ESR-REIT's DPU Continues The Down Trend

Updated: Nov 5, 2019



Key Highlights:

  • ESR-REIT's 3Q19 DPU dropped 0.4%

  • The annualised yield and price to book ratio are 7.4% and 1.17 respectively


1. Dividends


Net property income grew 101.1% to $45.3m. The increase was mainly boosted by the inclusion of Viva Industrial Trust's (VIT) portfolio (9 properties) and the contributions from the new asset, 15 Greenwich Drive.


The annualised yield is 7.4%. Both the stock price and DPUs of the REIT has been declining since 2014. While the industrial REIT has been negatively impacted by the slow down in economy in the past few years, the declining DPUs is definitely a warning sign on the REIT's performances. The merger of the ESR-REIT with VIT would potentially improve the fundamentals of the REIT in the coming quarters.

Source: reitscompass's REITs Insider ratings



2. Portfolio


Portfolio occupancy stayed at 91%, with 16.8% of gross rental income is up for renewal next year. The portfolio leverage is currently at the high side at 41.6%. The interest cost is 3.91%, the good news is downside risk is hedged with 85.3% of the loans are on fixed rates.


It is currently trading at a price to book ratio of 1.17.



Summary


The historical DPU trend of the REIT is not convincing. With the merger with VIT, there could be potential improvement on its performance. We will revisit the REIT when it is more stable.



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