15 Upon completion of the abovementioned divestments, ESR-REIT’s land lease profile is expected to improve meaningfully, with the proportion of assets with less than 15 years of remaining land lease reducing from 11.9%4 to 10.8%, while the weighted average land lease will be extended from 43.6 years to 45.1 years. ASSET ENHANCEMENT INITIATIVES AND REDEVELOPMENTS In FY2025, we successfully achieved Temporary Occupation Permit (“TOP”) status for the AEI at 16 Tai Seng Street, Singapore, increasing the plot ratio from 3.08 to 3.50, and expanding the total GFA to approximately 22,800 sqm. The enhanced asset has attained BCA Green Mark Gold certification and achieved approximately 50% occupancy as at 31 December 2025, and we are in advanced discussion with both new and existing tenants, including potential tenants from the pharmaceutical and medical technology sectors. In FY2025, we also commenced the AEI at 29 Tai Seng Street, Singapore, which involved the conversion of a singletenanted general industrial building into a Green Mark Gold PLUS-certified high-specifications industrial asset. The project is expected to deliver a yield on cost of approximately 6.4%. As at 31 December 2025, the AEI was approximately 76% completed and remains on track for completion in 1H2026. PRUDENT CAPITAL MANAGEMENT STRENGTHENS FINANCIAL RESILIENCE In FY2025, amid continued uncertainty in global interest rate movements, maintaining a resilient and well-managed balance sheet remained a key strategic priority for ESR-REIT in FY2025. We focused greatly on strengthening our capital structure, enhancing funding flexibility and proactively managing refinancing risks to ensure long-term financial stability. During the year, ESR-REIT achieved an investment grade ‘BBB’ credit rating with a ‘Stable’ outlook from Fitch Ratings, affirming the strength of our capital management framework and enhancing financial flexibility. This milestone, together with our proactive refinancing efforts and improved funding terms, contributed to a reduction in ESR-REIT’s all-in cost of debt, which declined to 3.35% per annum as at 31 December 2025, as compared to 3.84% per annum in the previous year, and is expected to continue on its downtrend as we have secured refinancing of a 2026 expiring SGD term loan at c.30 bps lower margins and for a longer tenor. Gearing remained well-managed at 43.4%. Assuming the abovementioned divestments were completed on 31 December 2025 and net proceeds were used to repay debt, ESR-REIT’s pro-forma gearing would stand at a healthy 38.5%. The MAS interest coverage ratio also remained stable at 2.5x as at 31 December 2025, comfortably above the regulatory minimum of 1.5x. ESR-REIT continues to maintain a well-staggered debt maturity profile with no more than c.29% of loans expiring each year and substantial debt headroom of S$701.4 million. ESR-REIT continues to be well supported by a network of 10 lending banks. With our prudent and disciplined capital management approach in place, ESR-REIT is well positioned to navigate periods of market volatility while retaining the financial capacity to pursue growth opportunities in a measured and sustainable manner. ENTERING THE NEXT PHASE OF SUSTAINABLE GROWTH Having strengthened our portfolio and capital structure, ESR-REIT is now well positioned to advance into its next stage of development. Following the release of our FY2025 financial results, we unveiled our new Total Return Strategy, which seeks to deliver sustainable income growth alongside long-term capital appreciation. This strategy targets total Unitholder return of approximately 8-10% supported by active portfolio management, organic growth via redevelopments and major AEIs and disciplined capital allocation over the next five years. The Total Return Strategy is anchored on five key pillars: 1. Active asset management, including initiatives to address short land lease assets and rejuvenate the portfolio through AEIs and selective redevelopments. 2. Combination of organic growth from visible and executable redevelopments, major AEIs and selective value accretive acquisitions. 3. ESR-REIT will retain its core focus in Singapore, which is expected to continue representing more than 50% of portfolio value, while selectively pursuing compelling international opportunities with strong growth tailwinds. 4. ESR-REIT is ESR’s flagship regional listed vehicle, and will continue to leverage its Sponsor, ESR’s pipeline and established presence across developed Asia-Pacific markets. 5. ESR-REIT will maintain prudent leverage, with a target gearing range in the mid-30% to low-40% range, supported by selective divestments of non-core short land lease assets, active capital recycling, internal cash flows, and disciplined balance sheet management across the cycle. 4 As at 31 December 2025. Does not include 1 Third Lok Yang Road and 4 Fourth Lok Yang Road and 79 Tuas South Street 5 as the divestments were completed on 24 March 2025 and 28 March 2025 respectively. ESR-REIT ANNUAL REPORT 2025
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