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ESR-REIT records 8.2% higher 4Q DPU of 1.005 cents with enlarged portfolio

Michelle Zhu
Michelle Zhu • 3 min read
ESR-REIT records 8.2% higher 4Q DPU of 1.005 cents with enlarged portfolio
SINGAPORE (Jan 18): The manager of ESR-REIT posted a 4Q18 distribution per unit (DPU) of 1.005 cents, 8.2% higher than the 0.929 cents declared from a year ago.
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SINGAPORE (Jan 18): The manager of ESR-REIT posted a 4Q18 distribution per unit (DPU) of 1.005 cents, 8.2% higher than the 0.929 cents declared from a year ago.

Gross revenue in the latest quarter more than doubled to $58.4 million from $27.2 million in 4Q17, after registering full quarter contributions from ESR’s two acquisitions at 8 Tuas South Lane and 7000 Ang Mo Kio Avenue 5.

Additional contributions from its newly-acquired property at 15 Greenwich, as well as the inclusion of Viva Trust’s portfolio of nine properties post ESR’s merger with Viva Industrial Trust, also helped to boost 4Q topline.

Property expenses near-doubled to $16.1 million from $8.9 million in the previous year, largely due to higher property manager’s fees, marketing commission expenses, property tax and other property expenses from new property acquisitions, the merger and master lease conversions.

In all, net property income (NPI) more than doubled to $42.3 million in 4Q18 from $19.9 million in 4Q17.

ESR-REIT’s latest set of quarterly results brings its total DPU for FY18 to 3.857 cents, which is relatively flat when compared to the previous year’s DPU of 3.853.

The manager nonetheless notes improved portfolio fundamentals, with a 93% portfolio occupancy as at end-Dec 2018, and rental reversions at -2.9% compared to -15.8% in FY17 due to wider exposure to the business parks and high-specs sectors, which have higher rents.

Looking ahead, the manager continues to see the potential threat of a global trade war impacting industrialists operating in Singapore in 2019, with possibly a negative impact on demand for industrial space.

Given the improving supply/demand metrics pointing to an increasing stable industrial real estate market, it remains cautiously optimistic on the sector’s prospects.

“We have taken steps to reposition our portfolio, with multi-tenanted properties making up close to 70% of our portfolio following the merger with Viva Industrial Trust and this bodes well for us in an industrial market that’s showing signs of stabilisation. In light of the macroeconomic environment, we have also reduced our financing risks by hedging a significant proportion of our capital structure for a longer duration while expanding our banking relationships and widening our pools of capital,” says Adrian Chui, CEO of the REIT manager.

“In the year ahead, we will continue to focus on extracting value for unitholders through operational synergies via integration, AEI opportunities, and value-enhancing asset acquisitions to deliver stable and sustainable returns for unitholders,” he adds.

Units in ESR-REIT closed 0.93% lower at 53 cents on Thursday.

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