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9 Quick Things Investors Should Know About EC World Real Estate Investment Trust’s Latest Earnings

EC World Real Estate Investment Trust (SGX: BWCU), or EC World REIT, is the first Chinese specialised logistics and e-commerce logistics REIT that was listed here in July 2016. It owns properties mainly used for e-commerce, supply-chain management and logistics.

The REIT recently announced its third quarter results for the year ending December 2017. Here, we will look at nine things that investors should know about its latest results.

1. Quarterly gross revenue grew 5.5% while net property income (NPI) improved by 7.7% as compared to the initial public offering  forecast.

2. Distribution per unit (DPU) declined 3.7% (in Singapore dollar terms) as compared to the forecast of 1.44 cents. This was due to withholding tax from cash repatriation.

3. Based on annualised DPU of 6.05 Singapore cents and closing price of S$0.77 as at 29 September 2017, the latest distribution translated to a yield of 7.9%.

4. The REIT’s gearing, as at September 2017, stood at 29.2%, with an annualised all-in-interest rate of 5.4%.

5. The latest occupancy rate stood at 97.8%, as at September 2017, with committed occupancy rate at 100%.

6. Lease expiry profile was at 3.2 years (by gross rental income). Less than 3% of the leases expire by 2019; 86.6% expire in 2020 and 10.4% expire after 2021.

7. Segment wise, Port Logistics, Specialised Logistics and E-commerce Logistics accounted for 49%, 15.4% and 35.6%, respectively, of the latest quarterly NPI.

8. China’s economy expanded 6.8% for the 2017 third quarter, in line with market expectations and ahead of government’s full year growth target of 6.5%. All of the REIT’s assets are currently located in Hangzhou and the city’s GDP grew at 8.3% in the first 9 months of 2017.

9. Below is the outlook provided by the REIT:

“Our 6 assets continue to enjoy 100% committed occupancy with built-in rental escalations and thus provide unitholders with stable income and organic growth potential. The WALE as at 30 September 2017 is 3.2 years (by gross rental). Furthermore, most of our leases (including all 3 master leases) have built-in annual rental escalations.

Furthermore, we are also actively pursuing quality, yield-accretive investment opportunities in China and the region. To reduce volatility in our distributions, interest rate exposure on the offshore loan as well as currency exposure for 4Q17 distributions have been hedged “

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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 Lawrence Nga doesn’t own shares in any companies mentioned.