Good morning, everybody and members of the public. Welcome to Mapletree Pan Asia Commercial Trust, or MPACT's, analyst briefing and live webcast for our results for the fourth quarter and financial year ending 31st March 2026.

I'm Li Yin, and I have the pleasure of hosting today's results briefing. Allow me to introduce our speakers for today.

They are: Ms. Sharon Lim, Chief Executive Officer of MPACT; Ms.

Janica Tan, Chief Financial Officer; and Mr. Koh Wee Leong, our Head of Investments and Asset Management.

We will be presenting our financial results, providing business developments and updates, and sharing market insights. Following the presentation, we will open the floor for a Q&A session where we invite you to ask questions or seek further clarification on our results.

Without further ado, I will hand the floor over to our CFO, Janica.

A very good morning. For FY 25/26, this was a year of deliberate reshaping of MPACT.

Three non-core assets were divested: two in Japan, completed in August last year, and in February, we completed the divestment of Festival Walk tower, the office tower of Festival Walk. All proceeds were deployed towards debt reduction, strengthening MPACT's financial foundation.

In relation to the divestment of Festival Walk office tower, a loss of divestment of $10 million and a balancing charge of $8.3 million on the capital allowances previously claimed on Festival Walk tower was recorded in fourth quarter FY 25/26. Now let me quickly go into the results.

Fourth quarter gross revenue and NPI were $210.1 million and $157.2 million respectively, lower by 5.5% and 5.9% year-on-year. This was largely due to lower overseas contribution, unfavorable FX, arising from weaker Hong Kong dollar and Japanese yen, and the divestment impact from the two Japanese assets and the Festival Walk tower.

Singapore's gross revenue and NPI grew 1.8% and 2.1% year-on-year respectively, led by VivoCity, as well as from other office properties. OPEX-wise, it fell 4.1% year-on-year, mainly due to reduced operation and maintenance expenses, and lower utility expenses.

The lower contributions from operations were partially offset by interest savings from lower interest rates on Sing dollar and Hong Kong dollar borrowings, as well as on loans repaid using the divestment proceeds. Distributable income for the quarter, $100.2 million, and DPU, 1.90 cents, which were 3.3% and 2.6% lower as compared to fourth quarter last year.

Without the one-off balancing charge, which I mentioned earlier, the DPU would have been 2.04 cents, which is 4.6% higher year-on-year. Moving on to the full year results.

Gross revenue and NPI were $867.3 million and $654.4 million, down 4.6% and 4.3% year-on-year respectively. Similarly, this reflects lower overseas contribution, the divestment impact, and FX impact.

Singapore's gross revenue and NPI, excluding Anson, which we divested in last financial year, grew 2.3% and 4.1% year-on-year respectively. Interest expense was $186.8 million, lower by 15.3%, mainly due to interest savings from lower interest rates on Sing dollar and Hong Kong dollar borrowings, and loans repaid using the divestment proceeds.

The lower interest expenses, combined with the better Singapore contribution, more than covered the lower overseas contributions. Distributable income for the year, $421.4 million, DPU, 7.97 cents, both marginally lower than last year.

Without the balancing charge, DPU would have been 8.11 cents, 1.1% higher year-on-year. This Singapore portfolio delivered 4.1% higher contribution to NPI.

Singapore Singapore portfolio now accounts for more than 50% to both group's gross revenue and NPI. VivoCity recorded a 7.6% growth in full year's NPI despite the AEI disruption, anchoring Singapore's performance.

We did a full year valuation as at 31st March 2026. MPACT's total portfolio valuation was $15.2 billion.

Based on the independent valuations and on the same-store basis, this this is 2.1% lower year-on-year. Singapore's valuation uplift of $238 million, or 3.1% year-on-year, largely offsets the $301.7 million operational valuation decline in the overseas portfolio.

The overseas portfolio was further impacted by $301 million of FX effect resulting from a stronger Sing dollar against Hong Kong dollar, Japanese yen, and Korean won. Excluding this FX impact, the total portfolio valuation would have been broadly stable.

The higher valuation of the Singapore portfolio was driven by VivoCity, which recorded a 5.4% uplift on a year-on-year basis, with the remaining Singapore assets holding steady. On the overseas valuation, these were lower year-on-year, driven by FX impact and softer market conditions in Greater China and Makuhari submarket of Chiba in China in Japan.

Moving on to balance sheet. With the divestment and the lower valuation and larger yen borrowing, MPACT's NAV per unit decreased from $1.78 a year ago to $1.73 as at 31st March 2026.

Moving on to capital management. Gross outstanding borrowing, $5.7 billion.

This is following the repayment of Hong Kong dollar loan with the proceeds from the Festival Walk tower's divestment. Leverage ratio improved to 36.5%.

Weighted average cost of debt declined to 3.16% per annum, and thereby strengthening the interest coverage ratio to 3.2 times on a trailing basis. This improvement were driven by proactive debt management, supported by our by the lower interest rates conditions.

The average term to maturity of debt profile was 3 years by the end of the financial year. By the end of the reporting period, MPACT has a financial flat of approx.

$300 million in cash and undrawn committed facility, ensuring sufficient liquidity for working capital and financial obligations. We will continue to ensure a natural balance sheet hedge by closely aligning the debt mix with the geographical distribution of MPACT's AUM where feasible.

MPACT's gross debt profile remain well distributed, with no more with no more than 23% of debt expiring in any financial year. We have started work started to work on the refinancing for FY 27/28, and the $255 million perps will be refinanced using bank borrowings.

This will bring our gearing post the refinancing of the perps to approximately 37.6%. On risk management, to shield against interest rates volatilities, we continue to keep our fixed rate debt above 70%.

As at 31st March 2026, the fixed rate debt stood at 71.5%. Forex remains volatile against Sing dollar, approximately 95% of our foreign-sourced distributable income were hedged into Sing dollar based on a rolling four-quarter basis.

On the total returns, the total return for the year was 12%, comprises of 5.6% appreciation in capital and 6.4% in distribution. We remain focused on driving sustainable performance through market cycles.

On this slide, it shows the distribution detail. DPU for fourth quarter was 1.90 Singapore cents.

Unitholders can expect to receive the distribution on 17 June, and the book closure date is on 28 April 2026. With that, I shall now hand over the time to Wee Lih.

Thank you.

Good morning, everyone. I'll just run through some developments on the portfolio and give you a little color on the performance of assets.

On occupancy, you'll see that occupancy on a year-on-year basis remains largely stable, even taking into account the impact of the divestment of the three assets. That's largely driven by improvements at MBC, which has offset the lower occupancy in China and Japan.

For MBC, you'll see that we have we have improved the occupancy slightly. There has been a number of new signings at the property that includes a fairly large IT company, which will be taking up a substantial amount of space, close to about three floors, and that's and and that will these will comments towards the end of the calendar year.

Some of the other other leases will start in will comments slightly earlier, but still looking at July, August, September kind of timeframe. Drilling down to some of the the drilling down to the two slightly more problematic geographies, for China, occupancy remains fairly constant against December, but has dropped against a year ago.

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

For Japan, we have had we have we have seen declining occupancies in the Japan portfolio, largely due to non-renewal of of of the master leases. We already had two rounds where where Seiko had left SII Building, and we had NTT UD give up their master lease at MBP.

Those were in the last two years. As at 1st of April, Fujitsu would have terminated their Fujitsu's master lease at FJM would have ended.

This number as at 31st of March would have dropped down This 71.5% as at 31st of March would have dropped down to 57.1% if you took into account the the ending of Fujitsu's master lease at at FJM. Okay?

For the other assets, the occupancy remains fairly constant and and strong. Moving on to rental reversion, rental reversion on a portfolio basis is flat.

The Singapore properties, improvements in rentals, particularly at VivoCity, have has helped to offset weakness continuing weakness in in Festival Walk China, as well as in Japan. Okay?

Moving on, lease expiry profile is improved slightly from the previous year, particularly driven by lease renewals at the office properties. Okay?

I think one thing one Good morning. One one thing that we should mention is that post the close of the quarter, we actually managed to renew one of the largest tenants at MBC, so that's helped to push out the lease expiry profile because that lease was on a fairly long long-term basis, more than five years.

Moving on to the next slides, there has been a lot of questions around around utilities costs and the impact of the of the Iran conflict. We have we have taken risk mitigation measures to try and limit the impact.

Earlier in the month, we had earlier in the month, we had we had extended our utilities contract. If you recall, the Singapore utilities contract was originally signed till October of 2026, and we were looking for suitable opportunities to extend out the contract.

Given given the current market volatility and given that there were it was it was interesting to to to to find out that we could actually extend the contract at substantially the same rate as what we had entered into for the current contract. That's given us a little bit of stability, but because of the of the of the longer-term uncertainties, as well as the the the market's perception that that this conflict will be will not be relative will not be will not be long-drawn, we have we had locked in rates only for one year.

For the period 1st November to 1st November 2026 to October 2027, we have locked in rates at substan- substantially the the same as what we had currently, what we are currently paying for the Singapore portfolio. The second year, we have we have allowed rates to float, and that's to that's a bet and that's to potentially take advantage of of changes in the market as as we go forward.

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

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

We'll keep We'll continue to monitor. One thing that across the portfolio we will be doing is to is to reduce electri- reduce electricity usage, whether that's by optimizing chiller performance, increasing set point for for air-conditioning, or or implementing early turn-on and early later turn-on, early turn-off for air-conditioning and other building services.

Hopefully, that will allow us to to to limit the impact of the utilities increases going forward. Bear in mind, a lot of most of these measures are fairly incremental, meaning at best we are talking about 2% to 3% improvement in in in electricity usage.

Moving on, let's talk through Vivo VivoCity. In terms of shopper traffic year-on-year, that's seen a good 2.6% increase, and on tenant sales, it's up 2.7%, bearing in mind that throughout the early part of last year, we had the whole of basement 2 down for AEI a fairly large chunk of basement 2 down for AEI enhancement.

In the next slide, we give a we you can see the completed basement 2 AEI enhancement. This was fairly substantial.

Phase 1 had changed the the kiosks on the as you come out of MRT on the left side, and on on phase 2 was a conversion of some of the car park spaces to retail, and that's as you come out of MRT on the right side. Okay?

That's delivered fairly healthy ROI of 10%, and has definitely enhanced the retail experience, as well as improved the tenant mix in the in basement 2. Moving on, we continue to refresh the tenants in throughout the mall, both in terms of new concepts as well as getting tenants to re- re- revitalized their spaces.

Previous quarter, Chinese New Year celebration was the was the key highlight for our AMP, and that's that's drawn in quite a good amount of traffic. Because Chinese New Year Chinese New Year was fairly late last year, we could have our Chinese New Year events run for a little bit longer, and that definitely helped performance at basic.

Moving on to Festival Walk, shopper traffic did see an improvement year-on-year, but tenant sales still remained fairly weak. I think Festival Walk is is while you will see that Hong Kong in general has has has had some improvement in tenant sales, that's retail sales, that's largely we feel that that's largely been driven by improving tourism at the in in the territory.

Fortunately or unfortunately, Festival Walk is not a a tourist-centric mall. You will see that most other those improvements have accrued to retailers and retail malls in the in Tsim Sha Tsui and Central area.

Moving on to Moving on. We do see a number of new tenancies in the mall, and this has helped to refresh the the mix within the mall, especially on the F&B side.

Shopper engagement is is continues to be key at Festival Walk, and we believe that that's actually contributed to improving the shopper traffic at the mall. These are some of the events that that we have run at the mall.

One positive development, we have we have done a we are this is a current ongoing space reconfiguration, a small AEI at Festival Walk. We reconfigured the space for one of the one of the anchor fashion fast fashion tenants, and split the space into into six different into six different concepts.

The works are currently ongoing, and expected to complete by second quarter. The outgoing rentals for the the outgoing rent Hello?

Hello? It seems my microphone flickered.

Hello?

Yes, can hear you. You're back.

Okay. The ROI that we expected to deliver will be closer to 50% for this reconfiguration exercise.

Okay? Last but not least, we'd just like to update that we have completed the divestment of Festival Walk's office component earlier in the quarter.

The next slide is just an update on some of our tenancies. Okay.

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

For our analysts, may I trouble you to raise your hand on the platform, and I will unmute you when you can ask your question. We kindly request that you state your name and of firm before asking your question.

For online participants, you may submit your questions through the text-based platform. First, we have Terence from J.P.

Morgan. Terence, please unmute yourself and ask your question.

Hey. Thanks, Li Yin.

Congrats on the results. If I may ask on AEI plans thanks for starting the AEI works at Festival Walk.

Perhaps maybe you could share a little bit more as to whether you have further AEI plans for the broader Festival Walk and perhaps for VivoCity. The second question from me, you divested three assets this year, gearing stands at about 36.5%, and even after the refinancing of the perps, you still do have a bit of gearing headroom left.

Would like to ask whether you'll be looking to redeploy some of the proceeds into investments going forward. Thank you.

Hi, Terence. In terms of AEI enhancement, let's take the AEI enhancement question first.

I think we have mentioned before, and it's something that was quite surprising to us when we took over the Hong Kong asset. Development planning in Hong Kong seems to take a fairly long time.

We have had a number of AEI enhancement plans, which we have been toying around with for the last two to three years. It's taken quite a while to get approvals going.

One key AEI enhancement which we are working very hard on is actually the reconfiguration of the cinema at Festival Walk. I think we have mentioned before the cinema trade in Hong Kong seems to be a lot weaker than here in Singapore, and we are concerned that there may be a shakeout in the industry, and might result in some tenants weakening.

Hence, we have been planning on what we can potentially do with the cinema space. Those are currently still ongoing, and once we are ready to proceed with the AEI enhancement, we'll make the necessary announcement.

For VivoCity, while yes, we can move a little bit faster, the truth is that we have done most of the low-hanging fruits, right? If you recall earlier AEI enhancements that were done at VivoCity, you have seen ROIs being a substantially higher number.

The other thing that we are a little bit concerned about is that construction costs have been going up. Aside from that, the AEI that we currently completed was already something like close to $50 million in terms of cost, and we are expecting that any AEIs that we will have to do in the future will be substantially more expensive.

Those are decisions we will not take lightly, and we are still evaluating what are the best things that we can potentially do to the mall, bearing in mind that costs are going up and that we have already done a lot of AEIs, right? Practically one every two years, and in some cases, once every year we have had AEIs at the mall over the last 10-plus years.

Looking at our gearing and acquisition potentials, if you talk to CFOs, you always want the gearing to go down even more. We have already done quite a bit in terms of divestments, and Singapore has also managed to cushion some of the reductions in valuations coming from the overseas assets on an operational basis.

FX is obviously something that we can not control, and that's had a bigger impact on our valuations than we would have liked. Have we been looking at acquisitions?

Terence. Maybe I help to chip in.

Maybe I'll sum it up for you. In Hong Kong, short-term, next year, the lease renewal for cinema is coming up.

That's why we're actively looking at reconfiguring. Number one is to contain a smaller cinema, the rest will subdivide, okay?

That's the plan. Subdivide, majority will be F&B.

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

Then moving along to VivoCity. VivoCity this year, you will see we have continued to revamp now the drop-off, okay?

The drop-off point is actually the back of VivoCity, where we have reconfigured how the cars move, and the taxi and drop-off point. At same time, we're still exploring whether the back of VivoCity can become our another front.

Nothing is firm, but I think that should be good traction if we can get the right tenancies, because we have always been using the drop-off point like a back of the house, but technically, the car park flows actually pass through there. It must be destination or traits that will be able to benefit from that location.

We have not firmed that out, but I think it's a train of thought that we are trying to share with you. Our gearing is comfortable, okay?

Took us a lot of effort, I think we are very, very comfortable with our gearing. We'll continue to explore as long as it makes sense for the portfolio, but we will be very careful in terms of certain countries.

We will definitely avoid China for the time being. I think the weakness will still be continuing.

Singapore looks like a good base, but in terms of transactions, it's very limited. We will continue to explore, but we will be careful in terms of overseas market, in terms of acquisition.

Thank you.

Thank you.

May I invite Liu Tian from CLSA to ask your question?

Hi, hi. Just two questions from me.

I didn't quite get the MBC negative reversions. Can you explain on that?

Then secondly, when can we expect China and Festival Walk reversions to bottom? Seems like with the AEI plans at Festival Walk, this should drag on for a little longer.

Is that correct?

The MBC to me I'll just chip in then after that the details Wee Lih can handle. The MBC, I would say that it is close to flat.

Like I always mention, changing of a tenant, our downtime will be way more than that. Three months out of 24 months, 36 months, costs you more than 1-over percent, okay?

For MBC, they are big takers, and they are slow in taking up space. In that way, we hang on to the tenancy and we've got good names, okay?

I'm not bothered when it's a -1%, okay? I think it is a good number.

If I change over tenant, I may get a slightly higher, but you don't see the downtime in this calculation, and that will actually hurt your cash flow, okay? China, expect it to go down for this year, too, okay?

I do not feel that it's actually strengthening. We're trying our very best in terms of hanging on to the tenants and trying different strategies, even fitting out certain areas, because fit-out cost is not very expensive, basic furnishing cost, so that tenant can just take their bag in and start operating.

I would think that that is the only way we can just hang on in China, okay? We are

China, will we see the same magnitude of 21% for this year?

At least a 10-over, minimum.

Okay.

At least.

Slightly improving, okay.

I really can't tell, yeah, because the number is coming in. China, as long as you've got a taker, you're happy.

The vacancy rate is very, very high. I won't be too optimistic with you when it comes to our Chinese assets, yeah.

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

Festival Walk with the AEI?

Festival Walk AEI, if you're talking about the cinema, it's 2027. What

is

to be expected, yes.

Okay. Just one more last one.

With the Japan portfolio occupancy slipping to 57%, right, I think is it fair to say divestments could take a while longer if there are any plans to divest?

If we can divest, we will divest, okay? I think Japan, especially for Makuhari assets, is a tall order.

We have done what we can as management: number one, contain the cost; number two, drop the val so that it's very negligible. The two buildings are two huge buildings.

Adding up, we're talking about 200-ish million, okay? I think we need to put that into the magnitude in terms of the valuation that's carrying in our books.

$200-over million is our problem assets in 200-plus in Japan. That is Fujitsu and Seiko Building.

Yeah.

Okay. That's it for me.

Thanks.

Thank you, Liu Tian. Geraldine from DBS, you're

next. Hi.

Morning. Just wanted to ask on the Festival Walk divestment.

Are you able to share the exit yield? Is it a low 2%?

Has gearing already reflected the debt repayment from the divestment proceeds?

The office yield was in the 3% 3-plus percent range, closer to 3.5. You're asking whether the gearing has taken into account

the

repayment of debt, right?

Yes,

that's reflected.

36.5% is after repaying the Hong Kong dollar loans using the proceeds from the divestment.

Got it. Maybe one more on Festival Walk.

Hong Kong tenant sales seems to be doing quite well this year, from what you're seeing, are retail landlords a bit more asking in terms of rents, or should we still expect to see a lag time between sales and rents?

I think one small bright spot doesn't allow landlords to start moving rentals that significantly. The other thing also is that the sense is that a lot of these improvements last year was tourism-driven, either by the events that have been ongoing in Hong Kong or the shift in travel patterns by PRC's from other countries to Hong Kong.

We feel that that's concentrated the improvement in tenant sales to the more tourist-focused areas: Tsim Sha Tsui, Central, Causeway Bay, and the like. Those landlords may be able to ask for higher rentals than they are currently, but bear in mind the last three years, which is a typical duration of retail leases, Hong Kong has had a fairly rough time, and because of that, it's unlikely you'll see positive rental reversions coming through whether it's our portfolio or others.

Some people might be lucky, but we don't feel that's the case, right? Festival Walk still remains a mall that's very focused on the people who are living around and working around the Kowloon area, and it's not a tourist-focused mall.

That improvement in sentiment has not really translated down. What we have been more focused on is actually, right, optimizing the trade mix at the mall, getting rid of weaker tenants and bringing in concepts which will appeal to the people who are working around and living around the area.

Okay. Understand.

Reversions will be in this ballpark for next year? Negative single to 10%?

Yep.

Thank you.

Thank you, Geraldine. Rachel from Macquarie, you may ask your questions now.

Hello, good morning, Sharon and team. Can you hear me well?

Yes.

Great. Maybe my first question is on interest cost.

What's the guidance for FY 2027? Could you give us a sense the perps rate versus the debt rate that you'll be getting to refinance the perps?

What is the first question?

Interest rate guidance is it will still be above 3%, but interest rate is very volatile, especially with the Middle East crisis. Based on our estimate, it will still be above 3%.

Hopefully, it's lower than what is currently we have here. It will be a low 3.

Currently, the perps we issue at 3.5%, and there's a CCS on it, we are paying actually, in fact, 2.5-over percent on this perps. If I were to refinance this using borrowings that we have on hand, it will be thereabouts the same as what we have been paying or slightly lower.

It depends on how much I fix the drawdown at a point in time. It should be thereabouts the same.

Can.

Our debt cost, yeah, the 3.16%, yeah.

Got it. Can I just get an update on your Hong Kong rates?

Is it still above the current Hong Kong rates?

What what do you mean Hong above our Hong Kong? The current book Hong

Hong Kong debt. Hong Kong.

Still

above. It's still above.

Yeah. We still have some high fixed interest rate swap, which hopefully majority of them will drop off in this coming financial year.

Yeah. Can.

Thank you. Then my next question is just a follow-up on the Festival Walk AEI.

If you were to break out the cinema space and get a higher rental, would you be able to then cover some of your negative reversions that's coming out from Festival Walk? Essentially, I'm trying to see whether your NPI will flatten out.

We separate the AEI and the rental reversion operation, okay? Will one shift the whole mall, answer is no, lah.

Yeah. One AEI shift the whole mall NPI?

No.

Can. Then lastly, now with that gearing headroom, and HarbourFront redevelopment will be coming up in second half of the year, what are your thoughts on that?

What are our thoughts in terms of you are talking about investing?

Or with any partnership with the sponsor, yeah.

For the time being, no, okay? What we are doing is just preparing for certain disruptions, which I think that has been very well handled by the leasing team.

It's still early for us, when the time comes and they're ready, then we are open to look.

Okay. All right, thank you.

I'll jump back to the queue. Thanks.

Rachel, Janica here. I just want to correct myself.

The 3.16% cost of debt is without accounting for the perps. Okay.

Oh, okay. If account the perps, it should be lower, or?

If I were to add on the perps, the 3.16% per annum will be lower.

Got it. All right, thank you.

Thank you, Rachel. Hi, Derek from Morgan Stanley, please go ahead.

Hi, morning. Just to follow up on the interest rate question, assuming current rates, what is the outlook for interest rates?

Outlook for our

From 3.16% to what?

It will be still above a 3, a low 3. Hopefully, maybe another 10 bps off.

10 bps off.

Interest rate is very, very volatile, maybe next quarter I can tell you another guidance.

Okay.

For now, it's maybe about 10 bps off, based on the current prevailing market rates.

Can do. Just on the valuations for Festival Walk, local currency terms, it's still down close to 5%, and do you think the valuers were being pretty aggressive in bringing that down, given that it's fully occupied outperforming the rest of the other overseas assets?

I guess, does that ease the path for potential divestment of Festival Walk?

Derek, if you look at the net property income movements at Festival Walk, the 5% reduction in valuation is actually fairly in line. We have also tried to see what the other valuation movements for retail assets in Hong Kong are.

Not many of them are disclosed, but from the few that we can see, the majority of retail assets in Hong Kong have gone down 4-ish to as high as 9% over the last year. The 5% reduction for the retail asset is more or less in line with the performance, as well as the market.

I do. I'm just asking it's difficult to see the comparable transactions.

I think Hongkong Land, they were reporting book value of 5%, but I'm not sure what's inside. Just thought I'll ask on Festival Walk.

Yep.

Thank you. Thank you, Derek.

Brandon from Citi, hi.

Hey, morning. Just wanted to go back to Festival Walk, right?

If you look at tenant sales for this quarter, it was up year-on-year. It's been close to 1 to 2 years, right, since you've seen this improvement.

Earlier you sound very skeptical, right? Is it correct to say that tenant sales hasn't exactly bottomed out for Festival Walk?

I think one quarter doesn't make a trend, and we are still continuing to closely monitor the performance of the mall, and the performance of the tenants. There are some strong points, and there are some strong areas.

F&B is doing fairly well, but fashion, some other tenant mix as cosmetics and the like are still fairly weak in the mall, and those continue to drag down our performance a little bit. This one quarter, we have had some interesting, or rather, not to say unexpected, but if you look at our jewelers, if you look at the gold smith shops within the mall, those have done extremely well, and has largely contributed to that improvement.

Like I said, a few trades doing very well doesn't quite make the case that overall retail sales are improving within our outlet market. We will continue to monitor, and we'll continue to remix the tenancies such that we weed out a bit of the weaker tenants and bring in stuff that the folks want to spend at.

Got it. Also just on back a bit similar to Derrick's question, right?

If we look at the latest valuations for Festival Walk at 20 $20.7 billion, right? That seems to be still, what, 13% above the acquisition price, right?

If you look at over the years, the reversions, it's still not great, right? Do you think at this point in time, it's still looking a bit overvalued for Festival Walk?

Based on management's eyes,

not on valuation, not on independent valuers' guidance, yeah. If you look as a process, it's done by professional third-party valuers, okay?

That part, I don't think there's any form of interference or manipulation on our part. That's the market value determined by third party.

If you talk about investment climate as for whether is buoyant and whether this price is something that people will look at, I think overall, most of the investors are still very careful pertaining to Hong Kong, okay? Your valuation may be there, but investor appetite may be slightly a little bit more cautious than what we in a typical market.

The two two two markets that I see investors very, very cautious is definitely Hong Kong, and China is stopping it, lah. Yeah.

I wouldn't say that our valuation is not correct, our valuation is done by third party, but the investment climate is not as strong in terms of the pool of investors looking and ready to put more money into Hong Kong and China.

Got it. Hey, thank you so much.

Thank you.

Thank you very much, Brandon. Jonathan, you're up next.

Good morning, Sharon and management team. Two question First question relates to MBC.

You mentioned one one one tenant secured during the quarter, and then another big one also after the quarter. I presume both are new tenants.

Could you give us some color in terms of the industry trade they are in, are they real, and then also the size of the lease that they have taken up? Then for the large tenant that came in after the quarter, if you include that, what would the level of occupancy at MBC be?

Okay. The tenant after the quarter was a renewal.

That was for more than five years, and rental reversion was actually just a little bit positive. That would have had no impact on the occupancy.

Okay? The other tenant, which is a new tenant that took up about three floors and has contributed to the improvement in MBC's committed occupancy, that's in the IT trade.

Thank you. For the guy that renewed, could you give us the industry sector?

Also I've a follow-up on Japan.

I think I'll leave it to them to tell

you their name, It's a confidential. It's confidential.

confidential. Okay.

Follow-up question on Japan. I couldn't help but notice that the tenant retention is 10%, looks extremely low.

Is that only unique to the quarter, and then you see some rebound after that? Could you comment on that and how that affects your outlook?

The tenant retention in Japan, the low number is largely driven by Fujitsu. Master tenant at FJM, and they are not extending the tenancy, so that whole building is going vacant because that tenant has moved out, and it's a fairly substantial portion of our portfolio.

If you look at our occupancy number, Japan now stands at 75%. Assuming we take this FJM out of equation, the occupancy will be then 57%.

It's a fairly substantial impact on the portfolio, and the retention rate is brought down largely because of this tenant.

Excluding this sort of high-impact events, normally what would you expect tenant retention to be for Japan?

If you if you exclude for the quarter, if if you exclude this particular tenant and and we are probably looking Well, last at last FY, we're probably around the 50-plus 60-plus No, actually a little bit lower. Maybe about 50-plus 60 60% mark.

Thank you. Thank you for the detail.

I'm

sorry.

Generally, we will expect the number to be a bit higher because in Japan, tenants tend to be a little bit stickier. Aside from the Makuhari assets, most of our other assets, tenants are a little bit stickier, but last year we did have one or two non-renewals in the other parts of the portfolio, which we've actually been managing to backfill the space, but that were actually have contributed to a slightly lower retention than than we are normally expected.

Yeah. Thank you.

Thank you very much for the detailed response. Thank you.

Thank you, Jonathan. Terence Lee, hello, Terence, please unmute and ask your question already.

Yes, good morning. Terence Lee from UBS.

Just a question on the one-off tax charge, the 8.3 million. Let's say if you manage to sell Festival Walk, the retail portion, should we expect another such one-off tax charge that would be flushed into the DPU?

Unfortunately, yes.

Is there a sensing for us to understand what kind of percentage or applicable tax rate that would be?

I do not have that on hand now. I can get back to you.

Basically, whatever that we charge off now is what we apportioned for the office part.

Yeah. The allowance was claimed as Festival Walk as a whole, we, based on some formula, to apportion the office part.

Of course, it's also subject to the tax office agreement on the way we apportion. Yeah.

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

Could we not just take the 8.3 million divided by the divestment price for the office portion as a proxy?

No, no.

No, no.

No, cannot.

Okay. I guess a separate question, can you remind us of the FX income hedge policy, and at this juncture, how far forward rates for the coming year looking like relative to spot?

I guess particularly for Hong Kong dollar and JPY.

I think Hong Kong Hong Kong dollar and JPY, JPY outlook is is appreciating, uh-huh, but I don't know how they are going to appreciate. Hong Kong dollar is depreciating.

Far, whatever swap that we have on the books, I think both of them not not the swap, sorry, forward hedge booked, both of them are majority out of money.

Is it fair to surmise that there should still be continued FX-related income weakness into FY 2027?

Based on the hedge on hand, that should be. Interest rate is very, very volatile, and the reason why we do income hedge is actually to just protect and lock in the rate, to ensure income stability.

We are not actually speculating the market. That it is a risk management.

Whatever that the board's guidance set on the threshold, we will just make sure that we monitor and we make sure that we lock in to mitigate risks. It's not so much of speculating and trying to earn from the market, yeah.

For our hedges, it's more risk management. Whether the currency will depreciate or appreciate further, we will still make sure that we hedge the risk threshold as set by the board, to give us stability on the income.

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

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

I think we do not provide a forecast, but we have already announced Fujitsu, and that's already a Sing dollar $10 million to the books. Yeah.

I'm not sure how on the other hand, you can get a comfort that the income from Japan will be lower, although it's depreciating. I don't know whether that's a comfort or not.

Got it. Thank you.

Sorry, just now, Jonathan asked about the tenant retention rate not including Fujitsu, it's not 50% to 60%, it's actually about 30, early mid-30s. That's due to non-renewals at MBP as well, where some of the remaining leases from the master tenancy which expired three years ago, those leases have actually expired as well.

Got it. Thank you very much.

Thank you.

Thank you. We do have a question coming from online, relating to the impact of online sales on Festival Walk, given that online players have been given heavy subsidies.

If you look at online retail in Hong Kong, it's actually a very marked difference from within China. If you look at online sales penetration rate in Hong Kong, we are looking at probably in the sub-10% range, whereas if you look at the same statistics in China, that's probably in the 40% range.

If you look at Singapore, we've actually been stabilized at about the just under 20%, fluctuating on a quarter-to-quarter, month-by-month basis. It looks like online retail in Hong Kong has been fairly stable, and there is some information that the online retailers are trying to be a bit more aggressive in Hong Kong, but part of the reason is the proclivity of Hong Kong residents to not use online payments that much, also preference to shop physically.

The truth is that the bigger chunk of the impact of retail sales in Hong Kong has been the leakage to Shenzhen. Now, the ability for Hong Kongers to go across the border to shop, that's probably had a much bigger impact on retail sales performance in Hong Kong than the online impact.

Thank you, Wee Lih. Just want to double check again, Terence, do you still have another question?

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

We ask the same question to our tax consultant, okay? It's considered operational issue because the allowance was being claimed and offset against the operational income.

Now that it's a clawback, it should be against operational income. Actually, when we divest MapleTree Anson, that is also a similar kind of balancing allowance and charge, but at that point in time, it was allowance.

An allowance will reduce our DPU, because it's a allowance and we pay off the unitholder via capital distributions.

I guess that would have been my next question. Why not make unit holders whole in terms of the cap distributions?

You see, it's different from Anson. Anson is reducing, but I'm not paying any money to the tax office, but this is different.

I'm paying a $8-over million to the tax office, Hong Kong Hong Kong tax office, and if I were to distribute, I am coming out another $8 million to pay to the unitholder. Having said that, if this is considered a transaction cost, it will definitely net off or charged to divestment gain or loss, but when we claim the allowance, it's net off against the operational income.

Now when there's a clawback, it should be against operational income.

Just to clarify, was there even a choice to distribute capital distributions to make unitholders whole?

Capital distribution we can distribute, okay? Of course, taxable distribution, tax-exempt distribution, you must have the relevant income, okay?

Capital distribution, we can if we want, yeah. It's just like if there's any gain or the proceeds from the divestment, if we were to distribute, we will distribute via capital distribution.

Yes, we can. We do have the choice to distribute, but because we are paying the tax office, we have only one $8.3 million.

If I'm paying tax office and I'm paying unitholder, then we are effectively borrowing to pay.

Got it. Thank you.

Thank you. We do have one more follow-up from Brandon from Citi.

Brandon?

Hey, just a couple of housekeeping matters, right? Can you share with us the occupancy cost for both FW and VivoCity?

For both malls, occupancy cost, plus-minus 20%.

Great. Hey, thank you.

Terence from J.P. Morgan.

Hi, Terence.

Hey, thanks. I just wanted to ask a little bit more on MBC.

You are seeing occupancies improve on a Q-on-Q basis, maybe could we get a sense of how soon could we see occupancies move back above, let's say, a 95% handle? On a broader scale, has the war impacted demand for space in Singapore in terms of leasing both on the office side and also on retail?

Thanks.

Occupancy at MBC is already above 95. We expect throughout the year, properties will remain around the mid-90s range, plus-minus a little bit.

In terms of leasing impact, what the war has introduced is actually uncertainty. What that causes tenants to do is actually to delay decisions, right?

As it is, before the conflict started, all of the tariffs issues as well as the uncertainty between US and China has already caused tenants to be cautious about taking up more space or to spend money on fitting out spaces. That has continued.

If anything, it's delayed decisions even a little bit more, right? In the past, we were probably looking at tenants looking at space 6 months, 9 months, 1 year before they moved in or before they're signing a lease.

Now that's probably gone up by another 1 to 2 months at 1 to 2 months. In some cases, what tenants have been doing is delay decisions, right?

They know they have to make a decision within the next 6 months, they don't have to do it now, they'll just wait another 3 to 6 months. That's really been the key.

The other thing is that the impact of the war will affect construction costs, and that will mean that fit-out costs will likely go up, that will then make tenants a little bit more reluctant to move from space to space. To mitigate that, what we have tried to do is as far as possible, if we do have departing tenants, and we do have a few, we've tried to retain fit-outs such that we can then use those fit-outs for new tenants, in that's actually helped to push some the occupancy for some of the floors.

In general, what the result of that is also that tenants are more reluctant to move, it's actually helped to maintain our occupancy and improve the retention rate at MBC.

Thank you.

Thank you very much, everybody. May I just do a quick check if there's any more outstanding questions from our participating analysts?

If not, I would like to thank everybody again for your precious time and all your questions for today's results briefing. Should you have any other questions, feel free to reach out to the investor relations team.

Thank you again, and we wish you a great week ahead. Goodbye.

Thank you. Thank you.