ESR-Reit DPU falls 16% to 0.84 cent for Q4

It attributed the revenue losses to higher property expenses.
It attributed the revenue losses to higher property expenses.PHOTO: ESR-REIT

SINGAPORE (THE BUSINESS TIMES) - ESR-Reit's distribution per unit (DPU) dropped 16 per cent to 0.84 cent for the fourth quarter ended Dec 31, 2020, from one cent the previous year.

Gross revenue for the fiscal year fell 9.1 per cent to $229.9 million from $253 million for FY2019. Net property income decreased by 12.6 per cent to $164.2 million for FY2020 as compared to $187.9 million for FY2019.

The real estate investment trust's (Reit) total income available for distribution fell 25.2 per cent year on year to $99.1 million from $132.6 million.

It attributed the revenue losses to higher property expenses as some property tax were now borne by the group due to a lease conversion from single to multi-tenancy.

Additionally, non-renewals and downsizing by some tenants, as well as rental rebates set aside for tenants to relieve some of Covid-19's impact, also resulted in lower revenue.

Some $4.7 million in trust expenses in abortive costs were incurred for the year due to the proposed merger of ESR-Reit and Sabana Shari'ah Compliant Industrial Real Estate Investment Trust, accounting for the lower NPI.

The DPU of 0.84 cent, which includes part of the remaining distributable income that was previously retained in the first quarter of 2020, will be paid out on March 19 after books closure on Jan 28.

Industrial market rents and prices are expected to remain soft in the near future, said the Reit's manager, who noted that demand and economic recovery are dependent on the Covid-19 situation as well as domestic and global vaccination progress.

The company will look to reduce uncertainties by refinancing debt ahead of expiry and work towards lengthening loan tenor and reducing the cost of debt, said Adrian Chui, chief executive officer and executive director of the manager.

It will also continue to explore potential value-accretive acquisition and development opportunities in Singapore and in countries where the sponsor has a footprint, he added.

"Given the Reit's relatively stable financials and operating metrics, as well as committed and supportive sponsor, we are confident we can capitalise on transitional downtime during the Covid-19 period to undertake more growth opportunities within the portfolio to be ready for the post-pandemic recovery."

Units of ESR-Reit closed one cent or 2.4 per cent lower at 40 cents, before the announcement.