Good morning, everyone. Thank you for joining us today for Keppel REIT's full year 2025 results analyst briefing. I'm Lilian 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, Ms. Teo Xuan Lin, 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. Good morning, everyone. Thank you so much for joining us today. We'll begin with an overall overview of 2025 and also our focus for 2026. In the fourth quarter of 2025, we completed two strategic acquisitions in December last year, namely a 75% interest in Top Ryde City, which is a regional mall in Sydney, and an additional one-third interest in MBFC Tower 3 in Singapore. Top Ryde City is our first pure-play retail asset and diversification into retail, enhancing our income resilience, allowing us to benefit from the resilient suburban retail segment, which has strong growth potential, supported by long-term consumption growth and population increase. MBFC Tower 3 was a rare opportunity that allowed us to deepen our ownership in Singapore's core CBD. It is the best asset in the best location and is a property 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 19th 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 year ahead. Moving on to our full- year 2025 key highlights on slide four. NPI rose 6.9% year-on-year, driven mainly by contributions from 255 George Street asset, 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 for Singapore prime office space and lower borrowing costs. DI from operations, assuming management fees were paid entirely in units, would have increased 6.3% year-on-year. As at 31st of December last year, our leverage stood at 47.9% due to the transitory impact of the equity bridge loans or the EBL obtained to fund the MBFC Tower 3 acquisition.
Had the proceeds from the preferential offering been received on 31st of December and were used to fund the acquisition, our leverage would have been 40.4%. We have since completed the preferential offering, and the equity bridge loans were repaid in full on the 20th of January 2026. The weighted average cost of debt was 3.41% per annum. Total borrowings on fixed rates is at 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 Singapore portfolio recording 10.7%.
The portfolio's weighted average lease expiry remained long at 4.4 years, while the WALE of our top 10 tenants was 8.1 years, reinforcing our income visibility. Through proactive leasing efforts, we had over 1.7 million square feet of leases committed in 2025. I will let Sebastian take you through the key financial highlights next.
Thank you, Hsien Yang. For the second half of 2025, we see continued strong performance. Property income, NPI, as well as share results of, excuse me, 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 higher 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 SGD 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 nine, DPU for the full- year 2025 is SGD 0.0523 . DPU for the first half of 2025 was SGD 0.0272 and was paid on the 15th of September. An advanced distribution of SGD 0.0163 was announced for the period 1st July to 16th of October pursuant to the private placement launch 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 31st December 2025, a DPU of SGD 0.0088 will be paid on the 25th of March 2026.
DI for the distribution period of 17th October to 31st December is attributable to both the units in issue as at 31st December, 2025, as well as the new units issued on 19th January, 2026 pursuant to the preferential offering launch 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 two acquisitions, which were completed in the latter half of December, led to a lower DPU for the shortened distribution period of 17th 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 Centre and the additional one-third interest in MBFC Tower 3.
Adjusted net asset value per unit as at 31st December , 2025 is SGD 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 loan margins during the course of refinancing. Riding on this momentum, we will continue to seek optimal outcomes for our refinancing activities in 2026 and achieve 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 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.
If 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 2.6 x. Moving on to slide 12. We are in various stages for the refinancing of loans maturing in the first half of 2026, which represent approximately 27% of the total debt due that year. The equity bridge loans of approximately SGD 890 million were repaid in full with proceeds from the preferential offering on the 20th of January, 2026. With that, I will now hand the time 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's portfolio committed occupancy improved to 96.7% quarter-on-quarter, driven primarily by new leases secured for Ocean Financial Centre, Keppel Bay Tower, 255 George 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 five floors at the Grade A commercial building, backfilling space vacated 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 255 George Street and higher occupancy at 2 Blue Street, the attributable NPI for our Australia portfolio increased by 6%, partially offset by a stronger Singapore dollar. Attributable NPI for our North Asia portfolio decreased 3.2%, mainly due to the stronger Singapore dollar. 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 SGD 12.91 per square foot per month.
By comparison, the average rent for the leases expiring in 2026 stands at SGD 12.14 per square foot per month , which is below both our signing rent and CBRE's fourth quarter 2025 average core CBD Grade A office rent of SGD 12.30 per square foot per month. We have commenced discussions with tenants whose leases are due to expire this year, and leasing demand continues to be healthy. 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 portfolio. The next three slides provide a summary of our portfolio valuations as at 31st of December. On slide 19, valuation for our Singapore portfolio increased 25.2% as compared to 2024. Excluding the additional one-third 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 and market rents.
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 of 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 II in Tokyo increased 5.6%. The increases were largely due to the higher committed rents achieved in 2025. Due to the stronger Singapore dollar, our valuations for North Asia decreased by 3.5% Singapore dollar terms. 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 works done at 8 Exhibition Street. The end-of-trip facility was upgraded to a larger bespoke facility to meet tenant needs for more premium amenities. It was launched in October last year for tenant use. Some ESG activities conducted in the last quarter of 2025 include a festive event held at Keppel Bay Tower that supported children from Care Corner Singapore, as well as building facade light up at Ocean Financial Centre in support of World Diabetes Day. We are pleased to announce that MBFC Tower 3 achieved the BCA Green Mark Platinum Super Low Energy, or SLE, certification in December last year. This marks a major sustainability milestone for the development, and it is our third Singapore asset to be granted this certification after Keppel Bay Tower and Ocean Financial Centre. Sustainability is integral to how we create and 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 the 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. The next few slides highlight key trends across the markets where Keppel REIT operates. This slide shows the average rent for Singapore's core CBD Grade A office increasing by 0.8% quarter-on-quarter to SGD 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 one 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 year-on-year CBD 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 Melbourne CBDs in the fourth quarter, and declined marginally in Macquarie Park compared to the previous quarter. In North Sydney, there is a sharper occupancy decrease, primarily due to the recent completion of Victoria Cross Tower. Meanwhile, prime gross effective rents in Sydney CBD continued its upward trajectory, increasing from AUD 1,067 per square meters per year in the third quarter to AUD 1,084 per square meters per year in the fourth quarter, reflecting the resilient demand for quality office space. Looking at Australia's retail market, we note that household spending, both discretionary and non-discretionary, had seen 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 goods spending seen in the previous month.
Data for December 2025 has not yet been released by the Australian Bureau of Statistics. In Seoul, 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%, while Grade B office occupancy increased to 98.5%. Net effective rents for Grade A offices increased 5.3% quarter-on-quarter, and Grade B offices grew 3.7%, reflecting continued strong demand for office space in Tokyo. That concludes our presentation. Thank you.
Thank you, Xuan Lin. We will now take questions. For analysts who are joining us on the Teams platform, please click on the raise hand button if you would like to ask a question, and wait for our cue before you unmute yourself to pose your question. For the benefit of all participants on today's call, please limit yourselves to two questions. If you have more questions, kindly re-enter the queue. For those joining us online via the webcast platform, please type your questions via the chat box provided. There is a first question from Terence.
Good morning.
Hi. Morning, Terence.
Hey, morning, Hsien Yang and team. Happy New Year. Congrats on completing the acquisitions in December. I wanted to ask what your priorities are for 2026. I understand that Marina One is reportedly on the market. Are you going to be looking at that too?
Okay. I think that the first slide that we presented, we really talked about our focus for 2026. As I also mentioned in the past month, our focus is really to drive organic growth, especially for 2026, given the very low supply and high demand in the Singapore market. Our Australian assets, we also want to continue to push for the best results that we can actually get. Of course, the other priority that we mentioned in the slides was also to reduce the borrowing cost. I also assured investors that I think that we have already done a fair bit of acquisition, so we are not rushing to do any equity fundraising anytime soon. The first half, we really want to dedicate towards asset management.
If the time is right, if we do find these attractive offers for some of our assets, 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. It may be in the next one or two months. It is a very large asset. It is expected to cost between SGD 5 billion to SGD 6 billion. Just as a rough gauge, the agent is saying that, 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 ± 3%. Of course, the rentals in this particular building are lower than MBFC.
Obviously, the price per square foot is expected to be a bit lower. It is something that the 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 is around SGD 6 billion? I think it is going to be quite challenging.
Okay. Thanks, Hsien Yang. Maybe if I could ask a little bit on the leasing, since that is going to be the focus. I understand you shared that you leased up five floors at 8 Exhibition Street. Can you share when the current tenant comes off and when does this replacement tenant kick in? Also on ANZ lease, I understand it is in the medias that ANZ will be leaving OFC. Have you started to look at that lease?
Okay, I won't be able to name specific tenants in 8 Exhibition Street. There's been a few. You can read that there's been speculation who the tenant is. There's one particular tenant that people have been talking about. They'll be exiting the building towards end of this year. They take up between eight to nine floors, and this lease that we've actually signed is actually for five floors. But what I will be able to give a rough guide is that the outgoing and incoming rental is actually quite a big difference. The reversion that we're getting from this new tenant is around, rather the incoming rate is more than double that of the outgoing. This new tenant will be coming into the building sometime next year.
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. Thanks. Maybe I'll jump back.
Okay, hold on. I haven't finished on 8 Exhibition Street. I will talk, that you mentioned the other tenant in Singapore, I will address that.
Yeah.
We have also signed heads of terms with another tenant, which wasn't covered in the slides. That is for three floors, also in 8 Exhibition Street. Similarly, the rentals that we are targeting for that is also more than double of the exiting tenant. That one also will be. But that one, the start date for that tenant will probably be sometime in 2028, probably in the first half of 2028. Okay? Moving to Singapore. 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 CBD assets, whether it's OFC, MBFC, ORQ, and MBFC, we really don't mind, especially if they are full floor tenants. I think we have shared in the last two quarters that we have a lot of demand for full floors, especially in OFC.
If there is a tenant who leaves, there will definitely be a lot more demand to lease this space at much higher rates. I'm not sure whether that specifically addresses it, but yeah. That's-
Yeah. Sorry, just a clarification for the two tenants at 8 Exhibition Street. I understand you are saying end of 2027 and probably first half 2028. Is that inclusive of the tenant incentives already? In terms of income contribution.
No, that is the start date. The tenant incentives for these two tenants is around between 35%-38%.
Okay, and the number that you quoted, more than double, is on a gross or net basis?
Gross.
Okay, great. Thanks.
Thank you, Terence. Next we have Dale. You can unmute yourself.
Hey, thanks, Lilian.
Morning, Dale. Yep.
Yeah, morning, Hsien Yang, and team. Thanks for the presentation. Sorry, I think Rachel was first, but I will just proceed to ask now. Okay. Anyway, just wanted to ask with regards to valuations in Australia in the local currency terms, I noticed that the North Sydney assets valuations came off a bit. Are you able to share more on that?
Our asset is doing well in North Sydney, but there is a general weakness in basically all the markets except for the core CBD. We have shared that the core CBD is very strong. Similarly, no increase in supply and a strong demand. There is also this flight to quality trend that we are actually seeing in Sydney. That is the reason why, because of the weakness, that is why the valuations for 2 Blue Street came down slightly.
Okay. 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?
I think we have guided that we will see savings in interest costs, especially going into this year and also next year. But of course, you know how the REITs actually hedge interest rates, so there are hedges that will need to come off. That is why you have this smoothing out effect. When the interest rates went up very quickly, you saw that Keppel REIT's interest rates remained relatively flat, went up quite slowly. Then we also peaked much later than many of the other REITs. Similarly, coming down, of course, it works that way. The other way, it also works against us. You will see it come down gradually. I am not sure whether that we can give any guidance, but we will see interest rates coming off as to that extent. I am not sure the step
How much more color can you give?
Yeah.
Yeah.
Previous setting , I think last quarter we guided that our outlook for 2026 for our cost of debt will be in the low 3% to 3.3%. I think that has not changed. But I think one of the main levers that we are tapping on is to ride on the momentum of our refinancing exercise. Last year, we have already achieved considerable savings on the margin front. We are riding on that into our refinancing activities this year. So, we had 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 ride on that this year.
Okay. Thanks. Just to clarify, this rate hike by the RBA, it will not derail this low 3% target interest rates?
Not for the time being. Yeah, that was unfortunate that they hiked the rate, but I think it was a matter of time, really, whether it was yesterday or it is to be at the next meeting. But, yeah. That aspect we cannot control, but what we can control is really to pull on one of the levers, which I highlighted earlier, and that is to drive margin savings.
Okay. Got it. Okay. That is all from me for now. Thank you.
Thanks, Dale.
Thanks, Dale. Next to Rachel. Apologies for that.
Hey, hi Lilian, Hsien Yang, and team. Thanks. No worries. It is okay to let Dale go through first. A few questions from me. Firstly, the 2 Blue Street rental guarantee, is it coming off in April 2026? Do you expect your occupancy to trend up further before the rental guarantee comes off?
Yes, it does fall off in April. This building, you can see the occupancy is around 92%- 93%. We are continuing to lease out the space. The building for now has actually performed better than underwriting for all the space that we eventually leased out. Actually, technically, we can potentially drop the rates a little bit for the remaining space, which is on the ground floor and the level below. Then we will still meet underwriting numbers. I think we are still holding out for higher rates. If you look at the total, because right now is whatever we are getting plus that top-up. If we do not manage to lease out the space, there will be a slight drop, in this particular building, but it is actually quite small.
I mentioned just now that there is some weakness in the North Sydney area. Our building is really one of the better performing ones. In fact, one of the best performing ones, and this is a brand-new building. If anyone signs a lease, 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 lease out this remaining space, which is why it is not so much about the rates, but it is really about the demand, and we are chasing this demand at the moment. The ground floor space is fully fitted, so we are just waiting for the right tenant who like the space, and then can actually pick up this space.
Okay. After the underwriting, which means actually now at 92%, you are the same as your underwriting 100% occupancy kind of income levels, is it?
Almost there, but not quite there.
Okay. I guess your competition is the Victoria Cross Tower, right? Comparative to your 2 Blue Street rents, what is your asking rents versus their rents, and what is the pre-committed levels at the Victoria Cross Tower?
Victoria Cross, the vacancy is actually quite high. It is more than 20%. It is actually quite high. Their rental is around-
Higher.
Theirs will be a bit higher. I will not be able to specifically give you what they are asking for.
Okay. Got it. Yeah. Can I just follow up on the 8 Exhibition Street, the two new leases. In terms of income contribution, when should we expect income contribution to come through?
Like I mentioned, one lease is end of next year. The other lease is in the first half of 2028.
Oh, so when they move in, then we will get the income contribution? There will be rent-free period and stuff?
That is part of the incentives. Each of them is a bit different, but it will be amortized.
Oh, okay.
Okay, wait. I think just now I also wanted to clarify the rental reversion. We compared the rental reversion on like for like. The more than double rental reversion is comparing net-to-net and gross-to-gross. On a net basis, it is still more than double after incentives. I think that this was something that Terence was asking just now. Yeah.
Oh, okay. On a net basis, rental reversions is also more than double.
Correct.
Okay. The lease sign, the number of years of the lease that they signed?
The one that was just signed is a very long lease. It's very long.
Okay. 10 years? I don't know, seven years.
Yeah, something like that.
Okay.
More than seven years. I won't tell you how many years. More than seven, more than eight. Okay?
Okay. Thanks. Okay. The OFC lease vacancy that is coming up. Roughly when is the lease that is coming up?
Hold on. October 2026, but they are talking to us. This tenant is talking to us of potentially staying for another few more months, so we are still working out with them. It really depends on the new tenant that we can actually get when they actually want to come in. We might or might not give them an extension.
It is all good. Got new tenant already. That is good. Good to know. Okay. My next question is, in terms of your divestments, 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 ride on that. Do you think Korea and Japan is good to sell now?
Definitely this year is a better time than last year. We are still seeing healthy rental reversions. I think that I have shared that we are looking at it very closely. If we can get the correct price, will we sell it? Yeah, I think the answer is that we definitely would look at selling it.
Okay. All right. I will jump back to the queue then now. Thank you. Thank you so much.
Thanks, Rachel. Next we have Terence from UBS.
Hi. Good morning.
Hi, morning.
Yeah. Can you please help us characterize the relationship with Hongkong Land going forward? Keppel REIT used to be partners and now ostensibly competitors. For now, they seem to want to grow their private equity AUM. I am just wondering, does it affect how you think about partnerships and potential stake sales? If you look in the past, in Keppel REIT's history, OFC, there was a stake that was divested to Allianz. In the current context, your valuations for Singapore office is indeed at a high. Maybe just a little bit of a follow on to that is, do you also see future opportunity for acquisitions even when they do decide, on the private equity side, to exit from their funds?
Our relationship with Hongkong Land is still good. We are still partners in ORQ and MBFC Tower One and Two. In fact, we just had an ExCo meeting last week, so things are as per normal. I think that, say what you like, we have always been partners and also yet competitors at the same time. Last time was Hongkong Land, us, Suntec. Now it is still basically these three, except for Tower 3. Our JV partner there is DBS. Nothing has really changed. Every company has their own aspirations, every company has their own strategy. Is our strategy? You look at between Keppel, you look at CapitaLand, you look at Hongkong Land, Lendlease, all of us have similar strategies. Suntec also has a similar strategy. Does that mean that the working relationship is not good?
I don't think so. I think that all of us are professionals. We work well with each other. We are still close. We are working closely with them. Obviously, they have the aspirations. They want to grow their portfolio. Any asset manager will want to grow their portfolio, but how do you grow it? Where they actually grow that one, I think is a question that you can actually ask them. Even for us, are we expecting to just sit and do nothing? Obviously, I don't think that is something that we are doing. Will we compete? We will compete, but doesn't mean that we cannot work well together. I am not sure whether that addresses what you were asking. But things are still 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 co-own together with them.
Got it. On Marina One, the SGD 5 billion to SGD 6 billion ask is a big range. I think it is like a 17% delta. Let us say if the closing price comes in towards the low- end of that, and let us say you get a high 3% cap rate, how would you expect the valuers to factor this towards your valuations when the time comes?
I think it is all speculation, right? Singapore premium office cap rates have always been around the 3.5% mark. I do not know how the valuers will value this. Do they value this as premium? Do they value this as more of a Grade A? Even then, the difference usually between premium and Grade A, we are talking about maybe 20 basis points difference. So between 3.5% to 3.7%. Logically, I would expect the cap rates to be around this kind of range. If it ever goes to your example, say high 3%, 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 there because they are not able to come out such a big quantum. But logically, it should not be at this kind of cap rate.
Of course, just now what I mentioned to you, between SGD 5 billion to SGD 6 billion 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 the in-place rentals before you can determine what the fair market price would be. I think, just specifically on the question, how the valuers will look, there is a difference between, say, MBFC and Marina One. Marina One, it is in that vicinity, but if you walk, you will understand. If you walk, just try to walk to Marina One. It is a street away. It is quite a fairly long walk. The difference between an ORQ and a Marina One or MBFC versus Marina One. You walk into the buildings, the feeling is different. You walk in MBFC, it is a different feeling versus Marina One.
You look out, you are looking at a swimming pool, you are looking at the swimming pool of the residential there, and the whole feel and ambience of the place is actually quite different. I think it is a bit early to tell how the property will actually transact. All I can say is that it is a bit different from a quality perspective between our building and their building.
Got it. Last one, quick one, just on OFC. Noticed that the valuation moved relatively little compared to, I think, Hsien Yang, you were alluding to the doubling of net rents. Just curious why it did not have a more material positive influence on the valuations.
They have not factored in the new leases. The lease was only recently signed, and the other HOD was also just recently signed.
Okay, got it. Thank you.
Thanks, Terence. Next, can we have Xuan?
Hi, Xuan.
Morning. First question is on acquisitions. Do you rule it out entirely for 2026? If not, what are the factors that you will consider? Specifically, can you comment on Keppel South Central?
Sorry. What's the first question again?
Do you rule out acquisitions? I understand it's not the priority, but do you rule it out for 2026?
Why would I want to rule out any acquisitions? Maybe my question back to you, there's no need for me to rule out.
Okay.
All I said just now is that we are not actively looking at anything, especially for the first half. Second half, could we look at something? Of course, answer is it's always possible. Are we going to do it without considering any divestments? Answer is probably 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 to do it, but there is no reason why I should tell myself to stop work and not look at any investments. That's just not very, very logical from the way we look at things. Your question was, the other one was on Keppel South Central, right? 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 their occupancy is still not at a level that makes it interesting for us to start discussions with them at this point in time. Of course, even if the occupancy level is at a level that's high enough for us to talk about, there's still a lot of things that we need to figure out. For example, cap rate, do you acquire that air? What's the price per square foot? What's the in-place rentals? There's a lot of things that we need to look at. But at this point in time, we haven't started even looking at it or considering even to talk to the sponsor about 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?
No. I think that we have only just started the year, right? How are the rental rates going to go to this year? No one really knows. You are just comparing spot, but the market rentals can move quite quickly. It is a bit too early to speculate where the rental reversions will be for this particular year. I think that like what I mentioned, we want as high a number as possible, so we will continue to work towards that. But what I can share is that there is continued demand in the market for especially quality and premium office space, and we are going to capitalize on that.
If I recall, one, two briefings ago, you were guiding for double-digit reversion for 2026. Does that still stand?
That is the aspiration, of course.
Okay, got it. Thank you.
Thanks, Xuan. Next, can we have Donald?
Hey, hi. Hsien Yang, how are you?
Hi, Donald. Hi. Good. And you?
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 really nicely pick up. Also, to follow up on that, is there any color on your operational performance for Top Ryde in terms of leasing spreads, and so on? Just a question.
I think that it is not just Australia. I think Singapore also we have seen a number of transactions being recorded both in Singapore and Australia, so there is also a lot more people looking at retail. Everyone sees the strong tailwinds in retail, and people are chasing these deals. In Singapore, we have seen The Clementi Mall transacted at quite a good cap rate. Of course recently we have seen Anchorpoint and White Sands come to market. In Australia, there are also a number of transactions happening, including Westfield Marion in Adelaide. This is owned by Cascade in Singapore. So there is a few transactions. Like I said earlier, of course there is no reason why we shouldn't look, but the acquisitions is really not the priority for us, especially in the first half.
We will take some time to digest what we have actually done first, and then we will focus really on asset management. Second half really depends on where we see ourselves and also dependent on divestments, and we might be looking to do more if we can recycle some capital. So that remains unchanged. Notwithstanding what transactions happen in the market, I think that that is something that we have said we will do and this is something that we will keep to, at least for the time being. But maybe-
Capital allocation.
Yeah, maybe coming back.
The capital allocation would be.
Sorry? Yeah, you mentioned capital allocations.
Yeah. I think previously, post the Top Ryde acquisition, you were talking about no more than 20%, something like that. Does that still hold?
Yeah. I think that still holds. I don't think we are looking. Having said that, it's not like we want to go to 20%. It really depends. That is just like we just set ourself an upper limit, but we are happy to just own Top Ryde for now. Like I mentioned, we are not looking to just go out and continue buying. We do want to take this time to reflect and also to focus on the management. I think you were asking about Top Ryde. You will be able to see the contribution of this asset 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, at least as an expectation. The demand continues to be very, very strong, especially for space in this particular retail mall. Cap rate, maybe just a quick one here. You didn't quite ask that, but I think 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, for your guidance of low 3% to 3.3% WACD, feels a bit slow in terms of the decline. My question is, any color on the currency breakdown on the expiring debt for 2026 and 2028? Is it more AUD?
2026 would be, I would say, okay, so we have a medium-term note, so that's in SGD. The remaining bank loans are split between Korean won and Aussie dollar. That's for 2026.
Sorry, 50/50? 2026.
Yeah.
Okay. 50% SG and 50% Aus and Korea.
Yes, that is right. I think maybe just one-
Would that be a reasonable reason why the taper is a little bit slower, and it could come in more in 2027? What is the breakdown in 2027?
I think we need to get back to you separately on the breakdown for 2027. 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. Also the refinancing, because it's only just that medium-term note that we have, which is currently about 3.72% per annum. 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.
Your floating, you say, is mostly offshore currency, isn't it?
My floating, yes.
It's mostly Aussie, I would presume.
Aussie and won.
Okay. Sorry, I don't want to harp on this, but last question. On the 8 Exhibition Street, can I confirm that your income contribution for your first tenant that is going to lease up five floors will only come in 2027?
Correct.
The remaining three floors is 2028.
Correct.
Okay. That will be the whole building.
No. This building has many floors. This, we are only talking about two leases.
And that will be somewhat around, sorry, could you remind me, how many percent of GRI?
This whole building has 35 floors.
Okay.
It is a 35-story building.
Proportionate. That is all from me. Thank you.
Donald, just to get back to you.
Yeah, yeah.
On the breakdown of the loans for 2027. For Sing dollars, it is about 60% of the total debt due in 2027. Aussie is about 30%, and the remainder is Japanese yen.
Thank you. Very helpful.
Thank you.
Thanks, Donald.
Thanks, Donald. Next, can we have EJ?
Yeah. Hi, morning, Hsien Yang.
Hi, morning.
Just a couple of questions from me. Firstly, in terms of Singapore CBD office demand, can I get some color in terms of, is this still driven by flight to quality? With now the gap widening, do you see this flight to quality slowing down or even possibly reversing? Maybe also give some color in terms of new or expansion demand. Is this from new setup that is coming to Singapore?
It is, I wouldn't say it's all flight to quality. It's really a good mix of, yeah, we have quite a lot of expansion. In OFC, we are seeing a lot of expansion at the moment. Our priority is if our tenants want to expand, we will give them space. For OFC, I won't mention who are the tenants, but the only reason why this tenant is leaving is because we can't give them additional space. They have two floors. They ask us for one additional floor. We are not able to give it to them, and that's why they are actually leaving our building, going to another building. That's the only reason. In fact, I just got up with them. They're actually quite sad to leave, but they just needed one extra floor that we're not able to give.
OFC, like I mentioned, is mostly expansion. The new tenants that we are talking to are not flight to quality. The majority of them are new tenants altogether. Some are, you can say, flight to quality. They are moving from other buildings. Across ORQ and MBFC, it is a good mix. It is expansion. It is new tenants. Could be flight to quality, but it is not. It is not like what you see, majority flight to quality, not quite there.
Okay. Can you give some color on who took up the additional space in Keppel Bay Tower? Is this from an existing expansion, or is this a new tenant in the same area?
These are new tenants.
Okay. My last question, would you consider share buyback as a strategy?
Yeah, I think we did mention that we stopped our share buyback program because our gearing was at a slightly more elevated level. But now that our gearing has come off, if we do some divestments, share buyback is definitely something that we are looking or considering.
Okay. Only on divestments.
Yeah. Well, not now. Yeah, definitely not now. Once we have done some divestments, yes, sometime we do it, we could look into it, yeah.
Okay. Thank you. That's all I have.
Thanks, EJ. Perhaps, I think we're just in time for one last question from Derek.
Hi. Morning.
Morning.
Hi. Morning. Just a follow-up on Xuan's comment on Singapore retail as potentially attractive. Would that include your sponsors i12 Katong because
Yeah.
Yeah.
We are not looking at it at this point in time. So I think that's all I can say. This asset, I think they have been doing repositioning and all that. I am not sure of the latest, but that's not something that we have considered.
Hmm. That's why, hence why I just wanted to check because they've been doing it for quite some time already.
On, for the best, I think just want to ask on the tax expense this time around, SGD 9 million. Is all that from withholding tax in Australia, and that's cash, right?
Yes. Part of it will be withholding tax. There is also a deferred tax component that we will provide for when there are valuation increases in Australia, Korea, and Japan. Because there are capital gains tax regimes there, we have to provide for some deferred tax or rather exit tax, when their valuation is
The SGD 9 million is all cash, right? It hits the DI.
Oh, no. The deferred tax component is non-cash, so that will only be realized when there is an actual exit or divestment. The remainder will be withholding tax that is actually paid in cash.
How much of it is withholding?
How much of it was withholding? Sorry, can I get back to you on this one?
Yeah, sure. All right. Thank you. That's all for me.
Thanks, Derek.
Thanks, Derek. I see that Terence is still on mute.
Yeah, thanks. Sorry, just a quick question from me. I want to ask on how's the tax transparency for Q3, and when should we expect that to come in?
We have started work on this one already. We are doing the documentation. Like I think the last time we mentioned, it should take around six months. So that's the estimated timeframe at this point.
Okay, that's good. Also, for the new borrowings for MBFC, Tower 3 on the acquisition side, what were the loan rates that you secured for the Q3 acquisition?
So, actually, when we bought Tower 3, there was already debt in place, which is locked in. Our own debt, we only took a very small loan. That one we borrowed at mid- double- digits spread, ± a bit.
And the all-in cost?
Under 3%.
Okay. Thanks. That's all I have.
Let me just get back to Derek, Morgan Stanley's question. For the income tax for the year, that's SGD 13.7 million, about SGD 9 million, was withholding tax paid in cash.
Okay. Derek, you still have your hand raised, I believe. You're okay, right? Okay, thanks, Derek. Thank you, everyone. We've come to the end of the call today. Thanks for joining us.
Thank you.