ESR-REIT reported a 3.4% y-o-y rise total distribution per unit (DPU) of 21.914 cents for the 12 months to Dec 31, 2025, its FY2025. Core DPU increased by 7.6% to 21.440 cents, and accounted for approximately 98% of total DPU, underpinned by higher core earnings and improved asset performance.
Gross revenue rose by 20.4% y-o-y to $446.0 million supported by ESR Yatomi Kisosaki Distribution Centre and 20 Tuas South Avenue 14 (acquired on November 15 2024 and November 29 2024, respectively) and positive rental reversions from lease renewals. This was further supported by income contributions from 7002 Ang Mo Kio Avenue 5, 21B Senoko Loop and 16 Tai Seng Street, which completed their Asset Enhancement Initiatives (AEIs) in 3Q2023, 1Q2024 and 3Q2025, respectively.
As a result, Net Property Income (NPI) in FY2025 rose by 25.6% y-o-y to $328.7 million. The total amount available for distribution to Unitholders rose 7.3% to $176.1 million in FY2025. The increase was driven by an 11.6% increase in core distributable income to S$172.3 million, supported by higher NPI, and partially offset by higher borrowing costs and perpetual securities costs incurred mainly to fund the acquisitions, non-controlling interests attributable to the 49% holders of 20 Tuas South Avenue 14, and higher tax expenses.
Rental reversions rose by 11.7% in FY2025 led by the logistics (+12.4%) and high-specifications industrial (+22.2%) sectors, with occupancy remaining stable at 91.1% as at Dec 312025. In FY2025, a total of 463,760 sq m of space was leased, comprising 328,220 sqm of lease renewals (70.8% of total leases) and 135,540 sq m of new leases (29.2% of total leases). ESR-REIT’s weighted average lease expiry (WALE) as at Dec 31 2025 was 4.4 years, while rental collections remained healthy at approximately 98.7% of total receivables.
On July 18 2025, ESR-REIT achieved TOP status for the AEI at 16 Tai Seng Street, Singapore, adding 2,793 sq m of high-specifications industrial space, an increase in plot ratio from 3.08 to 3.50, and an expansion of total gross floor area to approximately 22,800 sq m. The enhanced asset has attained BCA Green Mark Gold certification and achieved approximately 50% occupancy as at end-December 2025, and the Manager is in advanced discussion with both new and existing tenants, including potential anchor tenants from the pharmaceutical and food production sectors exploring expansion. In parallel, the Manager commenced the AEI at 29 Tai Seng Street, which involves the conversion of a single-tenanted general industrial building into a Green Mark Gold PLUS-certified, multi-tenanted high-specifications industrial asset. The project is expected to deliver a yield on cost of approximately 6.4%. As at end-December 2025, the AEI was approximately 76% completed and remains on track for completion in 1H2026.
In FY2025, ESR-REIT progressed its portfolio rejuvenation strategy through the divestment of two noncore assets with an aggregate value of $16.7 million at 2.3% above valuation, and the announcement in December 2025 of the proposed divestment of eight non-core assets with an aggregate value of $338.1 million at 2.0% above valuation. These divestments underscore the Manager’s disciplined approach to actively identifying and divesting non-core assets, with proceeds earmarked for recycling into modern, high-quality assets that align with evolving tenant demand.
In January 2026, ESR-REIT announced the divestment of the non-core Hotel Strata Lot at ESR BizPark @ Changi at valuation for $101.0 million while retaining ownership of the business park, retail and convention centre components, preserving the core income-generating assets within the integrated development.
Upon completion of these divestments, the portfolio’s land lease profile is expected to improve meaningfully, with the proportion of assets with less than 15 years of remaining land lease reducing from 11.9% to 10.8%, while Weighted Average Land Lease will be extended from 43.6 years to 48.0 years.
ESR-REIT’s gearing stood at 43.4% as at end-December. Upon completion of the recently announced divestments and assuming net proceeds are used for debt repayment, gearing on a proforma basis is expected to be 38.5%. The MAS interest coverage ratio stood at 2.5x, comfortably above the regulatory minimum of 1.5x, demonstrating robust debt servicing capacity. As at end-December 2025, ESR-REIT’s all-in cost of debt declined to 3.35% down from 3.84% a year ago. In FY2025, ESR-REIT was also assigned an investment grade ‘BBB’ credit rating with a ‘Stable’ outlook by Fitch Ratings, reaffirming its strong financial resilience and enhancing further capital optimisation.
See also: Keppel Infrastructure Trust's FY2025 DPU rose 1% y-o-y to 3.94 cents
Refinancing of the FY2026 SGD term loan and revolving credit facility have been secured at 30 bps lower margins and longer tenor, reducing interest cost and lengthening debt expiry profile. As at December 31, 2025, approximately 68.4% of ESR-REIT’s debt is on fixed interest rates, providing protection against interest rate volatility and ESR-REIT’s debt maturity profile remains well-staggered, with no more than approximately 29% of loan expiries in any single year and a weighted average debt expiry of 1.9 years. ESR-REIT also maintains a strong liquidity position with $701.4 million in debt headroom with approximately $161 million in committed undrawn revolving credit facilities and continues to be supported by a diversified network of 10 lending banks.
ESR-REIT has unveiled its Total Return Strategy to drive sustainable income growth and long-term capital value creation over the next phase of growth. The strategy targets total Unitholder return of approximately 8–10% and aims to grow target AUM to $8.0 billion over the next five years, supported by active portfolio management and disciplined capital allocation.
The Total Return Strategy is anchored on five key pillars: 1) Active asset management, including initiatives to address short land lease assets and rejuvenate the portfolio through AEIs and selective redevelopments. 2) Increase target AUM to $8.0 billion, capturing the benefits of scale and improved liquidity, through a combination of organic growth from redevelopments and accretive acquisitions. 3) ESR-REIT will retain its core focus in Singapore, which is expected to continue representing more than 50% of portfolio value, while selectively pursuing compelling international opportunities. 4) ESR-REIT is ESR’s flagship regional listed vehicle, and will continue to leverage its Sponsor, ESR’s pipeline and established presence across developed Asia-Pacific markets, while exploring selected opportunities in other developed markets. 5) ESR-REIT will maintain prudent leverage, with a target gearing range in the mid-30% to low 40% range, supported by selective divestments of non-core assets, active capital recycling, internal cash flows, and disciplined balance sheet management across the cycle.
Units in ESR-REIT closed at 2.71 on Feb 3.
