ESR-Reit slashes Q1 DPU to 0.5 S cent, retains S$7m amid pandemic

THE manager of ESR-Reit has more than halved the distribution per unit (DPU) to 0.5 Singapore cent for the first quarter ended March 31, 2020 from 1.007 cents a year ago.

This came as it decided to retain about S$7 million of distributable income for the quarter for "prudent cash flow management", in anticipation of a challenging operating environment due to continued uncertainties from the Covid-19 pandemic.

Excluding this retention, distributable income available per unit for the quarter had stood at 0.697 Singapore cent, the industrial real estate investment trust's (Reit) manager said in an interim update on Thursday.

The total amount available for distribution to unitholders amounted to S$24.5 million, down 23.5 per cent from S$32 million a year ago.

Gross revenue was down 10.9 per cent on the year to S$57.8 million for the quarter, from S$64.8 million previously.

Net property income (NPI) fell 15.6 per cent to S$41 million, from S$48.6 million a year ago.

The lower gross revenue and lower NPI were partly due to lease conversion from single to multi-tenancy for five properties where ESR-Reit now has to bear the costs of land rent, property tax and maintenance fees that tenants used to pay under a master lease arrangement.

Also weighing on gross revenue and NPI were the non-renewals and downsizing by certain tenants, as well as rental rebates set aside as part of ESR-Reit's measures to support tenants affected by the Covid-19 outbreak.

Distributable income declined by 18.2 per cent year on year to S$24.5 million, from S$29.9 million.

The Q1 distribution of 0.5 Singapore cent will be paid out on June 24, after books closure on May 4.

Adrian Chui, chief executive officer and executive director of the manager, said: "Our cash position is stable with no more refinancing risk for FY2020, in addition to the availability of committed undrawn credit facilities. However, the Covid-19 pandemic is highly uncertain in terms of the length and depth of its economic impact."

Besides fully passing on the property tax rebates to all qualifying tenants, ESR-Reit's manager is also expanding its existing support measures to help tenants whose businesses are "badly affected" by the outbreak, Mr Chui added.

Units of ESR-Reit increased by S$0.01 or 2.9 per cent to close at S$0.36 on Wednesday.