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ESR-Reit posts 0.4% dip in Q3 DPU to S$0.01 on enlarged unit base after placement

ESR-REIT'S (real estate investment trust) distribution per unit fell by 0.4 per cent from a year ago to one Singapore cent for the third quarter ended Sept 30, weighed down by higher expenses, and an enlarged unit base due to the issuance of new placement units. 

In June this year, the trust announced that it will issue about 194.2 million new units under its upsized private placement to raise gross proceeds of S$100 million. The issue price was fixed at 51.5 Singapore cents per unit, at the lower end of initial indications, and at an 8.3 per cent discount to the volume-weighted average price of 56.16 Singapore cents for all trades done on June 14. 

Gross revenue for the quarter rose 91.5 per cent to S$62 million, from S$32.4 million a year ago, while net property income more than doubled to S$45.3 million for the quarter, from S$22.5 million last year. 

These were mainly due to the acquisition of 15 Greenwich Drive, and the nine properties from Viva Trust's portfolio following the merger in October 2018, the leasing of 30 Marsiling subsequent to its asset enhancements, as well as rental escalations from its existing properties. 

Nonetheless, the increase was partially offset by the lease conversion from single to multi-tenancy for certain properties, the trust said in a regulatory filing on Friday. 

Total distribution to unitholders more than doubled year on year to S$33.8 million, from S$15.9 million. 

In line with the trust's preferential offering, there will also be an advanced distribution of 0.145 Singapore cent. This cumulative distribution of 1.145 cents will be paid out on Nov 8, after books closure on Oct 11. 

Looking ahead, Adrian Chui, chief executive and executive director of the manager, said: "Headwinds such as uncertainty over the status of US-China talks and weak global demand have started to affect business performance of industrialists, contributing to negative business sentiments, which is expected to impact demand for space in the short-to-medium term."

Units of ESR-Reit closed flat at 54 Singapore cents on Thursday before the results were released.

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