ESR-REIT's distribution per unit (DPU) was unchanged y-o-y at 11.239 cents for 1HFY2025 ended June 30.
Of this, core DPU rose by 8.1% to 10.765 cents (which accounts for 96% of total DPU). The total DPU increase took into account a 4.4% increase in the number of units to 802.1 million, mainly due to the preferential offering completed in 4QFY2024 for the acquisitions of 20 Tuas South Avenue 14 and ESR Yatomi Kisosaki Distribution Centre, partially offset by the unit buy-backs completed in 1HFY2025.
Revenue in 1HFY2025 rose by 23.2% y-o-y to $222.9 million, mainly attributed to contributions from ESR Yatomi Kisosaki Distribution Centre and 20 Tuas South Avenue 14, which were acquired on Nov 15, 2024 and Nov 29, 2024 respectively.
The increase in revenue was further supported by contributions from 7002 Ang Mo Kio Avenue 5 and 21B Senoko Loop which completed their asset enhancement initiatives in 3QFY2023 and 1QFY2024 respectively.
Consequently, 1HFY2025 net property income (NPI) recorded a 30.1% increase to $166.3 million.
ESR-REIT’s all-in cost of debt fell to 3.47% as at June 30, down from 3.84% as at Dec 31, 2024. This reduction is expected to continue, supported by early refinancing of FY2026 debt maturities without prepayment penalties and refinancing of interest rate hedges at lower rates.
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As at end-June, ESR-REIT’s gearing stood at 42.6%, with ongoing efforts to reduce it below 40%. The MAS interest coverage ratio remains healthy at 2.4x, well above the regulatory minimum of 1.5x, reflecting ESR-REIT’s strong debt servicing capacity.
Interest rate exposure remains well-managed, with 80.0% of debt on fixed interest rates, providing stability against rate volatility.
ESR-REIT says the debt expiry profile is well-distributed, with a weighted average debt expiry of 2.6 years. ESR-REIT also maintains a strong liquidity position, with access to $200.0 million in committed undrawn revolving credit facilities, supported by a network of 10 lending banks.
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Adrian Chui, CEO and executive director of ESR-REIT's manager, says: “We are pleased to report a set of results for 1H2025 that reflects the strength and resilience of ESR-REIT’s core underlying asset performance and operations. The turnaround in performance is a direct result of improvements across our existing portfolio, driven by disciplined execution and focused asset management."
The uplift in gross revenue (+23.2%) and net property income (+30.1%) was underpinned by full-period contributions from the newly acquired assets, ESR Yatomi Kisosaki Distribution Centre in Japan and 20 Tuas South Avenue 14 in Singapore, and the successful completion of AEIs at key properties, including 7002 Ang Mo Kio Avenue 5 and 21B Senoko Loop, says Chui.
He adds: "Even on a same-store basis, gross revenue and net property income increased 2.9% and 4.7% respectively. These enhancements in underlying asset performances have translated into a meaningful increase in DPU, with an 8.1% jump in core DPU, which accounts for approximately 96% of our total DPU, reinforcing the effectiveness of our operational strategy. Looking ahead, the future growth of total DPU will continue to be anchored by the strength of our core underlying operations."
