SINGAPORE (Oct 17): ESR Funds Management, the manager of ESR-REIT, has declared distribution per unit (DPU) of 0.964 cents for the 3Q ended September, a decline of 2.3% from DPU of 0.987 cents a year ago.
Gross revenue for 3Q17 fell 1.9% to $27.1 million, from $27.6 million a year ago, while net property income saw a 1.6% drop to $19.6 million in 3Q17, from $19.9 million a year ago.
This was mainly attributed to the loss of revenue during the transition phase of the properties moving from single-tenanted to multi-tenanted; increase in property operating expenses as a result of the conversions; higher maintenance costs; and property divestments.
As at end September, the group has 48 unencumbered investment properties with a combined carrying value of approximately $1.3 billion.
In 3Q17, more than 1.08 million sq ft of space was renewed, with occupancy of 91.1% and Weighted Average Lease Expiry (“WALE”) at 3.4 years.
In a filing to SGX on Tuesday, the manager says less than 25% of the ESR-REIT’s income will represent expiring leases for single-tenanted properties in the next three years, compared to 44% in 2012. It adds that this will allow it to focus on the expiring leases in its multi-tenanted properties in 2018.
As at end September, cash and cash equivalents stood at $2.8 million.
On the outlook, the manager expects the leasing market to remain competitive due to high levels of new supply that are not expected to abate until late 2018. Nevertheless, it says it will continue to focus on improving asset quality and maintaining occupancy in the current challenging leasing market.
“Despite continuing challenging market conditions, we have reported a stable business performance in 3Q2017,” says Adrian Chui, chief executive officer and executive director of the manager.
Units in ESR-REIT closed flat at 58 cents on Tuesday.
