ESR-Reit DPU for Q4 slips 0.5% to S$0.01

Singapore

ESR-REIT'S distribution per unit (DPU) slipped 0.5 per cent to one Singapore cent for the fourth quarter ended Dec 31, 2019, from 1.005 cents a year ago.

The real estate investment trust (Reit), however, recorded higher gross revenue and net property income (NPI). This comes on the back of contributions from Viva Trust's nine properties and the logistics facility at 15 Greenwich Drive, which were acquired in October 2018; the leasing of its 30 Marsiling property following its asset enhancements; and rental price increase for existing properties.

Gross revenue for the quarter was up 7 per cent to S$62.5 million from S$58.4 million a year ago, while NPI rose 9.3 per cent to S$46.2 million from S$42.3 million.

The Reit's total income available for distribution rose 18.4 per cent year on year to S$34.7 million from S$29.3 million.

The distribution will be paid out on March 9, 2020, after books closure on Feb 3, 2020.

For the full year ended Dec 31, 2019, DPU rose 4 per cent to 4.011 Singapore cents, from 3.857 cents for FY2018, and total income available for distribution surged 78 per cent to S$132.6 million from S$74.5 million. Gross revenue jumped 61.3 per cent to S$253 million from S$156.9 million, and NPI climbed 67.7 per cent to S$187.9 million from S$112 million.

With industrial activities taking a hit from global trade uncertainty, demand for space may be affected, said Adrian Chui, chief executive officer of ESR Funds Management.

But the Reit will continue to look to opportunities that will strengthen its portfolio quality and diversify portfolio risks, he added.

As the Reit sector continues to see an uptick in mergers, Mr Chui told the media on Thursday that he is not surprised by the trend. He attributed it to the increased competition as more Reits and private funds enter the market.

On the potential of another merger, Mr Chui said: "We are always open as you need to be big to thrive in a more competitive market."

He cited how the merger with Viva Industrial Trust in 2018 resulted in a broader investor base with higher trading liquidity and increased research coverage for the Reit.

Three years ago, ESR Reit and Viva Industrial Trust each saw average daily trading volumes falling below a million, according to Mr Chui. Post-merger in FY2019, the Reit had an average daily trading volume of over six million. It is also covered by six research brokers compared to only one before the merge.

Mergers and acquisitions will always be on the table but only if it is in the best interests of unitholders, he added.

Units in ESR-Reit closed one Singapore cent higher at S$0.56 on Thursday.