SINGAPORE (THE BUSINESS TIMES) – ESR-Reit’s distribution per unit (DPU) rose 1.7 per cent year on year to $0.00712 for the third quarter of 2021 from $0.007 a year ago, its manager announced on Wednesday (Oct 27).
Distributable income for the industrial property landlord increased by 15.1 per cent to $28.6 million from $24.8 million.
The growth was underpinned by broad-based year-on-year increases in gross revenue, which rose 7.2 per cent to $61.1 million, as well as a 8.6 per cent increase in net property income (NPI) to $43.9 million.
The manager also highlighted that DPU increase was the result of an enlarged unit base due to the issuance of new units.
The third-quarter growth was mainly attributed to the acquisition of 46A Tanjong Penjuru, as well as the absence of provision for Covid-19 rental rebates.
The higher NPI, together with the contribution from ESR-Reit’s 10 per cent interest in the ESR Australia Logistics partnership, has increased the amount available for distribution for third quarter 2021, the manager said.
Portfolio occupancy rate for ESR-Reit “remained resilient” at 91.2 per cent in the third quarter, consistently above JTC’s industrial average of 90.1 per cent, it said.
The year-to-date rental reversion was 2.2 per cent lower as at Sept 30, primarily due to lower renewal rates for some large business park tenants in the quarter, while the retention rate for third quarter 2021 was at 67.5 per cent.
The distribution of $0.00712 per unit will be paid out on Dec 29, after books closure on Nov 5.
Mr Adrian Chui, chief executive and executive director of the manager, observed that the good operating performance during the third quarter was driven by continued acceleration in digital adoption and paradigm shifts in the global manufacturing supply chain.
“Despite the impact of phase two (heightened alert), our leasing activities increased, with approximately 702,500 sq ft of space leased and renewed, underpinned by strong leasing interest received from technology, e-commerce and logistics sectors. We are also heartened by the strong endorsement demonstrated by our unit holders during the recent $149.6 million equity fund-raising and the $125 million notes issuance, which is a validation of our business strategy,” Mr Chui said.
Mr Chui said that leasing challenges in the business park segment remain due to the prolonged work-from-home measures, while operating expenses may also be affected by the increasing fuel prices and overall general inflation attributed to labour shortages from continued border closures.
“With the continued support of our unitholders and our sponsor, ESR Cayman, we are well positioned to enhance our performance by adding high-quality properties with stable cash flows in strong rental growth markets to our portfolio, undertaking asset enhancements and/or redevelopments while divesting non-core assets to deliver sustainable growth with lower risks for all unit holders,” he added.