SINGAPORE (Jan 17): The manager of ESR-REIT has declared a 4Q17 distribution per unit (DPU) of 0.929 cent, 6.7% lower compared to 0.996 cent in 4Q16.
This brings FY17 DPU to 3.853 cents, down 7.7% from 4.173 cents in FY16.
Gross revenue for the full year fell 2.1% to $109.7 million compared to $112.1 million in the previous year, as only a part of the benefit was received from the acquisitions of 8 Tuas South Lane and 7000 Ang Mo Kio Ave 5 that were completed on Dec 13 and 14 2017.
Net property income (NPI) registered a 4.7% decline to $78.4 million from $82.3 million in FY16.
Overall, the manager says that both gross revenue and NPI were once again impacted by higher property operating expenses from lease conversions of properties during the year and the full year impact of the leases converted in the prior year.
This was only partially offset by the positive impact of the new leases and acquisitions completed in mid-Dec 2017.
As such, the amount available for distribution to unitholders fell 7.5% in FY17 to $50.4 million from $54.5 million a year ago.
As at end-2017, ESR-REIT portfolio comprises 48 properties across Singapore, with a total gross floor area (GFA) of approximately 9.9 million sq ft. Its weighted average lease expiry (WALE) was 4.3 years, which the manager highlights as a significant increase from the 3.4 years recorded in the previous quarter, mainly due to the recent acquisitions.
Adrian Chui, CEO and executive manager of the manager, highlights the REIT’s recent yield-accretive transactions – 8 Tuas South Lane and 7000 Ang Mo Kio Ave 5 – as ones that have improved overall portfolio quality, with the latter demonstrating the REIT’s ability to recycle capital into high-valued assets.
See: ESR-REIT acquires Hyflux's Tuas facility for $111 mil in sale and leaseback deal
See: ESR-REIT acquires 80% of AMK high-specs building for $243.5 mil
“We have also diversified our funding sources by successfully issuing $150 million of subordinated perpetual securities in November 2017. In addition, we recently announced our plans to undertake a proposed equity fund raising to issue up to 263 million new units in ESR-REIT with our sponsor ESR undertaking to subscribe up to $125 million to rebalance our capital structure,” says Chui.
“This is all part of our overall strategy to recycle capital, optimise our capital structure and improve the overall portfolio quality, while signaling our Sponsor ESR’s commitment to ESR-REIT, enabling us to deliver stable returns to our Unitholders and begin 2018 from a position of strength,” he comments.
Units in ESR-REIT closed 0.86% lower at 58 cents on Tuesday.
