The manager of ESR-LOGOS REIT (E-LOG) has reported a distribution per unit (DPU) of 1.540 cents for the 2HFY2022 ended Dec 31, 2022, 7.5% higher than the DPU of 1.433 cents in the same period the year before.
Distributable income for the half-year period surged by 79.6% y-o-y to $103.5 million due to the higher gross revenue and net property income (NPI).
That said, the applicable number of units for calculation of DPU also increased by 67.1% y-o-y to 6.72 billion mainly due to the new units issued as part of the scheme consideration paid for the merger.
For the 2HFY2022, gross revenue increased by 61.0% y-o-y to $195.6 million while NPI increased by 64.0% y-o-y to $141.5 million. The higher gross revenue and NPI were mainly due to the contributions from ARA LOGOS Logistics Trust (ALOG) after the merger in April 2022.
DPU for the FY2022 stood at 3 cents, 0.4% higher than FY2021’s DPU of 2.987 cents. This is despite the 54.8% y-o-y surge in distributable income to $177.1 million. For the full-year, the REIT’s applicable number of units for calculation of DPU increased by 54.1% y-o-y to 5.90 billion due to the newly issued units.
As at Dec 31, 2022, E-LOG’s recorded positive rental reversions of 11.8%, compared to the -1.7% in FY2021. Its portfolio occupancy stood at 92.7%, down 1.0 percentage point y-o-y, while its weighted average lease expiry (WALE) stood at 3.2 years as at Dec 31, 2022.
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As at Dec 31, 2022, cash and cash equivalents stood at $42.9 million. Its gearing stood at 41.8%. About 72.0% of the REIT’s interest rate exposure is fixed with a weighted average fixed debt expiry of 2.0 years as at Dec 31, 2022.
“During the year, we continued to advance our strategy to solidify E-LOG’s position as a leading New Economy and future-ready Asia Pacific Singapore REIT (S-REIT). We completed a successful merger with ARA LOGOS Logistics Trust, divested $151.3 million of non-core assets and recycled the capital by acquiring our first property in Japan with the ESR Sakura Distribution Centre acquisition, providing us with access to freehold assets and a presence in three footprint and mature markets,” says Adrian Chui, CEO and executive director of the manager.
He adds: “Despite the uncertainties and challenges posed by the impact of high inflation, rising interest rates and geopolitical tensions, we continue to stay prudent in our risk management strategies and were able to deliver stable growth both operationally and financially. Leveraging on the continued tailwinds of economic structural trends, we continued to rejuvenate E-LOG’s portfolio towards in-demand, scalable and quality New Economy assets.”
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Looking ahead, the REIT manager expects to see the business park and high-specs industrial sectors benefitting from decentralised demand while rental growth is expected to come mainly from the logistics and high-specs segments due to continued deep economic structural trends towards New Economy assets.
"A multitude of macro challenges is expected to carry into 2023 with recession setting into two of the largest economies – US and Europe. Supply chain disruptions and continued interest rate hikes will affect economic sentiments, trade, financial and economic activities which will impact demand for space, rental growth, and operating costs for E-LOG,” says Chui.
“On a positive note, the cooling of US inflation data indicates that the pace and number of rate hikes are expected to slow down. The opening up of China’s borders should help to ease the supply chain disruptions that have been driving global inflation and increase demand for goods and services,” he adds. “In addition, the depth and pace of the economic structural trends is expected to continue furnishing the tailwinds for E-LOG.”
Units in E-LOG closed flat at 38 cents on Jan 30.