Lease Expiry Profile By NLA By Gross Rental Income 2024 2025 2026 2027 & beyond 9.4% 7.2% 60.7% 59.2% 24.3% 24.9% 7.9% 6.5% The Manager has been in ongoing negotiations with the Sponsor to finalise a Master Offset Agreement, which seeks to net off EC World REIT’s receivables from the Sponsor Group against EC World REIT’s payables to the Sponsor Group. This includes the cash security deposits provided by the master lessees and a portion of the advance payments received from the Purchasers in relation to the proposed divestment transactions. As these negotiations are still ongoing, no impairment allowance has been made at this stage. In light of persistent financial challenges, no distribution has been declared for FY2024 and it remains unlikely that any distribution will be made in FY2025 until operating and financial conditions improve materially. Asset Values Sustained Downward Trajectory The independent valuations of our properties as of 31 December 2024 have shown a decline, with the overall portfolio value dropped by 11.7% from RMB 4,336 million to RMB 3,829 million year-on-year. The valuation decline was primarily driven by intensified rental competition due to an oversupply of warehouse space in Hangzhou and Wuhan coupled by the shortening of remaining land tenure. This led to weaker market rents, higher vacancy rates, and more competitive leasing conditions across the logistics sector. Corresponding to the continuous softening market condition, the Manager implemented a leasing strategy focused on preserving occupancy and cash flow. Active Lease Management New Property Managers and Port Operator have been engaged with effective from 1 January 2025, providing EC World REIT with operational continuity and enhanced flexibility as the REIT proceeds with its ongoing asset divestment programme. The Manager works closely with the Property Managers to optimize the occupancy rates of the properties. Existing and prospective tenants are engaged well in advance of lease expiry dates to mitigate the risk of non-renewals and vacancies. As at 31 December 2024, the portfolio WALE was 1.6 years by net lettable area and 1.2 years by gross revenue. The expiry profile of leases that were committed as at 31 December 2024 is shown in the chart below: As a result of proactive leasing strategy, the team managed to secure a total of 17 new leases for Hengde Logistics Phase 1. The new leases took up 87.1% of the occupancy rate in Hengde Logistics Phase 1. The majority of the tenants occupying Hengde Logistics Phase 1 are pharmaceutical logistics tenants which align with the market strategy to transform Hengde Logistics Phase 1 into a pharmaceutical logistics hub in Hangzhou. Among those new leases, there is a key tenant, ATM Cloud that has taken up 42.2% of the leased area in Hengde Logistics. EC WORLD REIT 14 MANAGEMENT REVIEW
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