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EC World Reit’s Q2 DPU down 10.4% on income conservation

EC World Reit, commonly seen as a proxy to China’s e-commerce logistics growth, posted a distribution per unit (DPU) of 1.386 Singapore cents for Q2 ended June, down 10.4 per cent from a year ago on income retention amid a cautious outlook.

Gross revenue for Q2 was up 18.8 per cent to S$28.2 million, while net property income (NPI) rose 22.1 per cent to S$25.8 million. This was mainly driven by contributions from the Fuzhou E-commerce property, which was acquired in August 2019, coupled with organic rental escalations.

Operations of EC World Reit’s tenants, as well as underlying operations at the master leases have resumed. As at end-June, the real estate investment trust (Reit) had a portfolio occupancy rate of 98.7 per cent, with a weighted average lease to expiry of 3.6 years, by gross rental income.

However, Q2 finance costs also rose by 39.6 per cent to S$9.8 million, due to a higher term loan quantum compared to a year ago.

The Reit’s total amount for distribution rose 0.5 per cent to S$12.4 million. However, EC World Reit decided to retain 10 per cent of the amount, due to the uncertainties of the Covid-19 pandemic.

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For H1, EC World Reit posted a 16.5 per cent drop in DPU to 2.544 Singapore cents. This came even as gross revenue was up by 8.7 per cent to S$51.7 million, while NPI rose 10.9 per cent to S$47 million.

Goh Toh Sim, chief executive of the Reit’s manager, said: “While the China economy expanded 3.2 per cent in the second quarter of 2020, headwinds persist. Businesses remain cautious in their leasing and expansion plans amidst the uncertain geopolitical and economic climate.”

“ECW’s portfolio of eight assets has a healthy weighted average lease expiry of 3.6 years, and its master lease agreements with embedded rental escalation provides organic growth within the portfolio. We will continue to work closely with the property manager in China to optimise portfolio performance.”

Units of EC World Reit closed at S$0.64 on Friday, up 0.79 per cent ahead of the results.

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