UPDATE: ESR-REIT reports 4Q18 net property income of S$42.3 million in first post-merger results

Singapore five-dollar note Photo by Leslie Shaffer

ESR-REIT reported on Friday its fourth quarter net property income was S$42.3 million, up 112.1 percent on-year, in its first results since its merger with Viva Industrial Trust.

The improvement was due to contributions from 8 Tuas South land and 7000 Ang Mo Kio Avenue 5, which were acquired in December 2017, and additional contributions from the newly acquired 15 Greenwich Drive, which was completed in October 2018, and nine properties from Viva Trust’s portfolio after the merger was completed in October 2018, it said.

Gross revenue for the quarter was S$58.4 million, up 114.9 percent on-year, it said in a filing to SGX before the market open on Friday.

Its distribution per unit for the quarter ended 31 December was 1.005 Singapore cents, up 8.2 percent on-year from 0.929 Singapore cent, it said.

For the full year, net property income was S$112.0 million, up 42.8 percent on-year, while gross revenue was up 43.0 percent on-year to S$156.9 million, it said. The DPU for the full year was 3.857 Singapore cents, up 0.1 percent from 3.853 Singapore cents a year earlier, it said.

Occupancy improved, rising to 93.0 percent at end-December, compared with the JTC average of 89.1 percent as of the end of the third quarter, it said.

Rental reversions improved, with the level for the full year down 2.9 percent, narrowing from a 15.8 percent decline in 2017, ESR-REIT said.

Adrian Chui, CEO and executive director of ESR Funds Management (S), the REIT manager, was optimistic that the post-merger REIT would spur better returns via active leasing, asset enhancements and the potential for strategic acquisitions.

The REIT has pointed to up to seven assets for asset enhancement initiatives over the next three years, it said.

“2018 was a year of transformation for ESR-REIT. We are currently a S$3.0 billion portfolio with well-located assets across Singapore and a larger market capitalization of close to S$1.62 billion, which has resulted in higher liquidity and trading volume,” Chui said. “We have
strengthened and diversified our portfolio, with an increased exposure to in-demand High-Specs Industrial and Business Park assets.”

But in the outlook, Chui pointed to concerns over the global trade war, which could impact the industrial sector in Singapore, possibly hurting demand for industrial real estate.

As of end-2018, ESR-REIT has 57 properties in Singapore across the general industrial, light industrial, logistics/warehouse, high-specs industrial and business-park segments, it said.

This article was originally published on Friday, 18 January 2019 at 7:55 A.M. SGT; it has since been updated. 

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