ESR-Reit DPU up 4.1% in Q3

ESR-Reit has posted a third-quarter DPU of 1.004 Singapore cents, up 4.1 per cent from the same period last year.

Gross revenue in the three months ended Sept 30 rose 19.4 per cent to S$32.36 million.

Net property income rose 15 per cent to S$22.55 million on contributions from 8 Tuas South Lane and 7000 Ang Mo Kio Avenue 5, which were acquired in December last year.

This was partially offset by non-renewal of leases at 12 Ang Mo Kio St 65, 31 Tuas Ave 11, 54 Serangoon North Ave 4, 4/6 Clementi Loop, 1&2 Changi North St 2 and 3C Toh Guan Road East, revenue reduction from the master lease conversion of 16 Tai Seng Street and 21B Senoko Loop, four property divestments since the third quarter last year and the on-going asset enhancement works at 30 Marsiling Industrial Estate Road 8.

Portfolio occupancy increased from 91.4 per cent in the second quarter to 92.9 per cent, above the JTC average of 88.7 per cent as at Sept 30, ESR-Reit said.

ESR-Reit renewed and leased approximately 359,514 sq ft of space in the third quarter, reducing the ratio of lease expiries in the remainder of 2018 from 7.3 per cent to 3.6 per cent.

It secured two new master leases in the third quarter. Keito Engineering & Construction took up a lease at 21B Senoko Loop for three years commencing in October. Virogreen took up a lease at 31 Tuas Avenue 11 for five years starting in September.

ESR-Reit had a negative rental reversion of 4.1 per cent in the nine months ended Sept 30, against the same period last year. Tenant retention rate of was 47.2 per cent, due mainly to the non-renewal of Beyonics International at 30 Marsiling Industrial Estate Road 8.

Weighted average lease expiry was 4.4 years as at Sept 30, from 4.5 years as at June 30.

Unitholders will get a total distribution entitlement of 1.168 Singapore cents per unit, after adding an advanced distribution of 0.164 Singapore cents per unit, in accordance with the merger with Viva Industrial Trust by way of a trust scheme of arrangement. The distribution will be paid on Nov 26.

Net asset value per unit was 58 Singapore cents as at Sept 30, from 58.2 Singapore cents as at June 30.

ESR-Reit said that the industrial property market is "showing signs of stabilisation", with monthly rents in all market segments remaining flat quarter-on-quarter.

"The moderating level of supply in 2018 will enable the market to absorb the significant amount of space from the past six years," it said, citing CBRE, so the leasing market is expected to remain competitive.