ESR-Reit reports 2.3% dip in Q1 NPI to S$80.6 million

[SINGAPORE] ESR-Reit’s net property income (NPI) fell 2.3 per cent to S$80.6 million for its first quarter ended Mar 31, from S$82.5 million in the year-ago period, the manager reported in a Q1 business update on Friday (Apr 24).

Revenue for the quarter was down 0.4 per cent at S$110.1 million, from S$110.5 million a year earlier. 

This was primarily due to the divestment of two non-core properties in FY2025 and the sale of a hotel at 2 Changi Business Park Avenue 1 in March, the manager said. 

On a same-store basis, which excludes two non-core properties divested in FY2025, revenue grew 1.4 per cent year on year due to positive rental reversion and higher rates from new leases. 

NPI on a same-store basis decreased marginally by 0.1 per cent to S$80.6 million, due to higher utilities and property tax expenses.

Despite the lower NPI, total distributable income rose 1.4 per cent year on year to S$44.8 million. 

This improvement was driven by a 5.9 per cent increase in core distributable income, largely due to lower funding costs from reduced average borrowings and lower base rates.

The real estate investment trust (Reit) posted portfolio occupancy of 91.3 per cent for the quarter, down from 91.6 per cent previously.

It recorded positive rental reversion of 9.2 per cent, up from 8.6 per cent previously, led by sectors including logistics and high-specs industrial.

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As at Mar 31, gearing stood at 44.3 per cent. 

On a pro-forma basis, assuming the completion of the divestment of eight non-core Singapore assets and the hotel, gearing would have fallen to 39.5 per cent. 

The all-in cost of debt was reduced to 3.34 per cent per annum, compared with 3.35 per cent as at Dec 31, 2025.

The manager said: “Conflict in (the) Middle East pivots management focus from growth to resilience, with prolonged uncertainty and higher energy costs expected to dampen growth and drive inflation.”

Rental reversions are expected to moderate to single-digit positive rental reversions over the next two years with stable occupancies. Revenue will be affected by income loss from the divestment of non-core assets in the short term, pending redeployment, it added.

Units of ESR-Reit closed 0.4 per cent or S$0.01 lower at S$2.47 on Thursday.