190 CapitaLand Ascendas REIT Notes to the Financial Statements 31 December 2025 28. Financial Risk Management (continued) (e) Capital management The Group’s and the Trust’s objective when managing capital is to optimise Unitholders’ value through the mixture of available capital sources which include debt, equity and convertible instruments. In addition, the Group and the Trust ensure the compliance with statutory and constitutional capital and distribution requirements, maintaining gearing ratio, interest expense coverage and other ratios within approved limits. The aforementioned remain unchanged from 2024. The Board of Directors of the Manager (the “Board”) reviews the Group’s and the Trust’s capital management as well as financing policies regularly so as to optimise the Group’s and the Trust’s capital funding structure. The Board also monitors the Group’s and the Trust’s exposure to various risk elements and externally imposed requirements by closely adhering to clearly established management policies and procedures. The Group is subject to the aggregate leverage limit as defined in the Property Funds Appendix of the CIS Code. The CIS Code stipulates that the total borrowings and deferred payments (together the “aggregate leverage”) of a property fund should not, exceed 50.0% of the Deposited Property (2024 : should not, exceed 50.0% of the Deposited Property) and the property fund should have a minimum interest coverage ratio of 1.5 times (2024 : 1.5 times) after taking into account the interest payment obligations arising from the new borrowings. As at 31 December 2025, the aggregate leverage of the Group is 39.0% (2024 : 37.7%). The Group and the Trust were in compliance with the aggregate leverage limit of 50.0% (2024 : 50.0%) during the financial year. The Group had an interest coverage ratio1 of 3.6 (2024 : 3.6) times as at reporting date. 1 Calculated by dividing the trailing 12 months earnings before interest, tax, depreciation and amortisation (excluding effects of any fair value changes of derivatives and investment properties and foreign exchange translation) by the trailing 12 months interest expense, borrowing related fees and distributions on hybrid securities as defined in the Code of Collective Investment Schemes. Perpetual securities are the only hybrid security that the Group holds. 29. Fair Value Measurement The Group has an established control framework with respect to the measurement of fair values. This framework includes a team that has overall responsibility for all significant fair value measurements, including Level 3 fair values. The team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes, pricing services or external valuations, is used to measure fair value, then the team assesses and documents the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of FRS, including the level in the fair value hierarchy the resulting fair value estimate should be classified.
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