Good morning everyone. Thank you for joining us today for Keppel REIT's First Half 2026 Financial Results Briefing.

I am Charmaine from the Investor Relations team. Before we begin, let me introduce the management team on this session.

We have Mr. Chua Hsien Yang, Chief Executive Officer; Mr.

Andy Yue, Chief Financial Officer; Ms. Chiu Xian Lin, Head of Investment; and Mr.

Jason Chua, Head of Portfolio Management. We will start the briefing with a presentation by the management team, followed by a question-and-answer session.

I will now hand over the time to the CEO. Hsien Yang, please.

Thanks, Charmaine. Good morning everyone.

Thank you so much for joining us today. I think before we move into the results, allow me to provide a quick update on the operating environment.

Across our key markets, prime office demand has remained resilient, supported by a number of structural demand drivers including technology and innovation-led companies, continued flight to quality, leasing activity, and also growth from key sectors such as banking and finance, wealth management, and professional services. At the same time, flight to quality remains a key theme across many of our markets.

While businesses are taking a more measured approach to leasing decisions amidst the broader macroeconomic environment, they continue to prioritize well-located, high-quality office buildings that offer strong workplace experiences. The growth of AI and its implications for the office sector continues to be widely discussed.

AI is likely to support office demand as its adoption drives business growth, productivity, and also innovation across a broad range of industries. As businesses adapt to new technologies and evolving workplace requirements, they continue to prioritize high-quality office environments that support collaboration, knowledge sharing, and talent attraction, reinforcing demand for premium assets in prime locations.

Together with the ongoing flight-to-quality trend, these structural demand drivers continue to support demand for prime office assets. Against this backdrop, we continue to actively manage our portfolio to benefit from these structural demand drivers and the preference amongst tenants for premium, well-located office space.

I think we have shared since earlier this year that aside from focusing on asset management, we also be working on potential divestments. I'm pleased to share that this morning we announced that we have entered into an agreement to divest our interest in KR Ginza II in Tokyo.

The sale price of JPY 11.5 billion for 100% interest in the property represents an attractive 38.4% premium to the property's purchase price in November 2022 and a 9.7% premium to the property's valuation as at 10th of July this year. Keppel REIT is divesting its 98.47% stake.

Keppel Japan, which owns the remaining 1.53%, is also divesting its stake. The buyer is a listed real estate company in Japan.

This divestment demonstrates our ability to identify strategic investment opportunities and unlock value at the right time. We believe that the timing for this divestment is opportune, especially given that the exit cap rate is attractive, and the current all-in interest rates in Japan are actually the higher than the cap rate based on the selling price.

This divestment allows us to crystallize value and reduce our portfolio gearing, reinforcing our commitment to delivering sustainable long-term unitholder returns to our shareholders. Moving on to the 2026 key highlights for the first half, NPI rose 13.1% year on year, driven mainly by contributions from Top Ryde City.

Excluding Top Ryde, the NPI increased 2.5% year on year, reflecting continued growth across our existing portfolio. Share of results of joint ventures was 37.2% higher year on year, mainly due to the addition of 1/3 interest in MBFC Tower 3.

Excluding the acquisition, the share of results of joint ventures would have increased 11.6%, largely due to higher rentals and also lower borrowing costs. Distributable income from operations grew 25.2% year on year, driven by contributions from Top Ryde and the additional 1/3 interest in MBFC Tower 3, as well as the improved performance from our existing portfolio.

Excluding contributions from Top Ryde and the MBFC Tower 3 acquisitions, distributable income from operations increased approximately 4% year on year, reflecting positive organic growth across the portfolio. As at 30th of June, our leverage stood at 40%, weighted average cost of debt was 3.27% per annum, and total borrowings on fixed rates was 62%.

Assuming the proceeds of KR Ginza II sale are included in the gearing computation on a pro forma basis, the gearing will be at 39.6%. The portfolio's resilient performance reflects the strength of our Singapore portfolio and growing contributions of Australia, supported by active asset management and strong leasing execution across both markets.

As at 30th of June, on a portfolio basis, our committed occupancy remained high at 96%, and we achieved a strong rental reversion of 12.8% for this quarter, with the Singapore portfolio recording approximately 10%. The portfolio WALE remained long at 4.5 years, and the WALE of our top 10 tenants was at 8 years, reinforcing our income visibility.

Through proactive leasing efforts, we have committed over 1.1 million square feet of space during the period. I'll let Andy bring you through the key financial highlights next.

Thank you, Hsien Yang. In the first half of 2026, property income and net property income increased by 16.7% and 13.1% year on year respectively, and this is mainly due to the contribution from Top Ryde City.

Excluding Top Ryde, the existing portfolio also performed better as a result of higher occupancy and stronger AUD, Australian dollar. Share of results on joint ventures increased 37.2% year on year, mainly due to the additional 1/3 interest in MBFC Tower 3, as well as higher rentals, lower borrowing costs, and stronger AUD for the existing portfolio.

Borrowing costs increased 5.4% year on year, and that is due to the drawn loan drawdown for the acquisition of Top Ryde, as well as MBFC Tower 3 in the fourth quarter of 2025. This was partially offset by the lower interest rate during the period.

Driven by stronger portfolio performance and contribution from acquisitions, distributable income from operation increased by 25.2% year on year to about $119.6 million. Excluding contribution from Top Ryde and MBFC Tower 3 acquisitions, DI from operation increased approximately 3.7% year on year, and this reflects the quality and resilience of the portfolio, which continue to deliver organic growth through active asset management and leasing initiatives.

Including the anniversary distribution, distributable income for the period was $129.6 million. While this reflects a solid first-half performance, the period's include contribution from non-recurring items mainly due to lease pre-termination payments, as well as a stronger Australian dollar.

DPU for the first half of 2026 is 2.61 cents, compared with the 2.72 cents in the prior period, with underlying earnings growth partially offsetting the impact from dilution from the enlarged unit base during the distribution period. On slide 11, you can this shows the distribution timetable.

Distribution will be paid to unitholders on 15th September. Next, for balance sheet, total borrowings and total liabilities decreased 14.8% and 21.1% respectively from 31st December 2025.

The equity bridge loans which were obtained to temporarily fund the acquisition of our additional 1/3 interest in MBFC Tower 3 were fully repaid in full on 20th January 2026. Adjusted NAV per unit as at 30th June is $1.22.

Next, slide 13 outlines our key capital management metrics. Weighted average cost of debt was 3.27% per annum for the first half of 2026, and this is in line with our guidance for weighted average cost of debt for 2026 to be in the range of 3 to 3.3%.

Note that compared to the first half, it went up and that's mainly because the first quarter, sorry, note that it went up from the 3.16% reported in first quarter, and that's mainly due to first quarter having the equity bridge loan in there. I believe we disclosed during the first quarter as well that excluding that equity bridge loan, it is about 3.7% as well, 3.2 3.27%.

We remain focused on proactive capital management and will continue to evaluate opportunities to achieve favorable outcomes as we manage our refinancing requirements. Aggregate leverage was 40%.

Fixed-rate borrowings and sustainability-focused funding account for 62% and 80% of our total portfolio debt respectively. Interest coverage ratio was 2.7 times as at 30th June 2026.

Next, in terms of our debt maturity profile, we have completed the majority of our 2026 refinancing requirements and are in advanced discussions for the remaining portion. Consistent with our proactive approach to debt management, we typically engage lenders 6 to 9 months prior to the debt maturity and expect to commence discussions relating to our 2027 requirements in due course.

Following the acquisition of MBFC Tower 3 in December 2025, we have made good progress on the planned conversion, including the necessary tax and legal workstreams. Perry Place submission to IRAS are largely completed.

We are working through the remaining processes and will provide further updates as appropriate. With that, I will now hand the time to Jason, who will walk you through our portfolio review.

Thank you, Andy. Slide 16 shows Keppel REIT's portfolio breakdown as at 30th of June 2026 by geography.

Singapore remains Keppel REIT's largest market at 78.7%, while Australia, South Korea, and Japan are at 18.4%, 2.2%, and 0.7% respectively. We maintain high portfolio committed occupancy of 96% for the quarter, mainly driven by a higher committed occupancy within our Singapore portfolio.

This was offset by a lower occupancy at some of our Australian properties due to anticipated downsizing. Committed occupancy at Top Ryde declined slightly quarter on quarter, and this is expected as we continue to work with our partner to refresh and optimize the tenant mix.

The leases we have signed recently have been secured at improved rental rates, which are above underwriting, reflecting healthy leasing demand at the asset. At 8 Exhibition Street, we continue to actively engage prospective tenants and pursue opportunities to backfill available space.

While leasing activity remains encouraging, market conditions in the Melbourne office market remain competitive and may result in some near-term occupancy pressure. Slide 17 provides a breakdown of our performance by geography.

Attributable NPI for our Singapore portfolio increased 23.5% due to the additional 1/3 interest in MBFC Tower 3 and higher rentals. At our Australia portfolio, NPI increased by 21.2%, mainly due to Top Ryde, increased contribution from recently commenced leases at Pinnacle Office Park, and a stronger Australian dollar.

The decrease in the attributable NPI for our North Asia portfolio was due to a lower occupancy and a stronger Singapore dollar. Slide 18 gives an overview of our leasing performance.

80% of our leases committed during the first half of the year were at our Singapore properties. New leasing demand and expansions were primarily driven by tenants from the banking, insurance, and financial services sector.

We continue to maintain a well-spread lease expiry profile. The weighted average signing rent for our Singapore CBD office leases was $13.14 per square foot per month in the second quarter.

In comparison, the average rent for the remaining leases expiring in 2026 stands at $12.24, which is below both our signing rent and CBRE's second quarter 2026 average core CBD Grade A office rent of $12.50 per square foot per month. We have 6.4% of leases by attributable gross rents due to expire in the second half of 2026, which are largely concentrated in our Singapore CBD assets.

Leasing demand remains healthy, and we continue to actively engage with tenants ahead of upcoming lease expiries. This slide highlights the strength of our tenant base with a diversified mix of reputable blue-chip corporations and government agencies contributing to portfolio stability.

In April this year, we completed the lobby upgrading works at Pinnacle Office Park, including a new business lounge and refreshed common areas, enhancing the tenant experience and fostering greater workplace collaboration. These upgrades are expected to support tenant retention and leasing efforts by further improving the property's competitiveness within its submarket.

During the quarter, ESG initiatives included kitchen workshops at Top Ryde, conducted in partnership with retail tenants to promote community engagement and hands-on learning, as well as a food donation drive at 255 George Street in collaboration with OzHarvest, Australia's leading food rescue organization. In Singapore, Gourmet Park was launched at Ocean Financial Centre to foster community interaction and enhance the workplace experience for tenants and visitors through curated food and lifestyle offerings.

In June, we obtained the BCA Green Mark Platinum Super Low Energy certification at MBFC Tower 1 and 2, Marina Bay Link Mall, and One Raffles Quay. With this milestone, all of Keppel REIT's Singapore properties have attained this certification, reinforcing our leadership in sustainable real estate and low-carbon building operations.

These efforts also help to optimize the energy consumption, supporting cost efficiencies and enhancing the long-term resilience of our portfolio. 2 Blue Street also achieved the highest 6-star energy NABERS rating, highlighting its excellence in energy efficiency and sustainability.

I will now hand the time to Xian Lin, who will go through the market review.

Thank you, Jason. The next few slides provide a snapshot of market conditions across Keppel REIT's key operating markets.

In Singapore, average core CBD Grade A office rents rose a further 0.8% quarter on quarter to $12.50 per square foot per month in the second quarter of this year, representing the sixth consecutive quarter of growth. Occupancy remained high at 96.7%, reflecting continued landlord-favorable market conditions.

The tightening market conditions extended beyond the core CBD, with vacancy in decentralized locations declining sharply from 5.6% in the first quarter to 3.6% in the second quarter, partly due to the withdrawal of HarbourFront Centre from the market. The Shaw Tower redevelopment was completed in July this year, with no further supply expected for the rest of the year.

With limited upcoming supply and no significant completion projected through 2027, market dynamics are expected to be positive for landlords. Key real estate agencies are largely in consensus, with Singapore Grade A office rents in the CBD forecasted to grow at up to 5% year on year in 2026.

In Australia, JLL reported that prime Grade office occupancies improved in the Perth CBD and remained broadly stable in Sydney CBD and North Sydney. While occupancies in the Melbourne CBD and Macquarie Park moderated quarter on quarter, prime gross effective rents continued to trend upwards, reflecting ongoing demand for quality office space.

In the Sydney CBD, prime gross effective rents increased by 8.3% year on year, from $1,048 per square meter per year to $1,135 in the second quarter, highlighting the resilient demand for quality office space. In Australia's retail market, household spending increased 1.3% in May, supported by growth in all nine spending categories.

Spending on discretionary categories as well as clothing and footwear remained robust during the quarter. On the supply side, new supply of regional and sub-regional retail in Sydney remains below historical levels, with future supply largely driven by upgrades and expansion of existing shopping malls.

In Seoul, rents continue to trend upwards, with net effective rents for CBD Grade A offices rising 2.8% quarter on quarter in the second quarter of this year. Occupancy remained healthy at 87.7%.

The Tokyo market continued to perform exceptionally well, with net effective rents for Grade A and Grade B offices increasing 6.9% and 4.8% quarter on quarter respectively, reflecting sustained demand for office space. Occupancies remained high at approximately 99% across both segments.

That concludes our presentation. Thank you.

Thank you, Xian Lin. We will now take questions.

For analysts who are joining us on the Teams platform, please click on the raise hand button if you would like to ask a question, and wait for our cue before you unmute yourself to pose the question. For the benefit of all participants on today's call, please limit yourself to three questions.

If you have more questions, please re-enter the queue. For those joining us online via the webcast platform, please type your questions via the chat box provided.

We can start with the first question from Terence from J.P. Morgan.

Hi, morning, Terence.

Hey, morning, Hsien Yang and team. Congrats on the good results and on the Tokyo divestment.

Maybe just two questions from me first. Firstly, on the divestment, can we ask on the use of proceeds and are there other properties that would or could qualify for asset recycling?

Secondly, on acquisitions, another REIT has actually said that they may be open to divesting their 1/3 stake in ORQ. Would like to understand if Keppel REIT could potentially exercise their right to acquire the property.

Thanks.

On the divestment first. This asset was 100% funded by debt, the aim so far we're looking to do is to pare down debt, not looking to redeploy any of the proceeds for new to check acquisitions.

There is one other asset that I've shared before, which is our asset in Korea. We could potentially look at a divestment of this asset also given that we bought in at quite a good price.

If we were to sell it today, the price would actually be relatively attractive. This is the only other asset that we could potentially sell.

That's on the divestment. Then in terms of investments, I'm not sure what Suntec is thinking about in terms of divestments.

They have not spoken to me at all about potentially selling any of their assets. At this point in time, we are not doing any work.

I've also shared with you that this year, the focus is on divestments, not on investments for the time being. That's something that we can of course always look at if they approach us.

As of now, they have not spoken to us and not spoken to them, too.

I guess if they were to actually say that they wanted to divest, would this be something that you could consider and potentially if you were to acquire that one your equivalent stake or of that 1/3 stake in ORQ, would that be accretive?

Of course we are a 1/3 owner of this asset, right. Based on the information that we have on this asset, a price at valuation, if you ask me, would not be very attractive at this point in time.

Of course, you will need to do a bit more work, but if you're just asking very high level, if there was an offer to sell this asset at the current valuation, at the current yield, I don't think that is something that would be very interested to look at.

That's great. Thanks so much.

Okay.

Thank you. Next up we have Andy.

Hi, morning, Hsien Yang and team. Can I just check on the NPI margin?

It compressed by more than 2 percentage points. Just wondering how much of this was mostly driven by Top Ryde or were there some other reasons, given that we did see increases in utilities and repair and maintenance?

Just a follow-up on that, for Top Ryde, 67% NPI margin, can we consider this as a stabilized level, or is there some room for improvement going forward?

I think the NPI margin depends a bit like you also mentioned, things like repairs and maintenance, some quarters is a bit higher, some quarters is a bit lower. There will be some fluctuations, and a 2 percentage points is not really that large.

In terms of Top Ryde, it's the same thing, right? It's all like what I mentioned earlier, there could be a bit of fluctuation between quarters, but you can sort of take this as relatively a stable level that you can look at.

Thanks. In terms of the rental reversions, do you mind just giving us the breakdown between Australia and Singapore for both second quarter and first half?

Didn't I share just now already in terms of rental reversion?

Sorry, I missed the earlier part. Was there a breakdown given between the two markets?

For the quarter, for second quarter, the rental reversion Oh no, this is for first half. Our rental reversion is 12.8% for the first half, and then of which Singapore is around 10%.

For Australia?

The Australia is because Singapore is 10, the rest of it basically comes from Australia, Australia is a lot higher than that. I don't have the exact number, but it's quite a high number.

Okay. Last one from me, maybe any updates on your cost of debt guidance?

I think it should still be between 3 to 3.3% in terms of the guidance that we have previously given.

Thanks. That's all from me.

Thank you.

Thank you. Next can we have Geraldine?

Hi, morning, Hsien Yang and team. Maybe just one question on Japan after the exit and Korea you are also looking to divest.

Will you not be deploying in a big way in these two markets in the next say 3 to 5 years and just double down on what you have in Australia and Singapore, is that right to say?

So 3 to 5 is a very long way away to start off with, definitive in terms of positions. What I can tell you is today it is a better time to be selling in Japan and Korea.

The cap rates have compressed. We are in an environment where the interest rates are actually going up.

The returns from Japan and Korean assets are actually quite low. In fact in Japan, I also shared just now, the cost of borrowing is higher than the yield of the asset.

If you buy today, you are actually out of pocket immediately. There's no returns, it's negative returns.

If the cap rates remain at this current level, it doesn't make sense for us to invest in Japan nor Korea. If we do sell our Korean asset, the chances of us buying back into these two markets today is actually quite low.

I wouldn't say that we are going to double down in Singapore and Australia. I don't think we are looking to redeploy all the proceeds into new acquisitions.

Only if we see something that we like, we feel that the returns are attractive, then we will look at it.

Thanks, Hsien Yang, very clear. Maybe just a quick one on 2027 expiries.

Looks a little bit low, $11.5. Wondering if you're able to share a breakdown of what are those leases, which assets they are from, and are you able to rightfully up-lift those to today's market rates?

We have already started working on that, a fair bit of that is actually in Singapore. I would share that it's a CBD asset.

We only have MBFC, ORQ, and OFC is one of those. It will definitely get to market levels.

The expiring rent is at a very low level, and it will get to market. We have more or less already agreed on terms with them, the reversion for this particular large tenant is going to be quite high.

I won't be able to share any further details at this point in time.

Thank you.

Thank you. Next can we have Vijay?

Hi, morning, Hsien Yang and team. Most of my questions are answered, maybe just a couple of follow-ups.

Firstly, on this JPY divestment, just wanted to check what is the exit yield? Also the loan you're repaying, is it a Japanese loan or is it a Sing dollar loan?

If so, how do you have to repatriate it and would that be a mark-to-market loss?

I will answer the first question, Andy will take the second question. The exit cap rate for this asset is below 3%.

Okay. Andy, you want to take the second question?

In terms of the loans, all the loans are JPY loans, there's a natural hedge to the proceeds. It's taken both onshore and offshore.

The onshore loan will be repaid upon completion, and then once we repatriate the money back, we will repay the offshore loan in Singapore as well.

Okay. Net-net, would it be a slight minor negative impact to DPU or what would be the impact to DPU as such?

It's very minimal impact to DPU, which is why I think we allowed to do it as a media release rather than a SGX announcement.

Got it. Yes, thank you.

My second question is in terms of rent reversions, I noticed that the quarter on quarter, it has gone to some high single-digit kind of level. Is this because of leases expiring?

Is there a revised guidance for the full-year rent reversions which we should look out for?

I don't think we are providing any guidance in terms of the rental reversion for the rest of the year. I think I did mention earlier this year and also last year, the expiring rentals for this year is of course a fair bit higher than the expiring rentals for next year.

The rental reversions for next year obviously is going to be a lot higher. As of now, the rental reversion like what we shared is around 12.8%.

I also wanted to point out that we have done most of our this leasing for the year. There's actually very little leasing left for the remainder of this year.

This should be reflective of the performance for the year.

Got it. Just one last question.

In terms of future acquisitions potentially after divestments, earlier there was a discussion about adding retail to your portfolio. If you're looking at a future acquisition, would it be more office or retail?

How would you look at these two asset classes for future?

Before I get there, I think what I've shared, I think for completeness, I mentioned that we'll be looking at divestment of one or more assets. We have already done Japan, which has been announced.

I think some of the analysts picked up that it's quite a small divestment, I think logically it is fair to assume that there could be potentially another one more divestment. We have shared I think consistently the past one or two quarters, the aim is to pare down debt first, and also to use part of the proceeds for share buyback.

That is what we are looking to do. We are not looking actively at any investments at this point in time.

If we were to look at a deal, for example, hypothetically based on your question, would it be retail, would it be office? I don't think there is a definitive answer.

We do like both. Both are commercial assets.

It really depends on the opportunity that comes up. We will look at the returns to see what actually makes sense.

Of course today, if you look at purely yields, retail yields are higher than office yields.

Got it. Thank you.

That's all I have.

Next can we have Dale, please?

Hey, morning. Hi, morning, Hsien Yang and team.

Morning. Just two quick questions from me.

I think firstly, in terms of the signing rent that you reported this quarter, right, 13.14, I noticed that it is lower than first Q. Just wondering, is it due to the types of leases you sign or is that indicative of rents coming off?

No, the rents are actually still going up, but I think this is reflective of we signed very, very large leases. As the very large tenants, the rental rates are actually a bit lower.

Also depends on where they are in the stack. Those especially in the lower stacks will pay slightly lower rental.

It is not reflection of the market starting to come off. In fact, the rentals are still going up.

It's just the nature of these leases.

Okay. That's very clear.

Okay. Next question is just wanted to also follow up on what you mentioned earlier, this year's focus would be on divestments outside of Korea, Japan.

I don't know, is Singapore something you would consider? Firstly given that ORQ yields are really low, it could be something attractive.

Or if DBS were to come to you and say they want to do a 50-50% partnership with you for MBFC Tower 3, are these something you would consider?

The comments about the ORQ being the lowest yield didn't come from me, huh. That one, you have to go back to talk to the person who made that comment.

As of now, there are no plans for us to consider divesting any of our Singapore assets.

Okay. Got it.

Thanks, yeah. That's all from me.

Thank you.

Thanks, Dale.

Thank you. Next can we have Terence Lee?

Hi, good morning. For Singapore office, you mentioned that the property consultancies are expecting 5% growth in 2026.

Not trying to split hairs here, but as office rents reach new highs, what is more reasonable here, this 5% or perhaps something more in the line with GDP growth, like 3%?

Pricing for office is really not pegged to GDP growth. It really depends on supply-demand.

I think that if you look at what has actually happened in the second quarter, we have seen healthy lease-up of even assets outside the CBD. Shaw has just come online.

They have reached fairly healthy occupancy levels. The other one is of course an asset that was conquered.

They didn't tell me what the occupancy is, but I know that it has reached nowhere near full, but they also reached relatively healthy levels. They'll be announcing results tomorrow.

Maybe if any of you are covering them, you can also ask them. That is a reflection of the market, and within the CBD if I'm talking about core Marina Bay and Raffles Place, occupancies are very high.

That is the reason why the rental rates are going up. Rental rates are not pegged to GDP.

I wouldn't want to suggest that there's some correlation between these two. Today's reversions really reflect what the tenants are prepared to pay for, and like what I said in the opening remarks, we do see a flight to quality.

People are prepared to pay a bit more for good office space, a premium office space in very prime location. That is the trend that we're actually seeing.

Would it be at 5% next year given that there's no new supply coming up? I don't think it's quite reasonable.

Okay. I take it that they meant 5% this year in 2026, which implies 13.50 rents.

Correct. Then I think that if you look forward, of course this is anyone's guess, right?

To make an assumption of 5% plus/minus on a yearly basis, I would say that that is a fair assumption that one can take.

Okay. Maybe just help me understand say it comes in at 5% for 2026 hypothetically.

I take it it will naturally bring up asset valuations, being that it's slightly ahead of what valuers have penciled in earlier?

The valuers will look at what you have. It's not just about what the market has in general.

The valuers will take the rent roll, then they will look at how much is actually expiring in the next 1 to 2 years. They will make certain assumptions around the rental growth.

Would they revise, for example, if previously they assumed 2%, 3% and the market is actually showing 4% and 5%, would this actually bring on the valuation? Technically, it could.

Now the valuers will never mark expressly to the market, right? They will have their own house assumptions.

I think that if you are talking hypothetically, if the market has demonstrated say for example 5%, would they up their forecast a little bit? Potentially could, but like I said, it also ties back to the expiry profile of the building.

Okay. Got it.

Thank you.

Can we have Shan next, please?

Morning. Can I ask about the higher JV and associate contribution?

How much of that is driven by one-offs and also what is the cost of that at the JV level?

Hold on a moment, huh. Let me check.

In terms of the higher JV, one-off is only about a million or so. The rest are really the strong performance, the underlying performance for the JVs.

Of course, Australian dollar is stronger as well, huh. Australian JVs also contribute positively from the FX impact as well.

Just maybe to break down a little bit also, I think that if you're talking about rental reversions, we've spent a fair bit of time talking about reversions. Reversions just now if you are looking at the market, it is that that that up to 5% growth in rental on a year year-on-year basis, but of course some of these leases are up.

They are only due like every 3 years, so that's why the rental reversions are a lot higher. That's how you get the average of 10% for Singapore.

The rest of it is really interest savings.

Interest savings. Then in terms of your question on what's the interest rate for the JVs, I don't think we disclose that on a standalone basis, but they do form part of our 3.27% all-in.

Are they higher or lower or similar?

Standalone level.

If you look at the Aussie rate now, right, Aussie rate is so much higher than Singapore rate, right? By reference, It would be lower.

Lower, huh? Lower.

Okay. Okay.

Then earlier you mentioned about share buybacks, right? Can you share talk a bit more about that in terms of timing, quantum, what are you looking at?

No, I think what I said is for example if I have sold another asset, we would look to take out some portion to do share buyback. I've only sold Ginza, and Ginza is very small, share buyback is not happening yet.

If I do sell one more asset, then we look at that. Then we will actually share once we have announced a divestment of that deal, how much we intend to take out to do a share buyback.

I think we will provide more details once we have crystallized another divestment.

Okay. Then just one last question on Pinnacle Office occupancy.

How should we think about backfilling?

I think that this submarket is facing some headwinds in terms of leasing. Ours is already if you ask me the best-performing asset in this subsector, but definitely trying to attract tenants is a bit more difficult because like what I mentioned, flight to quality is applicable also in places like Sydney.

People do want the best buildings, and also in Melbourne, I think the eastern end is doing a lot better than the western end. Definitely this location is not a CBD location, it is going to be a bit more challenging.

I think that we have done the AEI for Pinnacle Office Park. I've just recently inspected it.

It's looking really good. We're hoping that this AEI will also help us to attract tenants into this particular asset.

Okay. Got it.

Thank you.

Thank you. Can we have Yew Kiang, please?

Hi, Hsien Yang. Can you hear me?

We can, yeah.

Yeah. Yes, just one question on the share buyback.

How should we think about because you mentioned you might be looking to divest some and then redeploy this into either maybe acquisitions or maybe share buyback, but predominantly you're going to focus on paring down the debt first. The first question is what level of gearing would you be sort of comfortable before you start to consider redeploying into acquisitions and share buyback?

Because when I look at say retail in Australia, you also acquired at about just above 6% yield, and if you look at your current share price is also implying about 6% yield. If you buy something like a retail asset in Australia and also a share buyback, technically it's almost the same.

How should we think about that? Which one should you be prioritizing?

I think just to clarify again, the aim is to look at divestments, okay, and together with the proceeds from Ginza, the aim is to pare down debt, not acquisition. Paring down debt is the top priority, and then allocating some of that proceeds for share buyback.

That is what we are doing. We are not looking at any investments from the proceeds of these divestments.

I think I wanted to clarify that because I don't know why you seem to think that I will use part of the proceeds for investments. No, it's purely to pare down debt and also to do share buyback.

That's what we have planned for and that's what we intend to do. There are no plans to do any acquisitions at this point in time until the share buyback has happened, until the paring down of debt has happened.

The gold standard today has to be under 40%, right? I think that's where the market would like to see the REITs operate at in terms of gearing.

I think that that's what we are still looking to maintain, a gearing level of under 40%.

You're about there already, or do you still need some more buffer?

Pro forma is 39.6%. If I do one more divestment, it will come down a bit further.

I think that that is a good level of gearing to be at.

Okay. Just to focus on share buyback then, is there a valuation price-to-book level that you'll be looking to actively trigger this?

If let's say you've done your paring of the debt already.

Like I mentioned earlier, we will share more details in terms of the quantum we would dedicate to the share buyback. We will share that at the later, but we don't have any indication now.

The focus for us at the moment is still on divestment. Once we have done that, then we will share more details.

Now we're not doing share buyback now. Only until that happens, then we will share more details before we actually do it.

Historically, had the board sort of focus on a price-to-book level or dividend yield level before you guys go aggressively on share buyback?

Share buyback, I don't think anyone will go aggressively on the share buyback. I think it will always be moderate.

That's something that we will need to discuss with our board. The truth is we have mentioned this concept to the board and similarly for the board, the board says you wait until a divestment is confirmed, the proceeds are in, then we look at it.

We have not given that anything concrete so at this point in time.

Yeah. Okay.

Just a thought, I think historically, your share buyback program hasn't been able to really rerate the share price. Just that's what I think unless it's very meaningful.

Thanks.

Okay. Thanks for that.

Thank you. Can we have Jonathan next?

Good morning, Hsien Yang and management team. My question relates to the expansion into the retail space.

Your peers like CICT and SCT, they have embarked on development projects together with their sponsor. Is that something feasible that you can do, doing a joint development to build a retail mall in Singapore together with your sponsor?

Then secondly, also related to the retail space, given the lack of opportunity in Singapore, assets are tightly held for retail mall, would you then say that it is more likely that you acquire retail asset in Australia rather than Singapore? Thank you.

I do think that this is really more a question for our sponsor Keppel to answer. If you look at what they have been saying consistently, they are moving away from the big developer model.

They are not looking to bid for land and to do development unless it is through a fund model whereby they look for investors to actually jointly develop assets. I think that the first question, are we likely to jointly bid on land together with them to build?

I don't think that is something that we are actually looking at. In terms of opportunities for retail, there are actually transactions happening in Singapore, there are transactions happening in Australia.

If we wanted to buy retail, we don't necessarily have to develop. We can potentially buy assets off the market.

Even today, there are assets being marketed for sale even in the retail space. I think that like what I mentioned earlier, we're not actively looking at acquisitions for now.

If we wanted to say, for example, add more retail, the most logical way for us to go about doing so is buying assets that are already operating versus developing an asset, for example. Does that answer your question?

Yes. You'll be looking for retail asset both Singapore and Australia.

Like what I mentioned, these are the two markets that we would potentially look to buy retail.

Yeah.

We are not actively looking at any deals at the moment.

Okay. Yep.

Thank you. We look forward to more progress on expansion in retail.

Thank you. Thank you very much.

Thank you.

Can we have Derek next, please?

Hi, morning. Actually, most of my questions have been answered.

Just maybe a follow-up on the ANZ lease at ORQ. I think previously you mentioned you were in advance nego for one floor and looking at the other.

Any other further updates on that?

That one floor, we are close to signing. I think I'm getting a signal I'm not supposed to talk about it, but yeah, we're fine.

Finding that one floor at a very, very good rental. The other one floor, we are negotiating with a prospect at the moment also at a good rental level.

Okay. That wouldn't be put into your reversion number, right?

It's a reversion number.

It's not in there yet.

Okay. If it does, then it will be put into your reversion number.

Correct.

Got it. Thank you.

Can we have Brandon, please?

Hey, morning, Hsien Yang. Hey, morning.

Just getting back to your share buyback, right? Any reason why don't you just lower further your fees in units instead of doing a share buyback?

Lower fees, I think this is a question you ask my sponsor. Whether it's something they will consider, I think we from a management perspective,

Lower fees in unit. Lower the number of fees in units.

Oh, you're talking about that, huh? I thought you're talking about lowering the fees.

The

Oh no, not lowering fees.

That means you're saying that take more units or take less units?

Take less.

Oh, yeah, your question is take less units, is it?

Instead of doing buyback.

I think that is something that we want to balance. I think I've shared before we feel that this is a level that we feel is a good level.

I wouldn't want to say optimal, but a good level. I think that we've also made a commitment not to change the split.

I think this was something that a number of investors have also raised with us. That is not something we're looking to change.

We made a commitment not to change this for at least 2 years. I think we will need to maintain this level of cash and units for now.

Is it correct to assume that you will be following what your predecessors did in terms of cancellation of the shares?

I think that like I mentioned, more details of this will be shared later once we have cleared this with the board. When we do share more details, I think we will be able to provide more color in terms of what we do, yeah.

Logically, I think that if you look at industry, that is a fair assumption.

Okay. Just one matters, right?

On your assets in Brisbane and in Melbourne, are you currently paying the SRO land tax surcharge?

We don't have any assets in Brisbane, only in Melbourne. Then Melbourne, yes, we do pay the SRO surcharge.

Oh, you are paying in Melbourne.

Correct.

Okay. Can.

Great. Thanks.

We have a question from the webcast. Given the current interest rate environment, are you concerned that this could increase Keppel REIT's financing costs, as well as are there plans to enter new markets in the future and which markets will be prioritized?

I'll take the second question first. Like I shared earlier, we are not actively looking at investments at this point in time.

The priority for us is to complete our divestments, to do a share buyback, and then for investments, we will look at this further down the line. Assuming if we do get out of Korea, the two markets that we have is Singapore and Australia.

I think that the focus will be on these two markets. Of course today, we do hear from investors their preference is for more Singapore exposure.

I think we have taken note of that. That would definitely be something that we will look at if we do look at new investment opportunities.

Andy, you want to take the question on interest?

Right, in terms of interest, I think we are actively looking at it and managing it through a mix of looking at the amount of our fixed-rate loan ratio. We are currently about 62%, we are keeping it between 60 to 70%.

Then as and when we enter into new loans or do new refinancing of those that are expiring, and we will also look and see whether is there a need to do the hedging to minimize the impact or to do a bit of risk management from the impact of interest rate on our DPU and DI.

Derek, do you have a follow-up question? Otherwise, we have another question on the webcast.

Given that Pinnacle Office Park's occupancy dipped in second quarter despite the completion of AEI, has the management considered divesting this asset?

I don't think that the moment you see an occupancy dip, that automatically qualifies this as a divestment target. I think that in order to get the best price for an asset, you do need to maximize the income first.

I think that the priority for us at this point in time is to focus on the leasing, get it up first. Also, you need to sell at the correct time in the cycle.

Australian assets cap rates have not recovered to the historic high, I think that that's why we have not mentioned that we are looking at potential Australian divestments at this point in time. I think we are better off focusing on the leasing, getting the occupancy up, and then selling when the cap rates have actually compressed, versus trying to sell the asset now.

If the asset is not performing well from an occupancy perspective, you're not going to get a good price, too.

Geraldine, you have a follow-up question?

Hey, quick follow-up question for the 38% premium, divestment premium. If you take into account the depreciation of JPY across the past 4 years, in local currency terms, would it be at a much lower level?

It wouldn't be much lower. Maybe just give you a sense.

The premium that we have sold it at is high 20s. The depreciation over this period is only around 10% plus/minus.

Definitely it is still positive. I think also I wanted to mention that we have funded this 100% via Japanese yen debt.

It's 100% hedged.

Thanks, Hsien Yang. Some impact, but not to the tune of the actual depreciation.

Yeah.

Got it. Thanks.

One last question from the webcast. Are you open to raising equity at this level for acquisition if a good asset comes along?

At this point in time, I don't think that we are looking to raise equity at this juncture.

Do we have a last question from Yew Kiang as well?

Can I just quickly confirm the numbers on the divestment of Ginza in when you acquired in JPY and Sing dollar terms back then and then the current JPY and also the current Sing dollar that you'll be locking in for the sale price?

Andy, are you able to share a bit more?

In terms of the gross sale price in JPY is 11.5 billion, and in terms of the Sing dollar equivalent is about $105 million Sing. Yeah.

Is that right?

91 million. 91 million Sing.

Yeah, $91 million Sing. Okay.

Thank you.

If there are no further questions, we come to the end of this call. Ladies and gentlemen, we come to the end of our results teleconference.

Thank you for joining us and have a pleasant day ahead.