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EC World Reit cuts Q4 DPU, sees muted demand for Wuhan asset

EC World Real Estate Investment Trust’s (EC World Reit) distribution per unit (DPU) fell by 3.8 per cent on the year to 1.51 Singapore cents for the fourth quarter last year, from 1.57 cents a year ago.

This comes as the Chinese logistics real estate investment trust’s (Reit) manager has decided to pay out 95 per cent of capital distribution to unitholders. If it were based on a 100 per cent distribution, DPU for the quarter would have been higher at 1.59 cents.

The manager said it retained 5 per cent for general working capital purposes and “unforeseen contingencies”.

It added that the coronavirus situation in China remains highly fluid. That being said, as EC World Reit caters largely to the e-commerce and specialised logistics sector, it is less exposed to the Covid-19 situation compared to businesses with operations that rely largely on human traffic, the manager said.

The Reit’s portfolio comprises seven assets in Hangzhou and one in Wuhan, the epicentre of the virus outbreak. Demand for space at the Wuhan asset, which accounts for 1.6 per cent of the portfolio net property income (NPI), is expected to be muted due to the Covid-19 situation, the manager said.

A tenant has also notified the manager that it will not renew its lease for 24,929 square metres of space at the Wuhan asset in the second quarter of 2020.

Gross revenue grew 10.2 per cent to S$25.9 million for Q4 last year, from S$23.5 million a year ago.

NPI rose 17.4 per cent on the year to S$24.5 million, from S$20.8 million previously.

The growth in revenue and NPI was due to the embedded rental escalations as well as contribution from Fuzhou E-Commerce, a yield-accretive e-commerce logistics asset which was acquired in August 2019.

Total amount available for distribution inched up by 2.4 per cent to S$12.7 million, from S$12.4 million a year ago.

The Q4 DPU will be paid out on March 27, after books closure on March 16.

Meanwhile, for the full year ended Dec 31, 2019, DPU fell 2.1 per cent to 6.047 Singapore cents, versus 6.179 cents a year ago.

Total amount available for distribution for the year was down slightly by 0.3 per cent to S$48.9 million. Gross revenue was 3 per cent higher at S$99.1 million, while NPI grew 2.7 per cent to S$89.7 million for the year.

The counter closed at 72.5 Singapore cents on Thursday, up one cent or 1.4 per cent, before the results were released.