Notes to the Financial Statements For the financial year ended 31 December 2025 8. LOANS TO SUBSIDIARIES (TRUST) The loans to subsidiaries comprise a mix of interest-bearing and interest-free loans, which are unsecured. The interest-bearing loans bear interest at a fixed rate or at rates based on ESR-REIT’s prevailing cost of debt. Interest is payable in arrears on a quarterly basis. The loans to subsidiaries are for a term of 5 years commencing 29 November 2024 or repayable at dates mutually agreed by the parties, which are not likely to occur within the next 12 months from the reporting date. 9. DERIVATIVE FINANCIAL INSTRUMENTS 2025 2024 Assets Liabilities Assets Liabilities $’000 $’000 $’000 $’000 Group Interest rate swaps Current 362 (434) 1,641 (1,407) Non-current 2,225 (13,245) 1,283 (2,874) Forward foreign currency exchange contracts Current 4 (36) 288 – 2,591 (13,715) 3,212 (4,281) Trust Interest rate swaps Current 362 (434) – (1,407) Non-current 1,700 (9,538) 1,283 (2,433) Forward foreign currency exchange contracts Current 4 (36) 288 – 2,066 (10,008) 1,571 (3,840) The Group uses interest rate swaps to manage its exposure to interest rate movements on its floating rate borrowings by swapping the interest rates on such borrowings from floating rates to fixed rates. At 31 December 2025, the Group has entered into interest rate swap contracts with a total notional amount of $1,029.5 million (2024: $1,284.8 million) to fix the base interest rates for a weighted average tenor of approximately 1.8 years (2024: 1.8 years). Under these interest rate swap contracts, the Group pays interest at a weighted average fixed interest rate of 2.4% (2024: 2.8%) per annum and receives interest based on SORA, TIBOR, TONA or BBSY Bid. The Group has also entered into forward foreign currency exchange contracts to manage its foreign currency risk. As at 31 December 2025, the total notional amount of the Group’s outstanding Australian dollar and Japanese Yen forward foreign currency exchange contracts was A$2.9 million (2024: A$6.9 million) and JPY150.0 million (2024: Nil), respectively. The Group’s derivative financial instruments are not designated as hedging instruments. 180 ESR-REIT ANNUAL REPORT 2025
RkJQdWJsaXNoZXIy NTM2MDQ5