EC World Reit posts rise in Q1 DPU to 1.501 Singapore cents

CHINESE e-commerce logistics-focused EC World Reit on Friday posted an increase in first-quarter distribution per unit (DPU) to 1.501 Singapore cents from 1.469 cents in the previous year, helped by various distribution adjustments.

This came as Q1 income available for distribution grew 3.1 per cent to S$11.9 million from the preceding year.

For the three months ended March 31, gross revenue slipped 0.3 per cent to S$23.9 million from the previous year, and net property income (NPI) slipped 1.4 per cent to S$21.2 million from the previous year, mainly due to exchange rate differences. In RMB terms, gross revenue and NPI were 3 per cent and 1.9 per cent higher respectively compared to the same quarter last year.

The Reit saw a 36.7 per cent increase in distribution adjustments, driven mostly by increases in provision for real estate tax and straight-lining of step-up rental.

The company said in a statement: "The Manager continues to deploy a proactive FX management strategy to ensure stable distributions to our unitholders. Interest rate exposure on the offshore loan has been fully hedged and 75 per cent of currency exposure for distributions to unitholders has been hedged quarterly on a six-month rolling forward basis."

EC World Reit, which has seven properties in Hangzhou and Wuhan in China, separately announced on Friday that it wants to buy Fuzhou E-Commerce, a warehouse and office building property in Fuyang, Hangzhou, priced at 1.1125 billion yuan (S$223.6 million), from Fultric Investments and Hangzhou Unilogix.

The total property purchase price includes a consideration of 769.5 million yuan to Fultric Investments, 343 million yuan to Hangzhou Unilogix and 563.3 million yuan for Fultric's borrowings.

The property comprises one three-storey warehouse building and two 14-storey office buildings, with a total gross floor area of 214,284 sq m. It is located adjacent to one of EC World Reit's existing assets, Fu Heng Warehouse, and so they can be combined to create a 308,571 sq m logistics hub.

The property is operated by Chinese e-commerce logistics provider Ruyicang, a wholly-owned subsidiary of sponsor Forchn Holdings.  

Because Fultric is owned by Bonray Investment Trust, a private trust whose sole beneficiary is Wang Guoli, the spouse of Forchn Holdings' and EC Holdings' chairman Zhang Guobiao, and also the sponsor holds a 40.59 per cent interest in Hangzhou Unilogix and the master lessees are owned by Forchn, this is an interested-party transaction and so shareholder approval will be sought at an extraordinary general meeting.

The transaction is expected to increase DPU by 1.6 per cent to S$6.278 on a historical proforma basis based on fiscal 2018 results.

Books will close May 28 and distribution is payable on June 28.

The counter closed at S$0.78 on Friday, up half a Singapore cent or 0.65 per cent.