ESR-Logos Reit H2 DPU rises 7.5% to S$0.0154 on higher earnings

ESR-Logos Reit posted a distribution per unit (DPU) of S$0.0154 for its second half ended Dec 31, 2022, up 7.5 per cent from a DPU of S$0.01433 a year ago.

Gross revenue was up 61 per cent to S$195.6 million for the half-year period, from S$121.4 million a year ago.

Net property income (NPI) grew 64 per cent on the year to S$141.5 million for the half year, from S$86.3 million.

The higher year-on-year gross revenue and NPI were mainly attributed to contributions from Ara Logos Logistics Trust (ALog Trust) after the merger in April 2022, the Reit’s manager said in a bourse filing on Monday (Jan 30).

The increase in NPI was partially offset by higher electricity rates arising from a surge in global energy prices and higher electricity demand, it added.

Total income available for distribution rose 79.6 per cent year on year to S$103.5 million, from S$57.6 million.

The distribution of S$0.0154 per unit for the period Jul 1 to Dec 31, 2022 will be paid on Mar 29, following the record date of Feb 7.

For the full year, gross revenue was up 42.3 per cent to S$343.2 million. NPI was up 41 per cent to S$244.2 million, while total income available for distribution was up 54.8 per cent to S$177.1 million. Full-year DPU rose 0.4 per cent to S$0.03.

Portfolio occupancy stood at 92.7 per cent, supported by “strong demand for quality spaces”, said the Reit’s manager. A total of 516,501 sq m of space was leased to tenants, comprising 373,650 sq m of lease renewals (72.3 per cent of total leases) and 142,851 sq m of new leases (27.7 per cent of total leases).

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The Reit recorded a retention rate of 69.3 per cent. It achieved a positive rental reversion in FY2022 at 11.8 per cent, compared to a negative rental reversion of 1.7 per cent in FY2021. The “strong” rental reversions were broad-based across all four sub-sectors and driven primarily by the new economy sectors of logistics (15.7 per cent) and high-specs (12.3 per cent), its manager said.

Its weighted average lease expiry as at Dec 31, 2022 was 3.2 years, up from 2.7 years the year before. As part of efforts to reduce tenant concentration risk, rental income contributed by the top 15 tenants accounted for just 34.8 per cent of the total portfolio, noted its manager. This marked an improvement by 2 per cent from 36.8 per cent in FY2021, with no single tenant contributing more than 5.5 per cent of rental income.

Adrian Chui, chief executive officer and executive director of the manager, noted that despite the uncertainties and challenges from high inflation, rising interest rates and geopolitical tensions, the Reit has “continued to stay prudent” in its risk management strategies and was able to deliver “stable growth” both operationally and financially.

He added: “Leveraging the continued tailwinds of economic structural trends, we continued to rejuvenate ESR-Logos Reit’s portfolio towards in-demand, scalable and quality new economy assets.”

Units of ESR-Logos Reit closed flat at S$0.380 on Monday before the results were released.