The manager of ESR-LOGOS REIT (E-LOG) has reported a distribution per unit (DPU) of 1.378 cents for the 1HFY2023 ended June 30, 5.6% lower than the DPU of 1.460 cents in the corresponding period the year before.
The y-o-y decline was attributable mainly to the enlarged unit base from the REIT’s equity fund raising exercise in February. At the time, the REIT launched an equity fund raising comprising a private placement and a non-renounceable preferential offering to raise some $300.0 million. The private placement injected 454.5 million new units while the preferential offering injected another 460.8 million new units.
During the 1HFY2023, gross revenue rose by 33.3% y-o-y to $196.8 million while net property income (NPI) rose by 37.0% y-o-y to $140.8 million. The higher figures for both were mainly due to the full half-year contributions from ARA LOGOS Logistics Trust (ALOG Trust) after the merger in April 2022. The acquisition of ESR Sakura Distribution Centre in October 2022 also boosted the REIT’s gross revenue and NPI for the half-year period.
Amount available for distribution rose by 37.9% y-o-y to $101.5 million spread across 7.363 billion units compared to the 5.041 billion units in the 1HFY2022.
During the 1HFY2023, the REIT’s portfolio delivered a positive rental reversion of 11.6%, 0.2 percentage points higher y-o-y.
As at June 30, its occupancy rate rose by 0.8 percentage points q-o-q to 92.9%. The REIT’s portfolio weighted average lease expiry (WALE) stood at 3.1 years as at the same period.
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Gearing as at June 30 stood at 39.4% and would be at 33.6% on a pro forma basis upon the completion of the divestments of the REIT’s five non-core assets that were announced on June 23.
As at June 30, 74.8% of the REIT’s total debt was on fixed rates, 2.8 percentage points higher since Dec 31, 2022.
Cash and cash equivalents stood at $46.6 million.
“We are pleased to announce a stable result for 1HFY202023 which continues to reflect the resilience of E-LOG’s portfolio in navigating the dynamic landscape of the real estate industry,” says Adrian Chui, CEO and executive director of the manager.
In its outlook statement, the REIT manager was cautious for the 2H2023 amid the various monetary policy decisions, changes in interest rates and tepid demand growth from China although the logistics sector is still expected to grow albeit at a slower rate.
“The key risk in the second half of 2023 is the continued rise in interest rates and its negative impact on asset valuations, DPU, and gearing. However, the equity fund raising and divestment of non-core assets have recapitalised and strengthened our balance sheet with lower gearing and alleviated the concerns of gearing pressures, enabling us to weather the continued high interest rate environment and valuation concerns,” notes Chui.
He adds: “Additionally, E-LOG stands ready with a strong financial position and significant debt headroom amidst an expected asset repricing environment, to capture investment opportunities which may arise for E-LOG to augment our portfolio rejuvenation strategy towards modern, in-demand new economy assets.”
Unitholders will receive their distributions on Sept 27.
Units in E-LOG closed at 34.5 cents on July 25.
