EC World Reit's Q4 DPU rises to 1.5 cents; to buy e-commerce logistics asset for S$31m

Stage 1 Properties of Bei Gang Logistics, one of the largest e-commerce developments in the Yangtze River Delta in Shanghai.
Stage 1 Properties of Bei Gang Logistics, one of the largest e-commerce developments in the Yangtze River Delta in Shanghai. PHOTO: EC WORLD REIT

SINGAPORE - EC World Reit's fourth-quarter net property income (NPI) fell 17.6 per cent to S$17.9 million, as gross revenue dropped 16.4 per cent to S$20.7 million from the year-ago period.

However, for the three months ended Dec 31, income available for distribution rose 3.6 per cent to S$11.8 million, resulting in an increase in distribution per unit (DPU) to 1.5 Singapore cents from 1.46 Singapore cents last year.

The lower gross revenue and NPI for the fourth quarter were mainly due to accounting adjustments for effective rent, and a S$1.1 million provision for impairment in other receivables at Fu Zhuo Industrial, one of the group's properties in Hangzhou China, EC World said.

The China specialised logistics and e-commerce logistics Reit added that these had "no impact" on its DPU.

Going forward, the group is actively looking to expand its asset portfolio in China and high growth markets in South-east Asia.

Separately, EC World on Wednesday also announced that it will be spending S$31 million to acquire a 100 per cent equity interest in Wuqiao Zhonggong Merlot (Hubei) Logistics, which owns a Wuhan property. This represents EC World's first acquisition since its initial price offering (IPO) in July 2016.

According to the Reit, the transaction which is likely to be DPU accretive, would enhance its proposition as a specialised logistics Reit, and grant it "exposure to favourable macroeconomic fundamentals of Wuhan".

The acquisition cost comprises of a purchase consideration of RMB145 million (S$30.3 million) and other acquisition-related expenses. This purchase price represents a 15.2 per cent discount to the valuation of RMB171 million as appraised by Beijing Colliers International Real Estate Valuation, EC World said.

The acquisition will be wholly funded by internal cash, "financed via security deposits received by EC World in the form of cash under the master leases entered into, in relation to Chongxian Port Investment, the Stage 1 Properties of Bei Gang Logistics and Fu Heng Warehouse", the group said.

The Wuhan property consists of a 68,219 square metre plot of land; and three two-storey warehouses, one five-storey multi-purpose building, as well as a six-storey building.

Said executive director and acting CEO of the manager, Goh Tim Sim: "With the continued rapid expansion of e-commerce sector in China, the demand for high quality warehousing facility and fulfilment centres is expected to stay strong for the foreseeable future. This acquisition reflects ECW's focus on building a differentiated asset portfolio platform for our unitholders and potential investors."

Units in EC World traded 1.3 per cent, or one Singapore cent higher to close at S$0.76 per unit on Wednesday.