ESR-REIT reports 1Q22 net property income dropped 10 percent

An artist's impression of ESR-REIT's planned re-development of 21B Senoko Loop in Singapore, announced in April 2022. Credit: ESR-REITAn artist's impression of ESR-REIT's planned re-development of 21B Senoko Loop in Singapore, announced in April 2022. Credit: ESR-REIT

ESR-REIT reported Wednesday its first quarter net property income dropped 10.4 percent on-year to S$39.5 million, mainly on higher utilities expenses as global energy prices surged and on higher electricity demand.

Gross revenue for the January-to-March period slipped 1.2 percent on-year to S$59.6 million on the divestment of 11 Serangoon North Avenue 5 and 3C Toh Guan Road East in the fourth quarter of 2021,
as well as 28 Senoko Drive and 45 Changi South Avenue 2 in the first quarter of this year, the REIT said in a filing to SGX.

The distribution per unit (DPU) came in at 0.723 Singapore cent for the first quarter, down 9.6 percent from 0.80 Singapore cent in the year-earlier quarter, despite the amount available for distribution rising 2.1 percent on-year to S$29.3 million, the filing said. The amount was available for distribution increased partly on lower borrowing costs and contribution from the REIT’s 10 percent interest in ESR Australia Logistics Partnership (EALP). But the DPU fell as the number of units rose to 4.05 billion in the first quarter, up 12.9 percent on-year, on equity fund-raising, the filing said.

The REIT posted positive rental reversion of 3.1 percent, up from positive 3.0 percent in the fourth quarter, with logistics/warehouse, general industrial and business park sectors showing “robust” reversions, offset by negative rental reversions in the business park retail space.

Portfolio occupancy was steady at 91.5 percent in the quarter, above JTC’s average of 90.2 percent, the filing said.

Outlook

Adrian Chui, CEO and executive director of the REIT’s manager, said utilities costs are expected to remain high near-term, impacting net property income.

“We are keeping a close eye and taking proactive steps to manage these surges in utilities costs and inflationary pressures. For example, we have secured electricity tariff rates with SP Services (which are lower than current pool rates) for tenants who consume large amounts of electricity in their production,” Chui said in the statement.

“Nonetheless, the industrial market is seeing a healthy demand from the logistics and general industrial sectors due to an acute shortage of quality space, and this was reflected in the positive rental reversions recorded for this quarter, continuing the positive trend from last quarter,” Chui said.

ESR-REIT’s merger with ARA LOGOS Logistics Trust will be completed on 28 April.

Read more details of ESR-REIT’s results.