ESR-REIT posts 2021 net property income rose 5.5 percent

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

ESR-REIT reported Thursday its 2021 net property income rose 5.5 percent on-year to S$173.3 million on the absence of Covid-related rental rebates for tenants during the year, the acquisition of the 46A Tanjong Penjuru property and increased leasing at some properties.

The 46A Tanjong Penjuru property was acquired in June 2021, the REIT said; the rental rebates to tenants in 2020 amounted to S$7.4 million. 

The REIT also pointed to contributions from its 10 percent interest in ESR Australia Logistics Partnership as contributing to funds available for distribution. 

Gross revenue for the 12-month period increased 5 percent on-year to S$241.3 million, the REIT said in a filing to SGX. 

The distribution per unit (DPU) for the full year came in at 2.987 Singapore cents, up 6.7 percent from 2.80 Singapore cents in the previous year, the filing said. 

The number of units rose 8.2 percent on-year to 3.83 billion in 2021, up from 3.54 billion in 2020, due to a private placement and preferential offering completed in May and August during the year, ESR-REIT said.

Portfolio occupancy rose to 92 percent in the fourth quarter, up from 91.2 percent in the previous quarter, above the JTC average of 90.1 percent, the filing said.

“Despite pandemic-related uncertainties, leasing activities remained positive with many new leases in FY2021 secured from logistics, info-communications, semiconductor and manufacturing industries,” ESR-REIT said. 

While fourth quarter rental reversion was a positive 3 percent, full-year rental reversion was negative 1.7 percent, mainly on lower renewal rates for certain large business park tenants, ESR-REIT said.

Outlook

In its outlook, ESR-REIT pointed to expectations the leasing market would remain stable, with expansions and set-ups, especially for the high-spec industrial and logistics sectors. But the REIT also noted some concerns.

“While 100 percent work-from-home is no longer the default from 1 January 2022, the leasing prospects for the business park sector may still face some challenges as companies continue to adopt hybrid work arrangements amid the ongoing pandemic,” ESR-REIT said. 

Adrian Chua, CEO and executive director of the manager, was somewhat upbeat. 

“The pandemic and global supply chain disruptions have provided tailwinds in the industrial sector as industrialists adapt to a paradigm shift in the way goods are produced, delivered and consumed,” Chua said in the statement. 

“Our steady FY2021 operating performance is reflective of these transformation efforts while we actively pursue growth opportunities through asset enhancements to reposition selected properties; value-accretive acquisitions of quality assets from our sponsor’s pipeline and third parties; and divestment of non-core assets,” he added.

Read more details about ESR-REIT’s results