This morning (05 April 2022), specialised logistics and e-commerce REIT in EC World REIT (SGX:BWCU) released its annual report for the financial year ended 31 December 2021.
For those of you who are not familiar with the REIT – it is the first specialised and e-commerce REIT listed on the Singapore Exchange. As at 31 December 2021, its portfolio comprises of 8 properties (all located in the People’s Republic of China), used primarily for e-commerce, supply-chain management, and third party logistics purposes.
As a unitholder of the REIT, I have studied the recently published report and in this post, you’ll find a summary of it, along with information about its upcoming annual general meeting (AGM), and 4 questions I have submitted together with my registration to attend the meeting:
FY2021 Financial Performance:
- Gross revenue and net property income both saw year-on-year increases of 14.4% (9.8% in RMB terms) and 12.7% (8.2% in RMB terms) respectively, largely attributed to the strengthening of RMB, positive straight-lining, along with the absence of a one-off rental rebate provided to tenants in FY2020 to mitigate the adverse impact of Covid-19 situation on on tenants’ operation.
- The Manager declared a distribution per unit (DPU) of 6.263 cents for FY2021, 16.9% higher than the DPU of 5.359 cents achieved in FY2020. The Manager has elected to make a voluntary one-off waiver of its performance fee of about S$0.8m, being the extent of the rental rebates provided in FY2020 resulted in a lower DPU for the last financial year (if the Manager chooses to collect its performance fee entitlement in full, the REIT’s full-year DPU would have been 6.217 cents instead of 6.263 cents.)
- Occupancy remained healthy at 99.2% with a weighted average lease to expiry of 2.7 years (by gross rental income), and by 2.3 years (by net lettable area.)
- During the year, the Manager successfully renewed a major lease in relation to Hengde Logistics, with China Tobacco Zhejiang Industrial Co., Ltd following an earlier lease renewal with the same company in October 2020.
- 4 of the REIT’s 8 properties are on master leases with fixed rental escalation, thus providing organic growth to the portfolio. The Manager continues to work closely with the Property Manager in China to enhance portfolio returns.
- In January 2022, the REIT was notified that the People’s Government of Linping District Hangzhou City, People’s Republic of China, had served a formal notice for the compulsory expropriation of Fu Zhou Industrial, a port property. The compensation package of RMB108.5m is 92.8% of the REIT’s valuation of the property as at 31 December 2021, and 26.8% higher than the REIT’s purchase price of RMB85.6m. The Manager had indicated its intention for the disbursement of proceeds, and they will be announcing more information about this in due course.
- As at 31 December 2021, the REIT’s aggregate leverage ratio remains stable at 38.2% (31 December 2020: 38.1%) with a running interest rate of 4.1% for FY2021, and a weighted average debt expiry of 0.63 years.
- The Manager had commenced discussions with its lenders on the REIT’s refinancing plans and will keep unitholders updated of any material development.
Details of AGM:
EC World REIT will be conducting its upcoming AGM virtually (due to the current safe management measures in place) on Wednesday, 27 April 2022.
If you are a unitholder of the REIT, and would like to attend the meeting, you can sign up here (do note that the deadline to do so will be on Sunday, 24 April 2022, at 10.00am.)
I’ve already signed up to attend the meeting as a unitholder (as usual, I will be providing a summary of the meeting in due course), and together with my registration, submitted the following questions:
- I’d like to ask the extent to which the REIT’s 8 properties were impacted by the recent lockdowns by the Chinese government – and if any of the properties were affected, did the REIT provide any rental rebates to the affected tenants (and if so, how much?)
- Does the REIT have any asset acquisition plans (whether directly from the Sponsor, or from 3rd parties) to further improve returns to unitholders.
- A huge bulk of the leases (76.6% by gross rental income) will be expiring in FY2024, and depending on whether or not the terms of the lease renewals are favourable, the REIT’s financial performances in the years ahead will be directly impacted. Hence, I’d like to ask whether or not discussions have begun on lease renewals, and if so, what is the current status of negotiations.
- Are there any updates on the REIT’s refinancing plan to share?
Disclaimer: At the time of writing, I am a unitholder of EC World REIT.