EC World REIT announced a net property income of $113 million in FY2021, up 12.7%. Distribution per unit (DPU) rose 16.9% in FY2021 to 6.263 cents translating into a yield of 8.2%. In January 2022, EC World REIT’s manager announced that Fu Zhuo Industrial, a port asset is likely to be expropriated by the local government. Fu Zhuo Industrial accounts for 1.48% of ECW REIT’s portfolio valuation as at Dec 31 and 1.4% and 1.6% of ECW’s gross revenue and net property income as at end-2021.
Excluding Fu Zhuo Industrial, the portfolio’s weighted average lease expiry is 2.6 years.
Seemingly, the REIT has a reasonable gearing ratio of 38.2%, as at end-2021, but a low interest coverage ratio (ICR) of 2.92x.
The REIT has a larger problem than expropriation, short WALE, low ICR and most of its properties master leased to the sponsor. Out of total debt of $721 million, $708.3 million matures in June. The EC-World REIT manager says it has commenced refinancing plans. These plans need to have a higher chance of success than the attempt to buoy unit prices by announcing in May last year a plan to divest of the portfolio.
