ESR-Reit DPU falls 16% to 0.84 Singapore cent for Q4

ESR-REIT'S distribution per unit (DPU) dropped 16 per cent to 0.84 Singapore cent for the fourth quarter ended Dec 31, 2020, from one cent the previous year.

The DPU of 0.84 cent includes part of the remaining distributable income of 0.099 cent, which was previously retained in the first quarter of 2020.

"Despite the ongoing Covid-19 pandemic, our core DPU has shown signs of operational stability and registered steady growth from quarter to quarter throughout FY2020," said Adrian Chui, chief executive officer and executive director of the manager.

"Thus, we have now decided to fully pay out the remaining distributable income that was previously retained in Q1 2020 for cash-flow purposes in Q4 2020," he added.

Gross revenue for the fiscal year fell 9.1 per cent to S$229.9 million from S$253 million for FY2019. Net property income (NPI) decreased by 12.6 per cent to S$164.2 million for FY2020 as compared to S$187.9 million for FY2019.(See Amendment note)

The real estate investment trust's (Reit) total income available for distribution fell 25.2 per cent year on year to S$99.1 million from S$132.6 million.

It attributed the revenue losses to higher property expenses as some property tax were now borne by the group due to a lease conversion from single to multi-tenancy.

Additionally, non-renewals and downsizing by some tenants, as well as rental rebates set aside for tenants to relieve some of Covid-19's impact, also resulted in lower revenue.

Industrial market rents and prices are expected to remain soft in the near future, said the Reit's manager, who noted that demand and economic recovery are dependent on the Covid-19 situation as well as domestic and global vaccination progress.

It is however worth noting that quarter-on-quarter revenue for the industrial Reit went up by 4.2 per cent to S$59.3 million from S$56.9 million for Q3. NPI also increased 7.9 per cent to S$43.6 million from S$40.4 million for the previous quarter.

This comes amid a rise in overall portfolio occupancy to 91 per cent in Q4, up from 90.8 per cent in Q3, due to new tenants and leasing prospects from pharmaceuticals, manufacturing, engineering and e-commerce companies.

The company will look to reduce uncertainties by refinancing debt ahead of expiry and work towards lengthening loan tenor and reducing the cost of debt, said Adrian Chui, chief executive officer and executive director of the manager.

It will also continue to explore potential value-accretive acquisition and development opportunities in Singapore and in countries where the sponsor has a footprint, he added.

"Given the Reit's relatively stable financials and operating metrics, as well as committed and supportive sponsor, we are confident we can capitalise on transitional downtime during the Covid-19 period to undertake more growth opportunities within the portfolio to be ready for the post-pandemic recovery."

DPU will be paid out on March 19 after books closure on Jan 28.

Units of ESR-Reit were trading 2.5 per cent or S$0.01 higher at S$0.41 as at 3.27pm on Wednesday.

Amendment note: An earlier version of this article incorrectly stated that trust expenses accounted for the lower NPI. The article above has been revised to reflect this.