10 Things to Know About ESR-REIT’s Latest Earnings

ESR-REIT (SGX: J91U) owns 48 industrial properties located all over Singapore. On Tuesday, the REIT announced its financial results for the third quarter ended 30 September 2017 (3Q2017). The reporting period was from 1 July 2017 to 30 September 2017.

Here are 10 things investors should know from the earnings announcement:

1. Gross revenue slid 1.9% year-on-year to S$27.1 million.

2. Net property income declined 1.6% to S$19.6 million. The decrease was mainly due to 1) loss of revenue during the conversion of properties from single-tenanted to multi-tenanted; 2) increased property operating expenses as a result of the conversions; 3) higher maintenance costs; and 4) property divestments.

3. Distribution per unit slid 2.3% to 0.964 Singapore cents.

4. As of 30 September 2017, portfolio occupancy was at 91.1%. This is a decline from 2Q2017’s figure of 95.4% due to the inclusion of 120 Pioneer Road into the occupancy calculation after completion of its asset enhancement initiative and impact of the non-renewal of a lease at 3 Pioneer Sector 3.

5. Rental reversion tumbled 18.8%.

6. The REIT’s gearing ratio was at 36.7%, as of the end of September 2017. In comparison, the ratio came in at 37.5% at the end of last year. The improvement was due to repayment of debt from divestment proceeds.

7. ESR-REIT has no significant refinancing requirements until the second half of 2018.

8. Approximately 93.9% of interest rate exposure is fixed for the next two years.

9. To achieve a healthy occupancy and improve overall portfolio weighted average lease expiry (currently at 3.4 years), the REIT launched its first partner rewards initiative, the Agent Incentive Programme. The scheme will support the REIT manager’s leasing and marketing efforts by awarding the top property agents and agency with the best sales and leasing performance.

10. Net asset value per unit was at S$0.632, as of 30 September 2017. This is slightly down from S$0.634 seen at the end of 2016.

ESR-REIT’s units are changing hands at S$0.575 now. This translates to a historical price-to-book ratio of 0.91 and a trailing distribution yield of 6.8%.

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