Keppel REIT (K71U.SI) Earnings Call Transcript & Summary

Good morning, everyone. Thank you for joining us today for Keppel REIT's Full Year 2025 Results Analyst Briefing. I'm Lillian 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. Sebastian Song, Chief Financial Officer; Mr. Tong Yan Leng, Head of Investment; and Mr. Jason Chua, Director of Asset Management. We will start with 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.

Thank you, Lilian, and good morning, everyone. Thank you so much for joining us today. We'll begin with an overall overview of 2025 and also our focus on 2026. In the fourth quarter of 2025, we completed 2 strategic acquisitions in December last year, namely a 75% interest in Top Ryde City, which is a regional mall in Sydney and an additional onetime interest in MBFC Tower 3 in Singapore. Top Ryde City is in our first pure-play retail assets and diversification into retail, enhancing our income resilience, allowing us to benefit from the Brazilian suburban retail segment, which has strong group potential, supported by long-term consumption growth and population increase. MBFC Tower 3 was a rare opportunity that allowed us to deepen ownership in Singapore's core CBD. It is the best asset in the best location and with the properties that we know well. Backed by the strong office market fundamentals in Singapore, we believe that it was the right move to increase our stake in MBFC Tower 3. As the acquisitions were completed late last year on 19 and 31st of December, we will see the full contribution from these properties starting from 2026. Operationally, we ended 2025 with a strong set of results, recording year-on-year increases in NPI and portfolio occupancy. I will elaborate further on the 2025 performance in the next few slides. For 2026, we will continue driving organic growth within the enlarged portfolio through both rental growth and proactive cost management. We've already begun to see the impact of lower interest rates on our borrowing costs in the second half of 2025. In 2026, we'll continue to monitor the interest rate environment closely and to the extent possible, continue to bring down our borrowing costs. Here are some of our focus areas for the year ahead. Moving on so our full year 2025 key highlights on Slide 4. NPL rose 6.9% year-on-year, driven mainly by contributions from 255 George Street. As said, which we acquired in 2024 and higher occupancy at 2 Blue Street. Share of results of associates and joint ventures increased 13.3% year-on-year, supported by the continued demand of [indiscernible] prime office space and lower borrowing costs. [indiscernible] from operations, saving management fees are paid entirely in units would have increased 6.3% year-on-year. As at 31st of December last year, our leverage was at 47.9% due to the transitory impact of the equity bridge loans or the EBL obtained to fund the MBFC Tower 3 acquisition. And the proceeds from the pref offering being received on 31st of December, and we used to fund the acquisition, our leverage would have been 40.4%. We have since completed a pref offering and equity bridge loans were paid in full on the 20th of January 2026. The weighted average cost of debt was 3.41% per annum. Total borrowings of fixed rate is 53%. And excluding the impact of the equity bridge loan, it would be 62%. Our Singapore portfolio continues to be a key contributor to our overall performance supported by positive rental reversions and lower interest rates. As at 31st of December, on a portfolio basis, our committed occupancy improved to 96.7%, and we achieved a robust rental reversion of 11.5% for the full year with the same or portfolio recording 10.7%. Our portfolios weighted average lease expiry remains long at 4.4 years on the WALE of our top 10 tenants was 8.1 years, reinforcing our income visibility. Through proactive leasing efforts, we have over 1.7 million square feet of leases committed in 2025. I will let Sebastian take you through the key financial highlights. Thanks.

Thank you, Hsien Yang. The second half of 2025, we see continued strong performance. Property income, NPI as well as share of results of associates and joint ventures had all increased due mainly to higher occupancy at 2 Blue Street and higher contributions from our Singapore assets. Also contributing to the strong performance was lower borrowing costs, largely due to tapering interest rates. Looking at our full year performance. Property income and NPI increased 4.9% and 6.9% year-on-year, respectively, mainly due to contributions from 255 George Street and high occupancy at 2 Blue Street. Share of results of associates and joint ventures increased 13.3% year-on-year on the back of better performance from our Singapore assets and lower borrowing costs. Borrowing costs increased 2% year-on-year due mainly to higher loan principal in 2025 as compared to 2024. DI from operations decreased 1.1% year-on-year to $192.4 million, mainly due to the payment of 25% of management fees in cash. Assuming management fees were paid entirely in units, DI from operations would have increased 6.3% year-on-year. Moving to Slide 9. DPU for the full year 2025 is $0.023. DPU for the first half of 2025 was $0.0272 and was paid on the 15th of September. An advanced distribution of $0.163 was announced for the period 1st July to 16th of October pursuant to the private placement launched in October. This was paid on the 25th of November. For the remainder of the second half of 2025, being the period from 17th October to 31 December 2025, a DPU of $0.088 will be paid on the 25th of March 2026. Time for the distribution period of 17 October to 31st December, is attributable to both the units issued at 31 December 2025 as well as the new units issued on 19th January 2026 pursuant to the preferential offering launched in December 2025. The enlarged unit base attributable to both the private placement and preferential offering exercises. Coupled with the absence of contributions from these 2 acquisitions, which were completed in the later half of December, led to a lower DPU for the short-term distribution period of 17 October to 31st December. Full contributions from these acquisitions will be recorded from 2026. On Slide 10, the increase in deposited property, total assets, borrowings and total liabilities is due mainly to the acquisition of 75% interest in Top Ryde City shopping center and the additional 1/3 interest in MBFC Tower 3. Adjusted net asset value per unit as at 31st December 2025 is $1.27. Slide 11 outlines our key capital management metrics. Weighted average cost of debt for the full year of 2025 was 3.41% per annum. Interest rates, particularly the SORA had eased substantially in 2025 from the peak in 2023 and 2024. In 2025, we had also achieved favorable savings on low margins during the cost of refinancing. Riding on this momentum, we will continue to seek optimal outcomes for our refinancing activities in 2026 and achieved cost of debt for 2026 to be between low 3% and 3.3%. Aggregate leverage was 47.9%. If proceeds from the preferential offering were received on the 31st of December and used to repay the equity bridge loans, aggregate leverage would have been 40.4%. Fixed rate borrowings and sustainability-focused funding account for 53% and 67% of our total debt portfolio, respectively. The proceeds from the preferential offering were used to repay the equity bridge loans on 31st December. Fixed rate borrowings would have been 62% and sustainability-focused funding would have been 79%, which is above our target of 75%. Interest coverage ratio remained at 2.6x. Moving on to Slide 12. We're in various stages for the refinancing of loans maturing in the first half of 2026, which represent approximately 27% of the total debt due to that year, the equity bridge loans of approximately $890 million were repaid in full with proceeds from the preferential offering on the 20th of January 2026. With that, I will now hand it on to Jason, who will walk you through our portfolio review.

Thank you, Sebastian. Slide 14 shows Keppel REIT's portfolio breakdown as at 31st of December 2025 by geographical locations. Singapore remains Keppel REIT's largest market at 79.8% while Australia, South Korea and Japan are at 17.2%, 2.3% and 0.7%, respectively. Keppel REIT portfolio contract occupancy improved to 96.7% quarter-on-quarter, driven primarily by new leases secured for Ocean Financial Centre, Keppel Bay Tower, 2 Blue Street, Pinnacle Office Park and 8 Exhibition Street. We are pleased to share that in January 2026, Keppel REIT committed a new lease at 8 Exhibition Street with a tenant from the banking, insurance and financial services sector. The new tenant will occupy 5 floors at the Grade A commercial building, backfilling space taken by another tenant. Slide 15 provides a breakdown of our performance by geography. Driven by higher rentals, the attributable NPI of our Singapore portfolio increased by 2.9%. Supported by contribution from 2 Blue Street and higher occupancy at 2 Blue Street, the attributable NPI for our Australian portfolio increased by 6%, partially offset by stronger Singapore dollar. Attributable NPI for our North Asia portfolio decreased 3.2%, mainly due to the stronger same quarter. Proceeding to Slide 16, the majority of the leases committed in 2025 were for our Singapore properties. New leasing demand and expansions were primarily driven by tenants from the banking, insurance and financial services and technology, media and telecommunications sectors. We continue to maintain a well-spread lease expiry profile, as shown on Slide 17. The weighted average signing rent for our Singapore CBD office leases in 2025 was $12.91 per square foot per month. By comparison, the average rent for the leases expiry in 2026 stands at $12.4, which is below both our signing rent and CBRE's fourth quarter 2025 average call CDE Grade A office rent of $12.30 per square foot [indiscernible]. We have commenced discussions with tenants whose leases are due to expire this year and leasing demand continues to build. Slide 18 highlights our well-established and diversified tenant base comprising reputable blue-chip corporations and government agencies that contribute to the stability of our view. The next 3 slides provide a summary of our portfolio valuations as at 31st December. On Slide 19, valuation for our Singapore portfolio increased 25.2% as compared to 2024. Excluding the additional 1/3 interest in MBFC Tower 3, our Singapore portfolio valuation would have seen a 5.5% increase. The increase in valuations is mainly due to higher committed end market rates. Slide 20 shows our Australia portfolio Australian dollar valuations, which increased by 19.3%. In Singapore dollar terms, the increase in valuation was slightly lower at 15.2% due to a stronger Singapore dollar. Excluding the acquisition Top Ryde, the Australia portfolio valuation remains relatively stable. Moving on to Slide 21. In local currency terms, valuation for T Tower in Seoul increased 2.2%, and KR Ginza to in Tokyo increased 5.6%. The increases were largely due to higher committed rents achieved in 2025. Due to the stronger Singapore dollar, our valuations for North Asia decreased by 3.5% Singapore dollars. On an overall portfolio basis, we see a strong increase of 22.3% in our valuations. Excluding both the acquisitions of Top Ryde and the additional interest in MBFC Tower 3, we would have seen a valuation increase of 3.4%. Moving on, we are pleased to share the enhancement work done at 8 Exhibition Street. The [indiscernible] facility was upgraded to a larger scope facility to meet tenant needs for more premium gates, was launched in October last year for tenant use. Some ESG activities conducted in the last quarter of 2025 include festive events held at Keppel Bay Tower that supported children from Care Corner Singapore as well as building for Satellite at Ocean Financial Center in support of World Diabetes Day. We have teamed to announce that MBFC Tower 3 achieved the BCA Green Mark Platinum Super Loan Energy or S certification in December last year. This marks a major sustainability milestone for the development, and it is our third Singapore accept to be granted this certification after Keppel Bay Tower Fortune Financial Center. Sustainability is integral to how we create preserve long-term value. We continue to maintain our positions on ESG benchmarks and indices. Furthermore, we are extending our carbon reduction commitment this year. From the existing target of a 50% reduction in Scopes 1 and 2 emissions by 2030 to a new target of achieving net zero for Scope 1 and 2 emissions by 2050. At the asset level, our portfolio continued to uphold strong green credentials. As mentioned, MBFC Tower 3 achieved a BCA Green Mark Platinum SLE certification. SLE buildings feature the best-in-class energy efficiency, the use of on-site and off-site renewable energy and other intelligent energy management strategies. As at end 2025, all properties were green certified, except for Top Ryde City, which was acquired on 19th of December, this is consistent with our long-standing commitment to operational excellence and environmental stewardship. I will now hand the time to Xuan Lin, who will go through the market.

Thank you, Jason. next feels like high like trends across the markets where Keppel REIT operates. This slide shows the average trend for Singapore's core CBD Grade A office increasing by 0.8% quarter-on-quarter to $12.30 per square foot per month in the fourth quarter of 2025 while average occupancy increased to 95.5%. For the full year 2025, prime office rents increased by 2.9%, backed by resilient occupier demand and a tightening supply pipeline. In 2026, only 1 new office development is projected to be completed. Accordingly, across major property consultancies in Singapore, there is a clear consensus that CBD Grade A office rents will continue to rise, supported by the scarcity of supply, combined with sustained demand for quality office spaces. Latest projections by these consultancies indicate on-year Civil Grade A office rent growth of between 4% and 7% in 2026. In Australia, JLL reported that prime grade office occupancies increased for Sydney, Perth and normal CBDs in the fourth quarter and declined marginally in core part compared to the previous quarter. In North Sydney, there is a shopper occupancy decrease, primarily due to the recent completion of Victoria Cross tower. Meanwhile, prime gross effective rent in Sydney CBD continued its upward trajectory, increasing from $1,067 per square meter per year in the third quarter to $1,084 per square meter per year in the fourth quarter, reflecting resilient demand for quality office space. Looking at the Australian retail market, we note that household spending both discretionary and nondiscretionary had same year-on-year increases from 2022 to 2024. Total household spending remained strong in November 2025, having a 6.3% increase year-on-year, continuing the strong rises in services and good spending since in the first month. Detail for December 2025 has not yet been released by the Australian Bureau of Statistics. And so market occupancy of CBD Grade A office was flat on a quarter-on-quarter basis. Notwithstanding, the outward rent trajectory continues. JLL reported that the net effective rent for CBD Grade A office increased by about 1.4% quarter-on-quarter. In the Tokyo office market, JLL reported that grade A office occupancy increased to 99.3%, more great way office occupancy increased to 98.5%. Net effective rents on prepaid offices increased 5.3% quarter-on-quarter and Grade B offices grew 3.7%, reflecting continued strong demand for office screens in Tokyo. That concludes our presentation. Thank you.

Thank you, Xuan Lin. [Operator Instructions] There's the first question from Terence, JPMorgan.

Congrats on completing the acquisitions in December. I wanted to ask on what your priorities are for 2026. I understand that Marina One is reportedly in the market. Are you going to be looking at that, too?

Okay. So I think that the first slide I will present, we really talked about our focus for 2026. As I also mentioned in the past part, our focus is really to drive the organic growth especially for 2026, given the very low supply and high demand in the Singapore market and Australian assets. We also want to continue to push for the best results that we can actually get. And of course, the priority that we mentioned in the slides was also to reduce the borrowing costs. I also assure investors that I think that we have already done a fair bit of acquisitions. So we are not rushing to do any equity fundraising anytime soon. The first half, we really want to dedicate towards asset management. And of course, if the time is right, if we do find this attractive offers for some of our asset or one or more of our assets we could look at strategic divestments as and when we see the window open. In terms of Marina One, we understand that is coming to the market. That is coming to the market in maybe in the next 1 or 2 months. It is a very large asset. It's expected to cost between $5 billion to $6 billion and I mean, just as a rough gauge, Agent is saying that they of course, they will also take our MBFC Tower 3 transaction, taking that into consideration in terms of where the market price would be. So it will be at a market cap rate estimated at plus/minus 3-plus percent. So of course, the rentals in this particular building are lower than MBFC. So the obviously, the price per square foot is expected to be a bit lower. It is something that whole market will look at so obviously, we will take a look, but if you ask me, is it possible for us to take down this whole asset given that it's around $6 billion, I think it would be quite challenging.

Okay. That's great. And maybe if I could ask a little bit on the leasing since that's going to be the focus. I understand your set that leased up 5 floors at exhibition. Can you share when the current tenant comes off? And when does this replacement tenant kick in? And also on ANZ, I understand in the media, that ANZ will be leaving OFC, have you started to look at that lease?

Okay. So there is -- okay, I won't be able to name specific tenants in exhibition. There has been a few you can read out that there's been speculation of who the tenant is, the tenant is -- there's 1 particular tenant that we have been talking about to be exceeding the building towards end of this year. So they take up between into loss and then this lease that we have actually signed is actually for 5 loss. But what I will be able to sort of give a rough guide is that outgoing and incoming rent is actually quite a big difference. The reversion are getting from this new tenant is around -- is the rate incoming rate is more than double that of the outgoing. So this new tenant, we will be coming into the building sometime next year. So there will be a bit of a gap. There will be a bit of a gap close to a year, but the rental is double or more than double actually. Okay. Great. That sounds great. Maybe I'll Okay. Hold on is I want finish on exhibition, and I will talk that you mentioned the other tenant in Sapa, I will address that. So there is we have also signed heads of terms with another tenant which wasn't covered in the slide. There is 3 floors also in the 8 Exhibition Street. Similarly, the rentals that we are targeting for debt is also more than double of the exiting tenant. And that one also will be -- but that one is the start date for that talent will probably be sometime in 2028, probably in the first half okay? So they're moving to Singapore. So I will not be able to confirm which tenant is leaving, but I think that for Singapore, any tenant that gives us space back in our assets, whether it's CMBS OR and MBFC, we really don't mind, especially if they are full floor tenant. I think we have shared in the last 2 quarters that we have a lot of demand for full floors, especially in OSD. So if there is a tenant who leave there will definitely be a lot more demand or to lease this space to much higher rates. I'm not sure we did that specifically [indiscernible].

Sorry, clarification for the 2 tenants at exhibition. So I understand you are saying end of '27 and probably first half 28, is that inclusive of the tenant incentive already in terms of come [indiscernible].

The tenants, tenant incentives for these 2 tenants is around between 35% to 38%.

Okay. And the number that you quoted more than double is on a gross or net basis?

Gross.

Thank you, Terence. Next, we have Dale.

Sorry, I think Rachel was first, but I'll just proceed to answer. Okay. And may I just wanted to ask with regards to valuations in Australia in local currency terms. I noticed that the North Sydney asset valuations came off a bit. Are you able to share more on that?

So I think that our asset is doing well in North Sydney, but there is a general weakness in all the basically, all the markets, except for the core CBD. So we have shared that the cost it is very strong. Similarly, no increase no increase in supply and a strong demand also this site to quality trend that we're actually seeing in Sydney. So that's the reason why the -- because of the weakness, that's why the valuations for touring came down slightly.

Okay. Okay. Got it. Got it. Okay. And just wanted to follow up. I think previously, we were talking about interest rate savings that will drive earnings going forward. How is this coming along? And how should we be expecting your overall interest rates for this year?

So I think that we I think we have guided that we will see savings in interest costs, especially going into this year and also next year because but, of course, how the REITs actually hedge interest rates. So there are hedges that will need to come off. So that's why you have this [indiscernible] out back. When the interest rates went up, very, very quickly. You saw that our key REITs interest rates remain relatively re-up quite slowly. And then we also keep much later than many of the other REITs similarly coming down. Of course, it works that way. The other way also works against us, you will see it come down gradually. I'm not sure whether I said you can give any guidance, but we will see interest coming off as to that extent. I'm not sure that's how much more color can you give.

Yes, they also so previously, I think in last quarter, we guided that our outlook for 2026 for our cost of debt will be in the low 3% to 3.3%. So I think that has not changed I think one of the main levers that we are tapping on is to ride on the momentum of our refinancing exercise. So in last year, we have already achieved a considerable savings on the margin front. So we're riding on that into our refinancing activities this year. So we have also carried out some early refinancing for debt that were originally due in 2026 that was done in December last year. So we also achieved the same margin savings for those refinancing exercises and we will continue to look to right on that this year.

Okay. Okay. So just to clarify, this rate hike in by the RBA, it won't derail this low 3% target interest rates?

Not for the time being. So yes, so there was unfortunate that they hiked the rate. But I think it was a matter of time really, whether it was yesterday or it was it is to be at the next meeting. But yes, so what that aspect we cannot control, but what we can control is really to [indiscernible] one of the levers, which I highlighted earlier, and that is to drive margin savings.

Thanks, Dave. Next [indiscernible]. Apologies for that.

Okay, let go first. A few questions from me. I think, firstly, the 255 George Street base guarantees it coming in April 2026. And do you expect your occupancy to trend up further before the rental guarantee comes up?

Okay. So yes, it is it does fall off in April. So this building, you can see the occupancy is growing at 2% and 3%. We are continuing to lease out the space -- so where we are so the building for now has actually performed better than underwriting for all the space that we have actually leased out. So actually, technically, we can't potentially drop the rates and the target for the remaining space, which is on the ground floor and the level below, and then we will still meet underwriting numbers. So I think we are still holding out for higher rates. So there will be so if you look at the total because right now, is part that we are getting plus at top part. So if we do not manage these other states, there will be a slight drop in this particular building, but it's actually quite small. So I mentioned just now that there is some weakness in the North Sydney area. Our building is really one of the better performing ones. It's 1 of the best performing funds. And this is a brand-new building. So if anything -- if anyone signs a need, I think our building will be in the best position to actually secure a tenant, but it is a much slower market and we are still trying to release out this remaining space, which is why it's not so much about the rates, but it's really about a month. And now we are chasing this demand at the moment. So the ground for space is fully fitted. So we are just waiting for the right tenant who like the space and [indiscernible] pick up this space.

So at the tearing, machine is actually now at 92% same as your entire 100%, you would see kind of income [indiscernible].

Almost there but not there yet.

Okay. Okay. And this addition is that we cross tower, right? Could you was like comparative to your Blue Street rents, what's your asking rents versus the rents? And what's the pre-committed levels that Victoria was [indiscernible]?

Victoria Cross goose, it's -- actually the vacancy is actually quite high. It's more than 20%. Yes. So it's actually quite high. Rental, their rental is -- yes. These will be a bit higher. I won't be able to specifically give you what they're asking for.

And then can I just follow up on the 8 Exhibition Street, the 2 new leases. In terms of income contribution, when should we expect income contribution to come through?

So like I mentioned, 1 lease is kind of next year. The other lease is in the first half of 2028.

So when they move in, then we will get the inter commission. There will be an even safer.

So that's part of the incentives. So the each of them is a bit different, but then it will be amortized. Okay. So I think so okay, we Yes. I think just now, I also wanted to clarify the rental reversion. And so we compare the rental reversion on like-for-like so more than double rental reversion is comparing net to net and gross to gross. So it's so on a net basis, it is still more than double after incentives. So I think that this was something that Terrence was asking just onward Yes.

Okay. So on a net basis, rental reversions is also more than doubled.

Correct.

Okay. Okay. And the lease signed, the number of years that after lease that they signed.

The one that was just signed is a very long lease with is very long. Yes.

10 years old. I don't know, 7 years.

So yes, something like that. More than 7 I would tell you how many years. I'm on [indiscernible], okay?

Okay. Then the OFC lease vacancy that's coming up roughly when is the least coming up?

October 2026, but they are talking to us. This tenant is talking to us potentially staying for another few moments. So we are still working on with them. It really depends on how the new tenant that we can actually see an to come in. So we might not we -- might or might not give them an extension.

Okay. That's good. Good to know. Okay. Then my next question is in terms of your divestment do you think that it is now a good time to sell Korea or Japan office. I know last thing you said they have very strong reversions. You want to write on that, but then do you think Korea and Japan is good to sell.

So definitely, this year is a better time than last year. So but we are still seeing healthy rental reversions. I think that I've said that we are looking at it very closely. So if you can get the correct price, but I can get a correct price will we said, yes, I think that says that we definitely would look at selling it.

Thanks, Rachel. Next, we have Terence from UBS.

Can you please help us characterize the relationship with Hong Kong land going forward? I mean K-REIT used to be partners and now ostensibly competitors. I mean for now, they seem to want to grow their private equity AUM. So I'm just wondering, does it affect how you think about partnerships potential stick sales. Like if you look in the past in K-REIT's history, was there was a stack that was divested to Alliance? And in the current context, your valuations for Singapore office is indeed at a high. And maybe just a little bit of a follow-on to that is, do you also see future opportunity for acquisitions if and when they do decide on the private equity side to exit from their funds?

So our relationship with Hong Kong Land is still good. We are still partners in Q and MBFCs 1 and 2. So in fact, we just had an ExCo meeting last week. So things are as per normal. I think that see what you like, we have always been partners and also your competitors at the same time. Last time was Hong Kong land, us, Suntech. Now it is still basically these 3 except for Tower 3, our JV partner there. is PBX. So nothing has really changed. Every one -- every company has their own aspirations. Every company has our own strategy. So it's our strategy is -- although you look at I mean, between Keppel, you look at Capital, you look at Hong Kong Land, labor all of us have similar strategies. Suntech was has a similar strategy. Does that mean that the working relationship is not good? I don't think so. I think that all about our professionals. We work with each other we are still close. We're working for new them. So obviously, they have the aspiration to want to grow the portfolio and asset manager wants to grow their portfolio. How do you grow it? Where do you actually grow that one, I think it's a question that you can actually ask them but even for us, right, we expecting to just do nothing, obviously, I don't think that is something that we are doing. So when we compete, we will compete, but it doesn't mean that we cannot work well together. I'm not sure whether that is your specific, whether that sort of addresses what you were asking, but things are working well. We still have the partnership in terms of managing the assets, and we are still working together to produce the best results for the assets that we call together with them.

Got it. Got it. And on Marina One, the $5 billion to $6 billion ask is a big range. I think it's like a 17% delta. So let's say, if the closing price comes in towards the low end of that, and let's say, you get a high 3% cap rate, how would you expect the values to factor this towards your valuations when the time comes?

So it is not -- Okay. So I think it's all speculation. So Singapore, Singapore premium of this cap rates have always been around the 3.5% mark. I don't know how to value was where value is today value this as premium, the revalue this as more [indiscernible]. But even then, the difference usually between prime between premium and Grade A. We are talking about maybe 20 bps differential between 3.5 to 3.7 so logically, I would expect the cap rates to be around this kind of price this kind of range, if it ever goes to -- your example say, high 3s. If you ask me the only reason for that is because of this ticket size being so big, that basically a lot of the buyers have actually been priced out because they're not able to come on such a big quantum. But logically, it should not be a discourage. And of course, just now what I mentioned to you between 5% to 6% is what is given by the agents because you have to look at underlying NPI. You need to look at the cap rates, you need to look at it in place rents before you can determine what the fair market price would be. But I think just on specifically the question, how would be look, there is a difference between, say, MBFC and Marina One. Marina One, it is in the facility. But if you walk, you understand -- if you walk -- just try to walk to Marina One. It is street away. It is quite a fairly long walk. The difference between the ORQ and the Marina One or MBFC versus Marina 1. They work into the buildings that the feeling is different. You walk NBCU's really, it's a different feeling, but now on you look up, you're looking at a swimming pool -- you're looking at the swimming pool of the residential there and the whole field and bonds are the case is actually quite different. So I think it's a bit early to tell how the property will actually transact. But all I can say is that it is a bit different in -- from a quality perspective between our building and the building.

Got it. And last one, a quick one. Just on ADS. I noticed that the valuation moved relatively little compared to I think can you were alluding to the doubling of net rents. So just curious why you didn't have a more material positive influence on the valuations.

That is a factor in that has affected in the new leases. Because the lease was only recently signed, a was also just recently signed.

Can we have [indiscernible]?

First question is on acquisitions. Do you rule out entirely for 2026? If not, what are the factors that you will consider? And specifically, can you comment on 2 Central?

So sorry, do I the first question agent.

Do you roll out acquisitions? I understand it's not a priority, but do you roll it out for 2026.

Why would I want to roll out any acquisitions? Maybe that's maybe my question back to you. There's no need for me to rule out online state just now is there. We are not actively looking at anything especially for the first half. Second half, could we look at something, of course, is always possible, but are we going to do it without considering any divestments? I say we will not. I think if we want to buy something, as I have mentioned to a number of you, it's only logical for us to consider doing some divestments first before rushing to do more acquisitions. We are not rushing today. But there is no reason why it should come myself to stop work and not look at any investments that's just not very, very logical from the way we look at things. So your question was The other one was on Keppel South Central, right? So I don't think there is any further update. What I mentioned to you is we have not commenced discussions with the sponsor for this asset. My understanding is that occupancy is still not at a level that makes it interesting for us to start discussions at this point in time. So -- and of course, even if the occupancy level -- is at a level that's high enough, there's still a lot of things that we need to figure out. For example, K-REIT, you acquire that air as the price per square foot was in place rent because there's a lot of things that we need to look. But at this point in time, we haven't started even looking at it or considering even to talk to the sponsor of this asset.

Okay. Got it. Second question is around rent reversion. If I compare the gap between expiring and signing is around mid-single-digit reversion, is that fair based on your current leasing discussions?

So no. So I think we have only just started the year right. How are the rental is going to go to 2 this year, no one really knows. No one really knows you're just comparing spot, but the market rentals can move quite quickly. So it is a bit too early to speculate where rental reversion will be for this particular year. I think that, like what I mentioned, we won as high a number as possible, we will continue to work towards that. But what I can share is that the risk continued demand in the market or especially quality and premium office space, and we are going to capitalize on that.

If I recall 1, 2 briefings ago you were guiding for double-digit reversion for 2026. Does that still stand?

Yes. That is the aspiration of course.

Next, we have [indiscernible].

A couple of follow-up questions also back to acquisitions. How is the appetite for Australia retail right now, given that a lot of transactions in the market and demand is starting to nicely picked up? And also to follow up on that is any color on your operational performance for Top Ryde in terms of leasing spreads and so on discussions?

So I think that it's not just Australia. I think Singapore also has we have seen a number of transactions being recorded, both in Singapore and Australia. So there is also a lot more people look at retail is everyone sees the strong tell winds in chasing these deals at Singapore, we have seen [indiscernible] transacted at quite a good quite a good cap rate. And of course, recently, we have seen a 0.05 come to market in Australia. There are also a number of junctions happening, including West, Merian in Analytics owned by cascading port. So there's a few transactions. Like I said earlier, we -- of course, there's no reason why we shouldn't not look -- the acquisitions is really not the priority for us, especially in the first half. Takes some time to digest what we've actually done first, and then we'll focus with our asset management. Second half really depends on where we see ourselves and also dependent on divestments that we might be looking to do more if we can recycle some capital. So that remains unchanged. So notwithstanding what transactions happen in the market, I think that, that is something that we are saying we will do, and this is something that we will keep to at least for the time being [indiscernible] allocation. Yes, you mentioned capital allocation.

Yes. And previously, as the Top Ryde acquisition, you were talking about more than 20% or something like that because that's still holds.

Yes. Yes. And I think that still holds there. I don't think we are looking. But having said that, it's not like we want to go to 20%. It really depends. That is just like -- we just set ourselves like an upper limit, but we are happy to just on Top Ryde for now. And like I mentioned, we are now looking to do to just cont buying. We do want to take this time to sort of reflect and we'll sort of focus on the management. And I think you were asking about Top Ryde. You will be able to see the contribution of business from first quarter onwards. We will not be able to share too much at this point in time. But I think based on the work that we have done so far together with our partners, definitely in line with underwriting, we are hoping to exceed our underwriting for this asset and leads as expectation and the demand continues to be very, very strong, especially for space in this particular retail mall. Maybe just a quick one. No you didn't quite ask that, but I think we have we are starting to see a compression of cap rates, both in Singapore and Australia when it comes to retail assets.

Got it. On the debt side line for your guidance of low 3% to 3.3% [indiscernible] feels a bit slow in terms of the decline? I mean the question is what is any color on the currency breakdown, the expiring debt for 2026 to 2027? Is it more only?

2026 would be, I would say -- okay, so we have a medium-term loan, so that's the same. The remaining bank loans are split between Korean won and Aussie dollar. That's for 2026.

Sorry, 50-50?

Yes.

Okay. So 50% SG and 50% [indiscernible] and Korea.

Yes, that's right.

I think maybe just one reasonable reason why the paper is a little bit slower and it could come in more in 2027, what's the breakdown in 2027.

I think we need to get back to you separately on the breakdown of 2027. But yes, the reason why it is not going to taper as quickly as maybe expected is because we don't have that much Sing dollar debt that is unhedged or floating. So -- and also the refinancing because it's only just the medium-term note that we have, which is currently about 3.72%, but whilst we think we could get a good rate when we refinance that at closer to the end of the year, I don't think that will move the cost of debt significantly downwards. Yes.

And your closing, you say, is mostly offshore.

My floating, yes.

And it's mostly also Aussie, I would presume.

Aussie and won.

Okay. Sorry, I don't want to cover this. But last question. On the exhibition, I can I confirm that your income contribution for your first tenant that is going to lease up 5 floors were only coming in 2027, and then the remaining 3 floors is 2028.

Correct.

Okay. And that will be the whole building.

No, no, this verdict had many, many floors. This is this [indiscernible] 2 leases, yes.

And that will be somewhat around -- sorry, don't you mind me how many percent of GRI?

So this whole building is 35 floors. There's [indiscernible]

So proportionate. Okay.

Just to get back to you on the breakdown of the loans or 2027. So for Sing dollars, about 60% of the total debt due in 2027. Aussie is about early and the remainder is Japanese yen.

Next, can we have Vijay?

Just a couple of questions for me. Firstly, in terms of Singapore CBD office demand, can I get some color in terms of is this still driven by flight quality but it now the gap widening, do you see this flight to quality slowing down or even possibly for thing. Maybe also some give some color in terms of new or expansion demand. Is this from a new setup that is coming to Singapore?

So it is -- I wouldn't say it's off line to quality is really a good mix of area. Quite a lot of expansion. we see we are seeing a lot of expansion at the moment. Our priority is if our tenant want to expand, we will give them space. And for OFC, the one of the -- I won't mention who are the tenants, the only reason why this tenant is leaving is because we can't give them additional space. They actually asked for -- they have 2 floors. They asked for 1 additional floor. We are not able to give to them. And that's why they are actually leaving our building, going by another building. So that's the only reason. In fact, I just caught up with them. They actually quite said to me they just needed 1 extra floor, we're not able to give. So OFC, like I mentioned, it's mostly expansion. The new tenants that we are talking to are not trying to quality. They are all -- Okay. Okay. The majority of them are new tenants or [indiscernible]. Some you can see flat to quality or they are moving from other buildings. Yes. And across our across ORQ and MBFC is a good mix. It's expansion. It is tenant could fly to quality, but it's not. It's not like what you see majority of like quality, not quite there yet.

Okay. Can you give some color on who took up the additional space in Keppel Bay Tower. I mean is this from an existing expansion? Or is this a new tenant in the same area?

So these are new tenants.

Okay. Okay. My last question, would you consider share buyback as a strategy?

Yes. I think we did we mentioned that we didn't -- we stopped our share buyback program because our gearing is at a more slightly more elevated level. But now that our gearing has come on if we do some divestments that is shared [indiscernible] that is something that we are looking or considering.

[indiscernible] divestments.

Yes, not now, yes, definitely not now. Once we have done some divestments, the divestments we do it, we're looking to [indiscernible]

Perhaps I think we're just in time for one last question from Derek.

Just a follow-up on Hsien's comment on Singapore retail is potentially attractive, would that include your sponsors, I want to know more.

Yes. We have we are not looking at it at this point in time. Yes. So I think that's all I can say. This asset, I think they have been doing repositioning and all that. I'm not sure at the latest, but that's not something that we have considered.

Yes, that's hence, my I just want to check because they're doing it for quite some time already, yes. And for See, I think I just want to ask on the tax expense this time around $9 million. Is all that from withholding tax in Australia, and that's cash, right?

Yes. So part of it will be reporting tax. There is also a deferred tax component that we will provide for when there are valuation increases in Australia, Korea and Japan. So because there are capital gains tax regimes there, so we have to provide for some deferred tax or rather exit tax when their valuation gains.

And the $9 million is all cash, right? It hits the DI.

No, no, no, no. The deferred tax component is noncash. So that will only be realized when there is an actual exit or divestment. So the remainder will be withholding tax that is actually paid in cash.

How much of it is withholding?

How much of it is withholding? Can I get back to you on this one?

Yes.

I see that, Terence.

Sorry, just a quick question for me. On the tax transparency for and should we expect that to come in?

We started work on this one already. We are doing the documentation. So I think the last time we mentioned it should take around 6 months, so that's the estimated time frame at this point.

Okay. That's good. And also for the new borrowings for MBFC, Tower 3 and the acquisition side what were the loan rates that you secured for that acquisition?

So actually, when we bought Tower 3, that was already debt in place, which is locked in. But our own debt, we only took a very, very small loan. That one we borrowed at mid-double digits per [indiscernible], plus minus a bit.

And the holding cost?

Under 3%.

Maybe just to get back to Derek, Morgan Stanley's question. So for the income tax for the year, that's $13.7 million. About $9 million was withholding tax paying cash.

Derek, you still have your hand raised, I believe, you're okay, it Thanks, Derek. Thank you, everyone. We've come to the end of the call today. Thanks for joining us.

Thank you.

Thank you.