ESR-REIT continues to strategically rebalance its portfolio by increasing exposure to high-growth New Economy sectors of Logistics and High-Specifications assets. This is achieved organically through AEIs and inorganically through acquisitions. This proactive strategy ensures strong alignment with the evolving operational needs of global end-users and supports long-term value creation in an increasingly digital and innovation-driven economy. A key AEI milestone is the upgrade of 16 Tai Seng Street, completed in July 2025. The project added additional floor area and enhanced building specifications, transforming the property into a modern, future-ready industrial asset. The AEI at 29 Tai Seng Street, which commenced in FY2025 and is expected to complete in 1H2026, involves converting the asset from a General Industrial property into a High-Specifications facility designed to serve occupiers in the technology, electronics, and biomedical sectors. Looking ahead, ESR-REIT will continue to pursue AEI opportunities and selective acquisitions to upgrade and future-proof its portfolio, ensuring its assets remain well-positioned to meet the fast-evolving requirements of industrial users. ESR-REIT’s capital management strategy remains nimble and agile, allowing it to respond effectively to interest rate movements and position itself for sustainable growth. As at 31 December 2025, ESR-REIT’s gearing stood at 43.4%, with an MAS Interest Coverage Ratio of 2.5x, well above the regulatory requirement of 1.5x. The REIT has also successfully reduced its all-in cost of debt to 3.35%, down from 3.84% as at 31 December 2024. Furthermore, ESR-REIT was also assigned an investment grade ‘BBB’ credit rating with a ‘Stable’ outlook by Fitch Ratings, reaffirming its strong financial resilience and enhancing further capital optimisation, as reflected in the compression of loan margins by c.30 bps in upcoming refinancing. With 68.4% of its interest rate exposure hedged and an extended weighted average debt expiry of 2.0 years, ESR-REIT maintains a well-diversified and disciplined debt maturity profile. Additionally, its strong liquidity position, with S$701.4 million in debt headroom1 and c.S$161 million in committed undrawn revolving credit facilities, is reinforced by a robust banking network of 10 lenders. By adopting a proactive and strategic approach to capital management, ESR-REIT remains well-positioned to navigate the evolving macroeconomic conditions while continuing to drive longterm growth and value creation. 1 Assuming gearing limit of 50%. From 28 November 2024, the Monetary Authority of Singapore issued revisions to the Code on Collective Investment Schemes to rationalise leverage requirements for the REIT sector and a minimum MAS interest coverage ratio of 1.5 times with a single aggregate leverage limit of 50% will be applied to all REITs Notwithstanding the shift in sentiment by certain investors influenced by the United States’ change in policy stance on climate change, ESR-REIT remains resolute in its commitment to integrate ESG initiatives across its global portfolio and operations. Guided by the decarbonisation roadmaps developed for each country in which we operate, we continue to embed sustainable practices into our asset management strategies and day-to-day operations. These efforts have enabled us to achieve meaningful progress in reducing our environmental footprint while strengthening the long-term resilience and investability of the portfolio. Key achievements in FY2025 include a 37% increase in the portfolio solar energy generation capacity, rising from 15.5 MWp in FY2024 to 21.2 MWp in FY2025, as well as achieving green building certifications for all properties in our Australia and Japan portfolios. These advancements are reflected in the marked improvement in our Global Real Estate Sustainability Benchmark (“GRESB”) performance, where we achieved a score of 82 with a 3-star rating, a significant uplift from our FY2024 score of 73 score and 2-star rating. In FY2025, ESR-REIT secured a S$160.0 million unsecured sustainability-linked term loan and revolving credit facility. The Manager will continue to embed ESG considerations into its funding strategy and, where appropriate, pursue additional sustainabilitylinked financing to further align its capital structure with its sustainability objectives and support long-term value creation. Strategies/ Growth Opportunities Strategies/ Growth Opportunities Strategies/ Growth Opportunities 39 ESR-REIT ANNUAL REPORT 2025
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