ESR-Logos Reit H1 DPU falls 18.6% to S$0.01122
Its NPI drops 9.2 per cent to S$127.8 million from S$140.8 million in H1 2023
ESR-LOGOS Real Estate Investment Trust (ESR-Logos Reit) posted an 18.6 per cent drop in distribution per unit (DPU) to S$0.01122 for the first half ended Jun 30, from S$0.01378 in the previous corresponding period.
It also announced acquisitions of two facilities in Japan and Singapore for S$772.6 million.
On Wednesday (Jul 31), the manager attributed the decline to the divestment of 11 non-core assets and lower distribution capital gains from the sale of investment properties in prior years.
The distribution will be paid out on Sep 17, after the record date of Aug 8.
ESR-Logos Reit’s net property income (NPI) fell 9.2 per cent to S$127.8 million from S$140.8 million in H1 2023.
Revenue for the half-year period declined 8.1 per cent to S$180.9 million from S$196.8 million.
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The lower NPI and top-line growth came mainly from the loss of income from the sale of an Australian non-core asset in the second quarter of 2024 and properties amounting to S$440.6 million.
The decommissioning of 2 Fishery Port Road also contributed to the fall, said its manager. But it noted that the declines were partially offset by additional income contributions from two assets – 7002 Ang Mo Kio Avenue 5 and 21B Senoko Loop – which completed their asset enhancement initiatives in the third quarter of 2023 and the first quarter of 2024, respectively.
The amount available for distribution tumbled 15 per cent year on year to S$86.3 million, mainly due to lower NPI and distribution of capital gains. This was partially offset by lower borrowing costs, said the manager.
New acquisitions
Separately, the Reit manager said that it plans to acquire a 100 per cent interest in a logistics facility in Japan, as well as a 51 per cent interest in a high-spec manufacturing plant in Singapore.
The total purchase outlay is about S$772.6 million. The proposed acquisitions are expected to be 1.8 per cent accretive to its DPU on a pro-forma basis, assuming that the purchase was completed on Jan 1, 2023.
The two properties are ESR Yatomi Kisosaki Distribution Centre in Nagoya, and 20 Tuas South Avenue 14. They will be purchased for about 38.7 billion yen (S$340.1 million) and S$444.6 million, respectively. See *Amendment note
The freehold asset in Japan has a total land area of 79,096 sqm and a net lettable area of 134,863 sqm. It has a Wale of 2.7 years as at Jun 30. It will be acquired at a 2.3 per cent discount to valuation and 4 per cent NPI yield.
Meanwhile, the Singapore asset has a total land area of 252,733 sqm and a net lettable area of 247,063 sqm. It has a Wale of 11.2 years, as at end-June. It will be acquired at a 2.3 per cent discount to valuation and a NPI yield of 6.1 per cent.
Adrian Chui, chief executive and executive director of the manager, said at the briefing of the Reit’s financial results on Wednesday that these two acquisitions are “on-strategy” assets, meaning they are new, freehold assets which are in demand and have green sustainability features.
The acquisitions will be funded by debt financing, the issuance of new units to existing unitholders to raise up to S$194 million, and consideration units of up to S$60.3 million.
Pro forma gearing will stay low, at 41 per cent.
Chui said that the deal could improve the trust’s logistics and high-specs industrial portfolios, as well as extend underlying land leases to create a resilient and future-ready portfolio.
Units of ESR-Logos Reit ended flat at S$0.275 on Wednesday.
*Amendment note: The story has been amended to reflect the correct purchase consideration of the Japan property.
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