NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2025 5 INVESTMENT PROPERTIES (CONT’D) (a) Investment properties comprise commercial, residential, hotel, serviced residences, purpose-built student accommodation (PBSA) and industrial properties that are leased to external customers. Generally, each of the leases is fixed for a period of 1 to 33 years (2024: 1 to 30 years), and subsequent renewals are negotiated at prevailing market rates and terms. (b) During 2025, the Group and the Company disposed of certain investment properties with a net carrying amount of $240.3 million and Nil, respectively (2024: $23.5 million and $21.2 million) to unrelated third parties for considerations of $376.3 million and Nil (2024: $165.6 million and $137.2 million). (c) During 2025, the Group’s transfer from development properties to investment properties relates to carpark lots located in Hong Leong Plaza Hongqiao which commenced leasing activities. (d) As at 31 December 2025, investment properties of the Group with a total carrying amount of $1,466,362,000 (2024: $1,502,492,000) were mortgaged to (i) certain financial institutions to secure credit facilities (refer to notes 22 and 23 for more details of the facilities); and (ii) a lessee as collateral for security deposit held of $3,026,000 (2024: $3,148,400) which will be discharged on termination of the lease. (e) The Group undertook its annual review of carrying amounts of investment properties for indicators of impairment. Where indicators of impairment were identified, recoverable amounts were estimated based on internal or external valuations undertaken. The cash generating units (CGU) are individual properties. The recoverable amounts of investment properties, being the higher of the fair value less costs to sell and value-in-use, were predominantly determined using the fair value less costs to sell approach, and were estimated using direct comparison, income capitalisation, standardised land value adjustment, discounted cash flow and residual methods (2024: income capitalisation, direct comparison, standardised land value adjustment, discounted cash flow and residual methods). Based on the impairment assessment undertaken in 2025, the Group recognised a net impairment loss of $74,324,000 which comprises impairment loss of $105,492,000 on three projects in China, net of reversal of impairment loss of $31,168,000 on a commercial building and two PBSA properties in the United Kingdom (UK), and two private rented sector properties in Australasia. Of the three commercial projects in China for which an impairment loss was recognised, two of them were investment properties in Shanghai that were reclassified to assets held for sale (note 18). The carrying amount of these properties were written down to fair value less cost to sell, prior to their reclassification to assets held for sale. The impairment loss recognised for the other commercial project was mainly due to prolonged slow-down in real estate market in China. The reversal of impairment loss mainly relates to higher gross rental rates and lower capitalisation rate for a commercial property in UK. In 2024, the Group recognised an impairment loss of $19,513,000 on two PBSA properties in the UK, two private rented sector properties in Australasia and one commercial project under construction in China. The impairment loss recognised during the year was mainly due to higher purchaser acquisition costs for the said commercial properties in UK, lower gross development value estimated by the valuer for the said properties in Australasia, and the downturn in real estate market in China which remained challenging, along with higher than expected development costs incurred on the project in China. The impairment loss was recognised in “other operating expenses” and the investment properties segment. ANNUAL REPORT 2025 | 151
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