ESR-REIT reports 3Q18 net property income rose 15 percent on two acquisitions

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ESR-REIT reported on Friday that its third quarter net property income rose 15 percent on-year to S$22.5 million after two acquisitions.

Gross revenue for the quarter ended 30 September rose 19.4 percent to S$32.4 million, it said in a filing to SGX on Friday.

The rise was mainly due to contributions from two properties acquired in December of last year: 8 Tuas South Land and 7000 Ang Mo Kio Avenue 5, partially offsetting lease non-renewals, master lease conversions, the loss of revenue from divested properties and the on-going asset enhancement initiative at 30 Marsiling Industrial Estate Road 8, the filing said.

The distribution per unit (DPU) rose 4.1 percent on-year to 1.004 Singapore cents in the quarter, up from 0.964 cent in the year-ago quarter, it said.

For the nine-month period, net property income rose 19.2 percent on-year to S$69.8 million, while gross revenue rose 19.4 percent on-year to S$98.5 million, it said. DPU for the nine-month period fell 2.5 percent on-year to 2.852 Singapore cents from 2.924 Singapore cents in the year-ago period as around 275.4 million new units were issued over the corresponding period.

Portfolio occupancy rose to 92.9 percent by the end of the third quarter from 91.4 percent at the end of the second quarter, it said.

ESR-REIT’s merger with Viva Industrial Trust, which was completed on 15 October, means its portfolio now has 56 Singapore industrial properties, it said.

“The completion of this transformational deal has strengthened ESR-REIT’s market position and our focus is now on integrating the two portfolios to ensure unitholders will reap the synergies and growth opportunities from the merger,” Adrian Chiu, CEO and executive director of ESR Funds Management, said in a statement.

In its outlook, ESR-REIT was cautious on the industrial property market.

“Although an increase in enquiries have been noted recently, the manager expects the leasing market to remain competitive notwithstanding that demand and supply dynamics appear to be improving as historically high supply levels look to taper off by late 2018,” it said.

It noted that Singapore tax authorities have confirmed its disposal gain from divesting 63 Hillview Avenue aren’t subject to income tax and those funds will underpin distribution income, helping to offset the impact of ongoing and expected asset enhancement initiatives on income.