THE manager of ESR Real Estate Investment Trust (ESR Reit) posted a distribution per unit (DPU) of S$0.00997 for its second half (H2) ended Dec 31, 2024, down 15.9 per cent from S$0.01186 in the year-ago period.
This brings total DPU for FY2024 to S$0.02119, down 17.4 per cent year on year. This takes into account an enlarged unit base from an equity fundraising completed in H1 2023, along with a preferential offering undertaken in Q4 last year to partially finance the Reit’s acquisitions.
The distribution for H2 will be paid out on Mar 14, following the record date of Feb 5.
Distributable income fell 14.7 per cent to S$77.8 million for the half-year period, from S$91.2 million in the same period the year before.
Revenue was unchanged at S$189.6 million for the half year, while net property income (NPI) grew 1.1 per cent to S$133.8 million, from S$132.3 million in the year-ago period.
For the full year, total income available for distribution fell 14.9 per cent to S$164.1 million, from S$192.7 million in the year-ago period.
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Revenue was down 4.1 per cent at S$370.5 million, from S$386.4 million in the year-ago period. This was primarily due to the divestment of 10 properties aggregating S$440.6 million in FY2023, the divestment of one property each in Australia and Singapore, as well as the decommissioning of 2 Fishery Port Road.
As a result, NPI for FY2024 fell 4.2 per cent to S$261.7 million, from S$273.2 million in FY2023.
The new-economy sectors of high-specs industrial and logistics drove positive rental reversions, with the Reit recording a 10.3 per cent rise in FY2024 across all sectors, down slightly from 11.1 per cent in FY2023.
Portfolio occupancy remained stable at 92.3 per cent, supported by strong demand for quality spaces in the new-economy sectors. This was a slight dip from 92.8 per cent in FY2023.
With the divestments completed in FY2024, ESR Reit has only about 13 per cent of assets with under 15 years left on their leases. Its manager noted that it is looking to further divest about S$200 million in non-core assets in FY2025.
It said 74.8 per cent of the Reit’s debt is on fixed rates, down from 81.6 per cent as at Dec 31, 2023.
As at end-December 2024, gearing stood at 42.8 per cent. Its debt cost reduced to 3.84 per cent, from 3.96 per cent in Q3 2024.
It expects to enjoy a lower cost of debt through the refinancing of debt expiring in FY2025 at margins about 15 basis points lower, as well as through the early refinancing of loans maturing in FY2026, with no prepayment penalties.
Outlook
In the upcoming financial year, Adrian Chui, chief executive and executive director of the manager, expects the improved portfolio fundamentals to translate into NPI and DPU contributions. This comes on the back of full-year revenue contributions from acquisitions, positive rental reversions, as well as lower interest costs.
“Positive rental reversions are anticipated to persist, albeit at a slower growth pace,” said the Reit manager.
It noted that growth in the new-economy sectors “is expected to moderate”, with manufacturing and supply chain activities continuing to drive demand.
Units of ESR Reit ended on Thursday unchanged at S$0.26.
