Operationally and the underlying performance of the assets were better than the headline numbers. ESR’s fund managemet Ebitda of US$579 million comprised around 60% of group Ebitda.
Excluding promote fees, fund management Ebitda grew 8.9% y-o-y. Total AUM and fee-related AUM increased by 7.3% to US$156.1 billion, and 6.3% y-o-y to US$81.1 billion repsectively on the back of US$7.5 billion of new capital raised.
Stabilised New Economy occupancy remains at 98% ex-China with, but lower at 91% including China. Ex-China, ESR experienced record leasing of 5.3 million sqm across the portfolio and strong rental reversions of 14.3%.
ESR has three priorities this year: its divestment programme of non-core assets; increasing its exposure to data centres and focusing cost synergies.
See also: Creative guides for ‘similar level of operating loss’ for 2HFY2025
Data centres are expected to be an increasing contribution to ESR Group, with 24% of development starts in FY2023. The Group will have 575 MW upon the completion of 8 sites (including a 100% pre-leased site in Hong Kong and India). In addition, the Group’s pipeline of land and projects will contribute more than one additional gigawatt (1 GW+).
Gearing rose from 22.8% in 2022 to 30.7% in 2023. However, this should reduced following the sale of the ARA Private Funds announced earlier in March with pro forma gearing down to 28%. The target is to bring gearing down to the 20% to 25% range. This is likely by the end of this year when ESR’s divestment targets are attained.
On the capital management front, US$1.5 billion to US$2 billion of assets in mainland China, Hong Kong, Japan and India are ready for either divestment or syndication (into funds). The ARA Private Funds divestment is part of this plan. If the sell-down of these assets is completed by the end of the year, gearing would fall to 25%, and interest costs would fall, leading to savings of around US$40 billion as the weighted average cost of debt declined from 5.3% in 2023 to less than 5%.
ESR announced a final dividend of 12.5 HK cents giving a total dividend of 25 HK cents per share.
