Note: Trading of EC World REIT’s units has been suspended since 30 August 2023, with the REIT being granted by the Singapore Exchange to submit a Resumption Proposal by 31 May 2025. Distribution payouts to unitholders have also been suspended since the 2nd half of FY2023 due to insufficient funds.
Listed on the Singapore Exchange, with a geographic focus in China, EC World REIT (SGX: BWCU) invests in real estate used primarily for e-commerce, supply chain management, and logistics purposes. Currently, its portfolio comprises 7 properties located predominantly in one of the largest e-commerce sectors in the Yangtze River Delta.
One recent update surrounding the REIT was an extraordinary general meeting (EGM) conducted in December 2024 to seek unitholders’ approval on the appointment of BDO as the auditor (which was passed with 99.93% of the votes in favour). The reason for the appointment was because PriceWaterhouseCoopers, which was the REIT’s auditor since its listing in 2016, did not seek re-appointment at the AGM held in July 2024.
The REIT has released its results for the 4th quarter, as well as for the financial year ended 31 December 2024 (i.e., FY2024) last evening (24 February), and in this post, you’ll find my review of its latest financial results, along with its portfolio occupancy and debt profile.
Financial Figures (4Q FY2023 vs. 4Q FY2024, and FY2023 vs. FY2024)
In this section, you’ll find a review of EC World REIT’s financial figures reported for the 4th quarter, followed by for the full year:
4Q FY2023 vs. 4Q FY2024:
| 4Q FY2023 | 4Q FY2024 | % Variance | |
| Gross Revenue (S$’mil) | $25.1m | $15.9m | -36.7% |
| Property Operating Expenses ($’mil) | $2.4m | $4.7m | +95.8% |
| Net Property Income (S$’mil) | $22.7m | $11.2m | -34.0% |
| Calculated Distribution to Unitholders (S$’mil) | $5.6m | $0.0m | N.M. |
My Observations: As expected, EC World REIT’s results for the 4th quarter was a much weaker one, given all the headwinds. Of note is its calculated distribution to unitholders, at zero, mainly due to revenue adjustments for master lease agreements, along with higher operating expenses at the properties.
Gross revenue plunged by 36.7% year on year to S$15.9 million mainly due to the following reasons:
- termination of master lease agreements upon lease expiry,
- the effect of novation of underlying leases from master leases and related party leases for Chongxian Port Investment, Chongxian Port Logistics, Fu Heng Warehouse, and Fuzhou E-commerce during the financial year
- discontinuation of China Tobacco leases in Hengde Logistics Phase 1
However, this was partially offset by income from new third-party leases for Hengde Logistics Phase 1, and higher late fee income.
Net property income plummeted by 50.7% year on year to S$11.2 million mainly due to lower income, bad debt provision, along with higher business tax as a result of accrual of late payment penalty.
FY2023 vs. FY2024:
| FY2023 | FY2024 | % Variance | |
| Gross Revenue (S$’mil) | $107.8m | $92.2m | -14.5% |
| Property Operating Expenses ($’mil) | $8.6m | $11.0m | +27.9% |
| Net Property Income (S$’mil) | $99.2m | $81.2m | -18.1% |
| Calculated Distribution to Unitholders (S$’mil) | $29.6m | $15.8m | -46.6% |
My Observations: Again, no surprises that, with all the ongoing financial troubles the REIT is faced with, its financial results for FY2024 was a much weaker one compared to a year before.
Particularly, its gross revenue fell by 14.5% year on year to S$92.2 million as a result of the following:
- termination of master lease agreements upon lease expiry
- the effect of novation of underlying leases from master leases and related party leases for Chongxian Port Investment, Chongxian Port Logistics, Fu Heng Warehouse, and Fuzhou E-commerce during the financial year
- discontinuation of China Tobacco leases in Hengde Logistics Phase 1
However, this was partially offset by income from new third-party leases secured for Hengde Logistics Phase 1, along with higher late fee income.
Net property income saw a 18.1% year-on-year decline to S$81.2 million from lower revenue, bad debt provision, and higher business tax as a result of accrual of late payment penalty.
Finally, EC World REIT’s calculated distribution to unitholders plunged by 46.6% year on year to S$15.8 million as a result of lower revenue, higher operating expenses, and a 5.2% increase in finance cost compared to last year, mainly due to higher interest rate for offshore facilities and additional finance cost incurred for the settlement of short-term advance from an offshore SBLC (standby letter of credit) issuer.
Portfolio Occupancy Profile (3Q FY2024 vs. 4Q FY2024)
The table below highlights some of the key statistics of EC World REIT’s portfolio occupancy profile reported for the current quarter under review (i.e., 4Q FY2024 ended 31 December 2024), compared against that reported in the previous quarter (i.e., 3Q FY2024 ended 30 September 2024):
| 3Q FY2024 | 4Q FY2024 | |
| Portfolio Occupancy (%) | 84.1% | 86.3% |
| Portfolio WALE (by Gross Rental Income – years) | 0.7 years | 1.2 years |
My Observations: EC World REIT’s portfolio occupancy saw a slight improvement compared to the previous quarter – by 2.2 percentage points (pp) to 86.3% as a result of improvements in the occupancy rates of most of its properties except for Chongxian Port Investment (where its occupancy rate declined slightly from 93.9% in 3Q FY2024 to 92.2% in 4Q FY2024).
While portfolio WALE also saw a slight improvement, but a significant percentage of leases (60.7% by net lettable area, and 59.2% by gross rental income) will be expiring in FY2025 ahead – which definitely is an area of concern.
Debt Profile (3Q FY2024 vs. 4Q FY2024)
During the update provided by the REIT’s CEO, Mr Goh Toh Sim, at its EGM in December 2024, the offshore lenders’ consent to release funds for operating expenses remains pending, with the management actively exploring alternative funding options to sustain critical offshore operations.
Additionally, a cross default has been triggered under existing onshore facilities, following the issuance of an enforcement order and notice of seizure by the High Court of Singapore on a mortgaged property under the REIT’s existing offshore facilities. However, the lenders have not indicated intent to accelerate the facilities.
In the table below, you will find a comparison of EC World REIT’s debt profile reported for the current quarter under review (i.e., 4Q FY2024) against that reported in the previous quarter (i.e., 3Q FY2024):
| 3Q FY2024 | 4Q FY2024 | |
| Aggregate Leverage (%) | 56.1% | 56.5% |
| Average Term to Debt Maturity (years) | 0.92 years | 0.7 years |
| Average Cost of Debt (%) | 7.9% | 8.2% |
My Observations: 2 updates I noted: First, as of 31 December 2024, all revolving credit facilities has been fully repaid using the cash collaterals for the standby letter of credit.
Additionally, the Manager has not received any indication from the lenders that they intend to accelerate the existing bank loans under the ECW facilities, and negotiations with the lenders of the Offshore Facility on a possible refinancing package are still ongoing.
CEO Mr Goh Toh Sim’s Comments & Outlook (from the REIT’s Press Release)
“On quarterly basis, the revenue in RMB terms was 35.9% lower compared to 4QFY2023. The Manager has been continuing to negotiate with the Sponsor for a Master Offset Agreement to resolve the outstanding receivables.
The Manager is actively exploring options to divest some or whole of the Group’s properties to pare down existing facilities with cash proceeds in order to be accepted by the lenders of the Offshore Facility for a possible refinancing or restructuring. At the date of this announcement, the Group has not received any notice of enforcement action. In the meantime, the Manager, with the close guidance of all independent directors, is trying its best endeavour to stabilise the performance of the ECW Group amid severe persisting challenges in operation and financing activities.”
Closing Thoughts
The only slight positive in EC World REIT’s latest results was the improvement in the occupancy rates of most of its properties. However, I note that more than half of the leases (by net lettable area and gross rental income) will be expiring in FY2025 ahead – and failure to renew the leases will lead to a further plunge in its financial performance.
Another thing I note is the significant decline in the REIT’s free cash flow – which, based on my calculations, fell from a high of S$93.2 million in FY2022 to a low of just S$4.8 million in FY2024.
Finally, as I’ve shared in my previous quarterly updates on the REIT’s results, I’m continuing my review for the benefit of readers of this blog who are invested in the REIT. If you ask me for my views on the REIT, I’m still of the opinion that it is headed towards being liquidated eventually (and I suffer from a full capital loss on my investment), given its grave cashflow situation, with anything else a ‘bonus’.
With that, I have come to the end of my review of EC World REIT’s latest results for the 4th quarter as well as for FY2024. Do take note that all the opinions expressed in this post are purely mine which I’m sharing for educational purposes only.
Related Documents
Disclaimer: At the time of writing, I am a unitholder of EC World REIT.
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