The manager of ESR-REIT has declared distribution per unit (DPU) of 0.798 cents for the 3QFY2020 ended Sept 30, down 20.2% from the 1.00 cent declared a year ago but up 20.5% q-o-q.
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Distributable income for the quarter stood at $28.3 million, down 3.1% y-o-y and up 20.9% q-o-q. This includes the distribution of $3.5 million, or 50% of the distributable income retained in 1QFY2020.
Excluding the release of 50% of the retained income, core distributable income would have been $24.8 million, down 15.1% y-o-y but up 6.0% q-o-q. DPU for the quarter would have been 0.70 cents.
3QFY2020 gross revenue fell 8.2% y-o-y to $56.9 million.
Consequently, net property income (NPI) fell 10.8% y-o-y to $40.4 million.
Net asset value (NAV) per unit fell 11.4% y-o-y to 41.0 cents.
The y-o-y declines were mainly due to the lease conversion from single to multi-tenancies for five properties where the REIT has to bear land rent, property tax and maintenance costs that were previously borne by tenants under master lease arrangements.
The lower figures were also attributable to non-renewals and downsizing by certain tenants, as well as rental rebates given to eligible tenants affected by the Covid-19 outbreak.
Portfolio occupancy as at Sept 30 stood at 90.8%, with a weighted average lease expiry (WALE) of 3.0 years.
ESR-REIT signed a total of 19 new leases during the quarter, accounting for approximately 244,000 sqft of space secured.
The REIT also renewed about 585,000 sqft of space in the same quarter. All single-tenanted leases due for renewal in FY2020 have been renewed.
Looking ahead, it expects industrial rents to remain muted amid Covid-19 and current weak trade conditions which prevent industrialists from committing to long-term space needs.
“In addition, the delay in construction of industrial space is expected to push new-supply completion into 2021. Therefore, we expect there will be continued downward pressure on industrial rents in the short term,” says the manager.
“Despite the ongoing pandemic, ESR-REIT has a well-diversified and resilient portfolio. Our stable portfolio metrics is reflective of our proactive leasing and asset management strategy and cost control initiatives,” says Adrian Chui, CEO of the manager.
“Our capital structure remains balanced with a well-staggered debt expiry profile and we continue to enjoy strong banking support. Our 100% unencumbered portfolio provides us with the flexibility to tap into various debt financing options and secure committed credit lines of $117.0 million to execute our organic growth strategies. Our robust balance sheet and stable cash flow position will enable us to strengthen ESR-REIT’s presence to capitalise on growth opportunities locally and overseas,” Chui adds.
Unitholders can expect to receive their distributions on Dec 30.
Units in ESR-REIT closed 1.5 cents lower or 4.2% down at 34.5 cents on Oct 29.
