ESR-Reit Q3 DPU rises 1.7% to S$0.00712 on enlarged unit base

ESR-Reit's J91U distribution per unit (DPU) was up 1.7 per cent year on year to S$0.00712 for Q3 2021 from S$0.007, while distributable income increased by 15.1 per cent to S$28.6 million from S$24.8 million, its manager announced in a bourse filing on Wednesday (Oct 27).

The growth is underpinned by broad-based year-on-year increases in gross revenue which was up by 7.2 per cent at S$61.1 million, as well as a rise in net property income (NPI) by 8.6 per cent at S$43.9 million.

The manager also highlighted that the relatively smaller increase in Q3 2021 DPU comes as a result of an enlarged unit base due to the issuance of new units.

The third-quarter growth was mainly attributed to the acquisition of 46A Tanjong Penjuru, as well as the absence of provision for Covid-19 rental rebates. The higher NPI, together with the contribution from ESR-Reit's 10 per cent interest in the ESR Australia Logistics partnership, has increased the amount available for distribution for Q3 2021, the manager said.

The manager also noted that portfolio occupancy rate for ESR-Reit "remained resilient" at 91.2 per cent in Q3 2021, consistently above JTC's industrial average of 90.1 per cent.

The year-to-date rental reversion was 2.2 per cent lower as at Sep 30, 2021 primarily due to lower renewal rates for some large business park tenants in the quarter, while the retention rate for Q3 2021 was at 67.5 per cent.

The manager also pointed out that ESR-Reit has a "well-staggered" debt maturity profile with a weighted average debt expiry of 2.6 years and an aggregate leverage of 41.3 per cent.

The distribution of S$0.00712 per unit will be paid out on Dec 29, after books closure on Nov 5.

Chief executive officer and executive director of the manager, Adrian Chui, observed that the good operating performance during the third quarter was driven by continued acceleration in digital adoption and paradigm shifts in the global manufacturing supply chain.

"Despite the impact of Phase 2 (Heightened Alert), our leasing activities increased with approximately 702,500 square feet of space leased and renewed, underpinned by strong leasing interest received from technology, e-commerce and logistics sectors. We are also heartened by the strong endorsement demonstrated by our unitholders during the recent S$149.6 million equity fundraising and the S$125 million notes issuance which is a validation of our business strategy," Chui said.

Chui added that leasing challenges in the business park segment remain due to the prolonged work-from-home measures, while operating expenses may also be affected by the increasing fuel prices and overall general inflation attributed to labour shortages from continued border closures.

"With the continued support of our unitholders and our sponsor, ESR Cayman, we are well-positioned to enhance our performance by adding high-quality properties with stable cash flows in strong rental growth markets to our portfolio, undertaking asset enhancements and/or redevelopments while divesting non-core assets to deliver sustainable growth with lower risks for all unitholders," added Chui.

The counter was 0.5 cent or 1.05 per cent higher at S$0.48 on Oct 27 when trading ended.

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