EC World REIT reports 3Q19 net property income rose 3 percent

EC World REIT's Stage 1 of Bei Gang Logistics, which comprises eight buildings, located in North Hangzhou, China. It is one of the largest e-commerce developments in the Yangtze River Delta. Credit: EC World REITEC World REIT's Stage 1 of Bei Gang Logistics, which comprises eight buildings, located in North Hangzhou, China. It is one of the largest e-commerce developments in the Yangtze River Delta. Credit: EC World REIT

EC World REIT reported Thursday its third-quarter net property income increased 3.2 percent on-year to S$22.92 million on strong occupancy and the acquisition of the Fuzhou E-Commerce property.

Gross revenue for the quarter ended 30 September grew 7.5 percent on-year to S$25.68 million, the e-commerce-focused REIT said in a filing to SGX.

The distribution per unit (DPU) came in at 1.489 Singapore cents, down 5.2 percent from 1.57 Singapore cents in the year-ago period, the REIT said.

The decline in DPU was due to a timing difference between a loan drawdown and the completion of the acquisition of Fuzhou E-Commerce, and on the depreciation of the yuan, the REIT said.

In yuan terms, third quarter net property income rose 11.4 percent on-year to 119.09 million yuan, on gross revenue of 130.96 million yuan, up 13.5 percent on-year, the REIT said.

Portfolio occupancy was at 99.2 percent, the REIT said.

“Despite the macroeconomic headwinds, EC World REIT’s portfolio of quality logistics assets continue to deliver, underpinned by its highly defensive lease structure. Its relatively long weighted average lease to expiry of 4.3 years (by gross rental income) provide sustainability in
returns,” Goh Toh Sim, executive director and CEO of the REIT’s manager, said in the statement.

“In August 2019, the REIT completed the acquisition of Fuzhou E-Commerce which contributed positively to the earnings,” he added.

For the nine-month period, EC World REIT reported net property income fell 1.9 percent on-year to S$65.26 million on gross revenue of S$73.27 million, up 0.7 percent on-year. The nine-month DPU was 4.537 Singapore cents, down 1.6 percent from 4.609 Singapore cents in the year-ago period, the REIT said.

In its outlook, EC World REIT pointed to the Chinese government’s efforts to spur domestic consumption and focus exporters on the domestic market.

“These include the expansion of cross-border e-commerce import business to more Chinese cities, encouraging innovation in the design and production of consumer goods as well as enhancement to existing pedestrian streets to generate shoppers’ traffic,” the REIT said, noting online retail sales increased 16.8 percent on-year in the first nine months of the year.

“EC World REIT’s assets cater to tenants with underlying businesses serving the domestic China market with no exposure to international trade. As China gears itself towards a more consumption driven economy, EC World REIT is well positioned to capitalise on the
potential of the domestic market for growth,” the REIT added.

EC World REIT has a portfolio of eight properties in China and focuses on logistics and e-commerce logistics.

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