ESR-REIT posts 3Q21 net property income rose around 9 percent, partly on acquisition

ESR-REIT property near Singapore’s Tai Seng MRTESR-REIT property near Singapore’s Tai Seng MRT

ESR-REIT reported Wednesday its third quarter net property income increased 8.6 percent on-year to S$43.9 million, mainly on the absence of year-earlier Covid-related rental rebates for tenants and contributions from the acquisition of 46A Tanjong Penjuru.

Gross revenue rose 7.2 percent on-year to S$61.1 million for the July-to-September period, the REIT said in a filing to SGX.

Distributable income increased 15.1 percent on-year to S$28.6 million in the quarter, mainly on the higher net property income and a contribution of S$100,000 from the REIT’s investment in a 10 percent interest in ESR Australia Logistics Partnership (EALP), the filing said.

The distribution per unit (DPU) rose 1.7 percent on-year to 0.712 Singapore cent from 0.70 Singapore cent in the year-ago quarter, ESR-REIT said. The expected payment date is 29 December.

The number of units in the REIT increased to around 4.0 billion, from around 3.55 billion in the year-ago period, a 13.1 percent increase, due to a private placement of 268.8 million new units and a preferential offering of 124.1 million new units, completed in May and August, respectively, the REIT said.

Portfolio occupancy was 91.2 percent, excluding properties in the pipeline for divestment and redevelopment, in the third quarter, the filing said.

The year-to-date rental reversion was negative 2.2 percent as of end-September, mainly on lower renewal rates for some large business park tenants in the third quarter, ESR-REIT said.

Rental collection was at 98 percent of total receivables in the third quarter, better than pre-pandemic levels, ESR-REIT said.

Outlook

Adrian Chui, CEO and executive director of the REIT’s manager, was generally upbeat about the outlook, although he noted some impact from Singapore’s Phase 2 Heightened Alert (P2HA) period earlier in the year, which entailed a partial lockdown to control the spread of Covid-19.

“ESR-REIT delivered a good operating performance during the third quarter, driven by continued acceleration in digital adoption and paradigm shifts in the global manufacturing supply chain,” Chui said in the statement. “Despite the impact of P2(HA), our leasing activities increased with approximately 702,500 sq. ft. of space leased and renewed, underpinned by strong leasing interest received from
technology, e-commerce and logistics sectors.”

He added that operating expenses may be affected by increasing fuel prices and overall general inflation attributed to labor shortages from continued border closures.