the coming year.

I believe the question actually refers to – he’s asking about lease expiries outside of the three Makuhari assets. I’ll answer it that way.

For the rest of the assets, the largest chunk is actually our HP buildings and that’s got – completes the lease all the way to 2030. For the remaining assets, they are always expiring leases.

I think the most significant one is where we have a single-tenant building at TSI at Ikebukuro. That asset, the lease expiry is coming up and we are in negotiation with the tenants.

So far, we’re still waiting for them to come back to us, whether they're going to stay or going to give up a little bit of space or going to be vacating entirely. That one is still going progress.

In any case, all of these assets are fairly small. In the case of Ikebukuro, it won’t be actually significant.

In short, what will be material will be HP. Hewlett-Packard lease.

And that is to 2030. The rest is part and parcel of the business and individually very, very small.

But if I say anything that will be significant, it will be HP lease. That lease is to 2030.

Thank you, everyone. I would like to thank everyone for finding time to join us today.

If you have follow-up questions, feel free to reach out to us. Anytime, we’ll be happy to take them on.

Thank you so much and have a good day ahead. Goodbye.

Thank you.

Thank you.