10 Quick Things That Investors Should Know About ESR-REIT Latest Results

Lawrence Nga

Last Friday, ESR-REIT (SGX: J91U) released its 2018 first-quarter earnings. As a quick introduction, ESR-REIT invests in industrial real estate, and currently has a portfolio of 47 properties located across Singapore.

Here are 10 things investors should know about ESR-REIT’s latest results:

1. Gross revenue for the reporting quarter grew by 21.2% year-on-year to S$33.6 million while net property income improved by 20.8% to S$23.8 million.

2. Yet, distribution per unit (DPU) fell by 15.6% to 0.847 cents. The fall was on the back of dilution from new units issued due to the preferential offering and distribution reinvestment plan since the first quarter of 2017.

3. Based on ESR-REIT’s annualised DPU of 3.388 cents (calculated using latest DPU of 0.847 cents) and its closing unit price of S$0.54 on 20 April 2018, the REIT has a trailing distribution yield of 6.3%.

4. As of 31 March 2018, the REIT’s gearing stood at 30%, well below the regulatory ceiling of 45%.

5. The REIT’s portfolio had a committed occupancy rate of 90.7% at the end of the quarter. The REIT’s portfolio occupancy rate has been higher than the market’s in each quarter from 2015 first-quarter to 2017 fourth-quarter.

6. The weighted average lease expiry was at 4.4 years as of 31 March 2018. Based on rental income, 56.4% of the REIT’s leases will expire between 2018 and 2020 with another 16.7% expiring between 2021 and 2022. The rest of the REIT’s leases (26.9%) have an expiry date after 2023.

7. ESR-REIT’s top 10 tenants accounted for 42.9% of its rental income in the first quarter of 2018, with no individual trade sector contributing more than 13.6% of the REIT’s rental income.

8. For the quarter, ESR REIT renewed and leased approximately 394,616 square feet of space and recorded a tenant retention rate of 70.7%.

9. The REIT initiated an asset enhancement initiative at 30 Marsiling Industrial Estate Road 8. This will enable the addition of two tenants, Aptiv and FormFactor, to ESR-REIT’s portfolio.

10. Mr Adrian Chiu, CEO of the manager, commented:

“We continue to build upon the strong foundations established in 2017 in order to enable ESR-REIT to capture growth opportunities within our portfolio and externally as the overall economic situation improves. Our recent Preferential Offering, supported by financial commitment from our Sponsor ESR, was well-received and was 1.7 times oversubscribed. This has enabled us to lower our gearing to 30.0%, providing us with c.S$458.2 million in debt headroom.”

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The information provided is for general infrmation purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn't own shares in any companies mentioned.