Independent Auditor’s Report to Unitholders of ESR-REIT For the financial year ended 31 December 2025 Key audit matters (cont’d) Valuation of investment properties held either directly or through joint venture and investments at fair value through profit or loss The Group’s investments in property assets comprise investment properties held either directly or through joint venture and investments in unquoted property funds. As at 31 December 2025, the respective carrying value of directly held investment properties is $5.0 billion, investment in joint venture is $39.3 million, and investments at fair value through profit or loss is $261.0 million. The underlying investment properties, held directly or indirectly, are stated at fair values based on independent external valuations. The valuation of investment properties is considered a key audit matter because it requires significant judgement in the determination of the appropriate valuation methodology and the assumptions and estimates that are to be applied in the valuation. The valuation of the investment properties is sensitive to changes in the key assumptions applied, which is aggravated by an increase in the level of estimation uncertainty and judgement required arising from the rapid changes in market and economic conditions. We have assessed the Group’s process relating to the selection of the external valuers, the determination of the scope of work of the valuers, and the review of the valuation reports issued by the external valuers. We evaluated the independence, objectivity and competency of the valuers and read their terms of engagement to ascertain whether there are matters that might have affected the scope of their work and their objectivity. We considered the valuation methodologies adopted and compared them against those applied by other valuers for similar property types. We tested the key inputs in the projected cash flows and net operating income used in the valuations to supporting key information such as contractual terms of the leases and externally available industry and economic data. We assessed the reasonableness of key assumptions used in the valuations, including market rental growth, price per square metre, terminal yield, capitalisation and discount rates, by comparing them against current and historical rates and available industry data, taking into consideration comparability and market factors. Where the rates were outside the expected range, we undertook further procedures and, where necessary, held discussions with the valuers to understand the effects of additional factors taken into account in the valuations and assessed whether the assumptions and market data used were reasonable in the context of the current environment. We have reviewed the appropriateness of the disclosures in Notes 4 and 30 of the financial statements. 121 ESR-REIT ANNUAL REPORT 2025
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