The manager of EC World Real Estate Investment Trust (EC World REIT) has declared distribution per unit (DPU) of 1.386 cents for 2Q20 ended June, 10.4% lower than the DPU of 1.547 cents a year ago.
This brings DPU for 1H20 to 2.544 cents, compared to the DPU of 3.048 cents in 1H19.
Distributable income for the quarter fell 9.5% y-o-y to $11.1 million due to a 10% retention by the manager.
Gross revenue for 2Q20 increased 18.8% y-o-y to $28.2 million, while net property income (NPI) rose 22.1% y-o-y to $25.8 million. The increase in both figures were mainly driven by the acquisition of Fuzhou E-commerce and organic rental escalations.
In RMB terms, gross revenue and NPI rose 19% y-o-y and 22.3% y-o-y respectively.
After straight-line, security deposit accretion and other relevant distribution adjustments, the gross revenue and NPI in RMB terms were 19.8% and 20.7% higher respectively compared to 2Q2019, for the same reasons.
Finance costs for the quarter increased by 39.6% y-o-y to $9.8 million, mainly due to the higher term loan quantum.
As at June 30, EC World REIT reported an occupancy rate of 98.7% with a weighted average lease expiry (WALE) of 3.6 years by gross rental income.
One of the REIT’s assets, Wuhan Meiluote, which is located in the epi-centre of the Covid-19 outbreak, contributed about 1.8% towards 2Q20’s gross revenue.
On Feb 27, 2020, the manager announced in the REIT’s 4Q19 results that one of its tenants will not be renewing 24,949 sqm, or 51.2% of lettable space in Wuhan Meiluote in 2Q20. The manager says it is working closely with the property manager in China to backfill the space.
Looking ahead, the manager of the REIT foresees muted leasing activity to continue on tenants’ cautious approach in their business plans.
“While the China economy expanded 3.2% in the second quarter of 2020, headwinds persist. Businesses remain cautious in their leasing and expansion plans amidst the uncertain geopolitical and economic climate,” says Goh Toh Sim, executive director and CEO of the manager.
“ECW’s portfolio of eight assets has a healthy weighted average lease expiry of 3.6 years and its master lease agreements with embedded rental escalation provides organic growth within the portfolio. We will continue to work closely with the Property Manager in China to optimize portfolio performance,” he adds.
Units in EC World REIT closed 0.5 cents higher, or 0.8% up, at 64 cents on Aug 7.