Management Discussion & Analysis 12 STRENGTH IN UNITY the impact of foreign exchange fluctuations particularly in Japan and South Korea, the decline in Fee Income was a moderate 2% year-over-year. Core asset recurring fees from asset management, investment management and property management grew 7% y-o-y, underscoring the resilience of the fund management platform. Correspondingly, fund management EBITDA margins excluding promote fees stayed resilient at approximately 70%. Fee Income By Region* 29% India & SEA 21% Australia & New Zealand 7% Hong Kong 18% Japan & South Korea 9% U.S. & Europe 16% Mainland China US$254 million * Refers to the fund management revenue ESR raised US$2.3 billion in capital during the first half of 2024. This was an increase of 155% against the same period last year, despite a second consecutive year of muted fundraising for the sector. Furthermore, in the last 12 months, the Group had successfully raised and transacted over US$1.2 billion worth of core capital across a range of geographies, allowing investors to continue to stay invested and/or allocate more towards APAC New Economy. This continued support from existing and new fund investors is much appreciated and valued. Capital Raised by Fund Type 47% Development 32% Alternatives/Others 21% Core/Core Plus Funds US$2.3 billion Capital Raised by Region 41% Australia 31% Europe 18% South Korea 5% SEA 4% Japan 1% Mainland China US$2.3 billion As at 30 June 2024, the Group had substantial uncalled capital of US$23.7 billion10 for deployment to grow Fee-related AUM. Deployments are ongoing across all markets albeit at a cautious pace. NEW ECONOMY: HEALTHY OUTLOOK BUT LONGER RUNWAY FOR NEWLY STABILISED ASSETS IN MAINLAND CHINA AND JAPAN As at 30 June 2024, the portfolio occupancy rate for the Group’s New Economy assets11 stood at 87% (94% excluding Mainland China). More than 1.2 million sqm of newly stabilised assets in Japan and Mainland China came on-stream in the first half of the year. In a market where tenants are taking longer to commit to additional floorplates or execute on consolidation plans, a longer runway is needed for the committed occupancies of these new and high-quality assets to attain their target levels. The occupancy for the bulk of the portfolio excluding Mainland China and the impact of these newly stabilised assets remained strong at 97%. Approximately 3.9 million sqm of renewals and new leases were recorded for 1H2024, up 86% y-o-y, and at weighted average rental reversions12 of approximately 10.7% (19.4% excluding Mainland China). Leases in Australia and South Korea accounted for the highest rental growth rates, achieving reversions of approximately 27.9% and 24.0% respectively, mitigating the cap rate expansion for assets in Australia and South Korea, save for those with longer weighted average lease expiry (“WALE”). Although leasing conditions in Mainland China remain soft, the momentum in lease renewals and replacements were active. Rental reversions are negative as tenants seek flexibility in leasing and occupancy continues to be prioritised. As at 30 June 2024, the WALE for the Group’s New Economy portfolio remained at approximately 4.6 years and 4.0 years by income and area respectively. Notes: 10. Excludes US$0.3 billion of uncalled capital attributable to ARA Private Funds 11. Stabilised New Economy assets; excludes listed REITs and Associates 12. Weighted by the AUM of each country
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