EC World REIT delivered stable operating performance in 3Q17 with gross revenue and net property income doing better than forecast in the IPO prospectus by 5.5% and 7.7%, respectively.
The REIT pursued "a liquidity management alternative" through the successful repatriation of RMB 68.2 million (SGD 13.9 million) cash distribution from its PRC subsidiaries during 3Q 2017.
As a result, the REIT has declared a DPU of 1.44 cents for 3Q 2017, which is 3.7% lower than forecast due to withholding tax incurred during the cash repatriation process.
Excluding the impact of the tax, the DPU would be 1.53 cents, exceeding the forecast by 2.3%.
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1 July 17 to 30 Sept 17 |
1 Jan 17 to 30 Sept 17 |
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|
Actual |
Forecast |
Change |
Actual |
Forecast |
Change |
|
Gross Revenue |
23,866 |
22,613 |
5.5 |
70,690 |
67,839 |
4.2 |
|
Net Property Income |
22,086 |
20,500 |
7.7 |
64,759 |
61,500 |
5.3 |
|
Distributable Income |
11,281 |
11,626 |
(3.0) |
35,315 |
34,869 |
1.3 |
|
DPU (cents) |
1.440 |
1.496 |
(3.7) |
4.521 |
4.440 |
1.8 |
| 3Q17 highlights • Gross revenue and net property income outperformed forecast by 5.5% and 7.7%, respectively, in 3Q17 • Distribution per unit for 3Q 2017 is 1.44 cents, 3.7% lower than forecast due to withholding tax • On a like-for-like basis, DPU would be 1.53 cents, 2.3% higher than forecast • REIT is actively pursuing and evaluating certain high- quality and accretive acquisition opportunities in China and in Southeast Asia. |
Still, for 9M2017, the REIT delivered DPU of 4.521 cents to its unitholders, which is 1.8% higher than forecast.
This was mainly due to strong operating performance of the underlying asset portfolio, lower finance costs and effective expenses and cash management.
Stable Portfolio Performance
For 3Q 2017, net property income was S$22.1 million (an increase of S$1.6 million or 7.7% compared to the pro-rated forecast).
This was mainly due to additional rental income from the completion of an asset enhancement initiative (construction of a sheltered warehouse) at Chongxian Port Investment, lower property expenses and favorable SGD/RMB exchange rate vis-à-vis forecast assumption.
 “Our portfolio has continued to deliver a stable set of results for our unitholders, demonstrating the sustainability of ECW’s portfolio. “At the same time, we continue to be prudent in managing our capital and financial risk while enhancing financial and operational flexibility.” -- Alvin Cheng (photo), CEO and Executive Director of the REIT manager |
Another piece of good news: The committed occupancy continues to stand at 100% while the weighted average underlying end-tenant occupancy of the portfolio was 97.8% as at 30 September 2017.
There are no significant leases expiring in the next 2 years. Furthermore, most of its leases (including all 3 master leases) have built-in annual rental escalations.
Prudent Capital Management
As part of its proactive risk management strategy, the REIT has entered into a SGD/RMB forward contract to hedge the FX exposure of its RMB income source for distributions up to 4Q 2017.
As at 30 September 2017, the REIT’s aggregate leverage remains conservative at 29.2%, thus providing it with debt headroom for acquisitions.
The REIT has an aggregate amount of RMB993.6 million (S$202.1 million) onshore secured term loan facility, and a S$200.0 million syndicated secured term loan facility as well as a revolving credit facility of S$50.0 million, of which S$24.0 million has been drawn down.
100% of the offshore loan facility is at fixed rate, providing further certainty to ECW’s distributable income.
The blended annualized all-in interest rate for the loans was 5.4% for 9M2017.
