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

In late February, EC World Real Estate Investment Trust (SGX: BWCU) released its 2017 fourth quarter and full year earnings update.

As a quick introduction, EC World REIT is the first REIT in Singapore’s stock market that focuses on specialized logistics and e-commerce logistics facilities located in China. The REIT ended 2017 with six properties in its portfolio that are mainly used for e-commerce, supply-chain management, and logistics purposes. On the same day that its earnings update was released, EC World REIT also announced the acquisition of its seventh property, an e-commerce logistics facility.

Here are nine things investors should know about EC World REIT’s latest results:

1. Gross revenue for the reporting quarter came in at S$20.7 million, 8.6% lower than the forecast given in its IPO prospectus (the REIT was listed in July 2016). Meanwhile, its net property income of S$18.0 million for the reporting quarter was 12.5% lower than the forecast.

2. Yet, the REIT’s distribution per unit (DPU) of 1.504 cents was 0.5% higher than expected.

3. Based on EC World REIT’s 2017 total DPU of 6.025 cents and its closing unit price of S$0.735 as of 27 March 2018, the REIT has a trailing distribution yield of 8.2%.

4. As of 31 December 2017, the REIT’s gearing stood at 29.2%, which is a safe distance from the regulatory ceiling of 45%.

5. The REIT’s portfolio had a committed occupancy rate of 100% at end-2017.

6. The weighted average lease expiry (by gross rental income) was at 3.0 years as of 31 December 2017. Only 0.4% and 2.6% of the REIT’s leases (by gross rental income) will expire in 2018 and 2019, respectively. But, some 86.7% of the leases are expiring in 2020, so investors may want to watch the REIT’s progress in renewing its leases.

7. The Port Logistics, Specialised Logistics, and E-commerce Logistics segments accounted for 41.9%, 19.5% and 38.6%, respectively, of EC World REIT’s net property income for the reporting quarter.

8. EC World REIT has the right of first refusal (ROFR) on two properties that are owned by its sponsor.

9. In its latest earnings update, EC World REIT gave some insightful comments on its outlook:

“ECW’s 6 assets are all located in Hangzhou, benefiting from Hangzhou’s vibrant economic growth. Stage 1 Properties of Bei Gang Logistics and Fu Heng Warehouse are both e-commerce focused assets which are expected to benefit from the continued strong growth of the e-commerce sector in China. Barring unforeseen circumstances, the 6 assets in the portfolio are expected to continue to achieve full committed occupancy and stable organic growth.

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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.