EC World Real Estate Investment Trust (SGX:BWCU) is the only Singapore-listed REIT that owns e-commerce logistics and specialised logistics real estate in China.
Recently, the REIT released its financial results for the first quarter of 2018. Here are the 10 takeaways from its earnings update:
1. Gross revenue increased 1.2% to S$23.9 million from S$23.7 million a year ago. However, due to higher building maintenance expense, net property income declined 0.5% to S$21.5 million from S$21.6 million.
2. Distributable income for the quarter dropped 3.8% year-on-year to S$11.6 million from S$12.0 million. Distribution per unit (DPU), likewise, declined 4.7% to 1.469 Singapore cents from 1.541 Singapore cents.
3. Distributable income declined at a faster pace than net property income due to higher tax expense than the same period last quarter. This was due to the manager repatriating cash from its China asset companies, incurring a 5% withholding tax. Excluding this, adjusted distributable income and DPU would have instead been S$12.4 million and 1.57 Singapore cents respectively, 2.7% and 1.9% higher than the previous year.
4. The REIT’s manager has said that it does not plan to conduct further cash repatriation exercises for the rest of 2018.
5. As of 31 March 2018, the REIT had a leverage ratio of 28.9%, well below the 45% regulatory limit. It had an annualised debt interest rate of 4.5%.
6. At the end of the quarter, EC World REIT had total assets valued at S$1.54 billion and liabilities worth S$806 million. Net asset value (NAV), therefore, stood at S$731 million, up 1.9% from the previous quarter. NAV per unit, likewise, increased 2.1% to S$0.93 from S$0.91.
7. As of 31 March 2018, the REIT had a committed occupancy at 100% and weighted average lease expiry by gross rental income of 2.8 years.
8. During the quarter, EC World REIT made its maiden acquisition since its listing. The asset acquired was an e-commerce logistics asset located in Hubei Province in Wuhan City. It was purchased at RMB145 million (S$30.3 million), a 15.2% discount to its independent valuation of RMB 171 million and was wholly funded by internal cash.
9. On the outlook, the REIT’s management said:
“Income from Wuhan Meiluote [the new acquisition] will be attributable to ECW [EC World REIT] in 2Q 2018 and the asset portfolio as a whole is expected to continue to deliver stable income and returns for our unitholders.”
10. Based on its unit price of S$0.735, the REIT trades at a price-to-book ratio of 0.79 and an annualised distribution yield of 8.0%.
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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 Jeremy Chia owns units in EC World Real Estate Investment Trust.