ESR-Reit focusing on S'pore after merger

ESR-Reit, now one of the largest industrial Reits here with $3 billion in property value after a merger, is not rushing into overseas markets just yet.

The Reit already has its hands full with its 57 existing assets in Singapore - up to seven have been identified for asset enhancement initiatives over the next three years, and it might accelerate those plans if market demand calls for it.

"This is the beauty of having a large portfolio... Some of our assets are pretty old, we need to rejuvenate them, and now we have the platform to do it," said Mr Adrian Chui, chief executive of the Reit's manager.

Some examples: The Reit is in talks with a potential tenant to build additional space for them at 7000 Ang Mo Kio 5 where there is currently 495,000 square feet of untapped gross floor area; at 3 Tuas South Avenue 4, there are discussions with some parties who may want to do an expansion there.

Asked about plans for asset acquisitions, Mr Chui said there is no target AUM (assets under management) mandated by sponsor ESR to hit in the next few years.

As for an overseas play, this will happen eventually, but it has to be in countries where the sponsor already has full-fledged operations, including marketing, leasing and project management.

Mr Chui was speaking at ESR-Reit's results briefing for the fourth quarter ended Dec 31, 2018 - the first set of financial results after it completed its merger with Viva Industrial Trust (VIT).

ESR-Reit posted a distribution per unit (DPU) of 1.005 cents, up 8.2 per cent year on year. Gross revenue for the quarter more than doubled from $27.2 million to $58.4 million, while net property income (NPI) rose from $19.9 million to $42.3 million. The total amount available for distribution to unit holders came to $29.3 million, up from $12.2 million a year ago.

For the full year, gross revenue increased 43 per cent to $156.9 million while NPI rose nearly 43 per cent to $112 million, partly due to contributions from the 8 Tuas South Lane and 7000 Ang Mo Kio Avenue 5 properties that were acquired in December 2017. The DPU for the full year worked out to 3.857 cents, compared with 3.853 cents a year ago.

VIT's revenue and expenses from Oct 16, 2018, to Dec 31, 2018, have been included in the group's results. The merger was completed on Oct 15.

The Reit sees demand coming from logistics, warehouses and high-level manufacturing, and it also sees interest from pharmaceutical companies looking to set up shop in Singapore.

The DPU will be paid out on Feb 28. An advance distribution of 0.164 cent per unit was paid on Nov 26 last year. ESR-Reit closed at 53.5 cents on Friday, up 0.94 per cent.

A version of this article appeared in the print edition of The Straits Times on January 21, 2019, with the headline 'ESR-Reit focusing on S'pore after merger'. Print Edition | Subscribe