ESR-REIT reports 2Q19 net property income more than doubled

Singapore two-dollar bills

ESR-REIT reported Monday second quarter net property income jumped 103.9 percent on-year to S$47.8 million, broadly in line with forecasts from Daiwa.

Gross revenue for the quarter ended 30 June was S$63.8 million, up 95.9 percent on-year, the REIT said in a filing to SGX.

“The increase in gross revenue and net property income was largely contributed from the acquisition of 15 Greenwich Drive and the 9 properties from Viva Trust’s portfolio following the completion of the merger in October 2018 in addition to the leasing up of 30 Marsiling Industrial Estate Road 8, as well as rental escalations from the existing property portfolio,” the REIT said.

The distribution per unit (DPU) was 1.004 Singapore cents, up 0.3 percent from 1.001 Singapore cents in the year-ago quarter, the filing said.

Daiwa had forecast net property income of S$48.4 million on revenue of S$63.5 million, with a DPU of 1.00 Singapore cent.

The portfolio occupancy at end-quarter was 91 percent, above the JTC average of 89.3 percent, the filing said.

“Post-merger, we continue to diversify our portfolio and execute on our asset enhancement initiative (AEI) opportunities and rejuvenation strategies to ensure that our assets are FutureReady,” Adrian Chui, CEO and executive director of the REIT’s manager, said in the statement.

“With an enlarged market capitalization and broader investor base, we are seeing significantly higher trading liquidity, research, investor and stock brokering coverage,” he added.

But he pointed to some risks ahead.

“The ongoing global trade tensions have resulted in increased risk-averse behavior amongst industrialists on the demand-side in the short-to-medium term and these uncertainties may have started to impact their profitability,” Chui said. “It is pertinent that the manager continues to enhance its portfolio to meet the needs of the ‘industrialists-of-tomorrow.'”

As of end-June, ESR-REIT’s portfolio held 56 properties in Singapore.

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