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ESR-Reit posts Q4 DPU of 1.005 Singapore cents in first results since VIT merger

ESR-Reit posted a distribution per unit of 1.005 Singapore cents for the fourth quarter ended Dec 31, 2018, up 8.2 per cent year on year.

This is ESR-Reit's first set of financial results after it completed its merger with Viva Industrial Trust (VIT) on Oct 15, 2018. VIT's revenue and expenses from Oct 16, 2018, to Dec 31, 2018, have been included in the group's results.

ESR-Reit said gross revenue for the quarter more than doubled from S$27.2 million to S$58.4 million, while net property income (NPI) rose from S$19.9 million to S$42.3 million. The total amount available for distribution to unitholders came to S$29.3 million, up from S$12.2 million a year ago. 

For the full year, gross revenue increased 43 per cent to S$156.9 million while NPI rose nearly 43 per cent to S$112 million, owing to contributions from the 8 Tuas South Lane and 7000 Ang Mo Kio Avenue 5 properties that were acquired in December 2017 and the additional contributions from the newly-acquired 15 Greenwich Drive and the 9 properties from Viva Trust. The DPU for the full year worked out to 3.857 cents, compared to 3.853 cents a year ago.

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Adrian Chui, chief executive officer of ESR Funds Management, said: “We continue to see the potential threat of a global trade war impacting industrialists operating in Singapore in 2019 and possibly having a negative impact on the demand for industrial space. However, we are cautiously optimistic about prospects in the sector given the improving supply/demand metrics pointing to an increasing stable industrial real estate market.

"We have taken steps to reposition our portfolio, with multi-tenanted properties making up close to 70 per cent of our portfolio following the merger and this bodes well for us in an industrial market that’s showing signs of stabilisation.” 

The Reit has also reduced financing risks by hedging a significant proportion of its capital structure for a longer duration.

He added: "In the year ahead, we will continue to focus on extracting value for unitholders through operational synergies via integration, AEI (asset enhancement initiative) opportunities, and value-enhancing asset acquisitions to deliver stable and sustainable returns for unitholders.”

As at Dec 31, 2018, ESR-Reit’s portfolio comprises 57 properties across Singapore, with a total gross floor area of approximately 14.1 million square feet. Portfolio occupancy stood at 93 per cent, while rental reversions for FY18 clocked negative 2.9 per cent, narrowing from -15.8 per cent for FY17. As of Dec 31, ESR-Reit has a diversified tenant base of 339 tenants and a weighted average lease expiry (WALE) of 3.8 years.

The DPU will be paid out on Feb 28. An advance distribution of 0.164 cents per unit was paid on Nov 26, 2018.