EC World REIT (SGX: BWCU) was Singapore’s first specialised and e-commerce logistics REIT back when it was listed in July 2016, at S$0.81 per unit. Unfortunately, due to its inability to repay offshore interest expenses as a result of cash flow issues it is facing (particularly with the Sponsor defaulting on its rental payments), it has been suspended since 31 August 2023.

Currently, its portfolio consists of 7 properties located within the largest e-commerce clusters of Hangzhou in the Yangtze River Delta and Wuhan, valued at approximately S$714 million.

Some of the recent developments surrounding the REIT include the Sponsor, Forchn Holdings Group Co., Ltd, filing for reorganisation in China due to severe financial difficulties (in an announcement posted on SGXnet on 27 March 2025, and you can read the document in full here). The REIT’s management have also being informed that the Chinese court has ruled the mortgage placed on Fuzhou E-Commerce property as valid, despite its claims that it was unauthorised. It plans to appeal the court’s decision (you can read the announcement posted on SGXnet on 14 April 2025 in full here).

Following the conclusion of the financial year on 31 December 2024 (i.e., FY2024), EC World REIT have published its annual report on Tuesday (15 April 2025), and in this post, you will find key highlights to take note of (which I have compiled for unitholders who do not have the time to go through it), along with details of its upcoming AGM (unlike last year, where the REIT had to apply for a delay to conduct its AGM, they were able to conduct the meeting within the stipulated time this year):

Key Highlights from EC World REIT’s Annual Report 2024

FY2024 Performance Highlights:

• Gross revenue and net property income declined 14.4% and 18.1% year on year to S$92.2 million and S$81.2 million respectively, primarily due to the expiry and novation of master leases and related party leases, along with the weak leasing environment in China. This was on top of the discontinuation of anchor tenant leases at Hengde Logistics.
• Portfolio occupancy improved to 86.3% as at 31 December 2024, supported by active leasing at Hengde Logistics Phase 1 (where the REIT have managed to secure 17 new leases, and taking up 87.1% of the occupancy rate) and Wuhan Meiluote. Occupancy rates for more than half of EC World REIT’s properties are above 90%, except for Fu Heng Warehouse (at 74.5%), Wuhan Meiluote (at 77.4%), and Fuzhou E-commerce (at 72.3%), through efforts by the REIT to undergo a strategic realignment of the lease structure.
• Portfolio valuation declined by 11.7% year on year to RMB3,829 million compared to last year, due to the deteriorating market conditions in China, oversupply of warehouse space, and weaker economic sentiment both globally and in China locally.
• The REIT’s capital structure continues to face significant pressure, with its aggregate leverage at 56.5% after the full repayment of resolving loans in FY2024, even though it was a slight improvement compared to 57.9% a year earlier.
• Distribution payout remain suspended in 2024 (based on its gross revenue of S$92.2 million, its calculated distribution per unit for the full year was S$0.01951), and it is highly likely that no distribution for the financial year 2025 will be declared either, in light of the financial challenges.

Sustainability Efforts:

• In 2024, EC World REIT’s properties completed several environmental initiatives, including the installation of solar panels.

Outlook of China’s Economy, and the Warehouse & Logistics Market in the Country:

• While China’s economy grew by 5.0% in 2024 and meeting official targets, but the recovery remains uneven, with consumer demand yet to show broad-based strength, property investment declined by 10.6% year on year, and business confidence remains fragile.
• The World Bank projects China’s GDP to moderate to 4.5% in 2025, reflecting structural challenges in real estate and a cautious external environment.
• China’s macroeconomic policy stance in 2025 has shifted towards supporting growth with measures aimed to stimulate domestic demand, improve credit access, and supporting struggling businesses.
• Within the country’s warehouse and logistics market, while fundamentals remain intact over the long term (supported by the continued growth of e-commerce and domestic consumption), but warehouse supply in regions like Hangzhou and Wuhan (where EC World REIT’s properties are located) remain high, and rental recovery is expected to remain slow and uneven.

Overdue Rent Receivables & Financial Impact:

• As of 31 December 2024, the accrued overdue rent receivables owed to EC World REIT by the Sponsor amounted to approximately RMB629.9 million (S$117.4 million) – comprising of RMB547.4 million (S$102.0 million) arising from rent payable under the former master leases, and RMB82.5 million (S$15.4 million) from other related party lease arrangements.
• The REIT’s management has been in ongoing negotiations with the Sponsor to finalise a Master Offset Agreement, which seeks to cancel out the amount which it is owed by the Sponsor Group against what the REIT needs to pay to them. At this point in time, negotiations are still ongoing, and no impairment allowance has been made at this stage.

Looking Ahead:

• KPMG has been appointed as financial advisor to assess viable restructuring pathways and reporting to the lenders, while Savillis and Cushman & Wakefield are supporting efforts to market selected assets for sale (where a pre-enforcement notice has been issued by the offshore lenders for the REIT to divest a sufficient quantum of assets to fully repay the offshore facility by 31 May 2025, with the Singapore Exchange also granting the REIT to submit its resumption proposal by then).
• At this juncture, it remains uncertain whether all lender-imposed milestones can be achieved within the current timeframe, and an extension may be required if circumstances necessitate.
• The management’s near-term priorities include stabilising occupancy, managing operational costs, and executing asset divestment as part of its broader restructuring.
• Additionally, the management will be working closely with the new property managers and port operator (engaged with effect from 01 January 2025) to optimise the occupancy rates of the properties, with existing and prospective tenants being engaged well in advance of lease expiry dates to mitigate the risk of non-renewals and vacancies.

Details of EC World REIT’s Upcomng AGM

When? Wednesday, 30 April 2025
Where? Retreat Room Lever 12, Oasia Hotel Downtown, 100 Peck Seah Street, Singapore 079333
Time? 10am

The upcoming AGM will be held in a wholly physical format, with no options available for unitholders to attend virtually.

Unitholders whose units are in the CDP account need not pre-register to attend the meeting, as verification will be done on the spot. For unitholders whose units are in a custodian account, and would like to attend the coming AGM, you will need to get in touch with your brokerage to appoint you to attend the meeting as a proxy.

Closing Thoughts

Headwinds continue to remain for the REIT as far as repayment of its debt is concerned.

Given the current economic situation in China at the moment (where its still grappling with a property crisis, high youth unemployment, and low domestic consumer spending patterns), coupled with the ongoing trade conflict with the United States (where they have slapped a 245% [yes, there’s no typo here, it has been upped from 245% this afternoon; you can read the news about it here] tariff on all imports from China), in my personal opinion, demand for warehouse space will continue to remain low, hence making it challenging for the REIT to find tenants to fill up the remaining vacant spaces.

On top of that, in terms of diversifying of properties to repay debt, I’m of the opinion that even if a buyer can be found, the transaction will likely be at prices that’s way below valuation. Additionally, the loss of income following the sale of these properties will further impact the financial performance of the REIT.

All things considered, I’m still of the opinion that it’s an uphill climb for the REIT ahead, and personally, it will be a miracle if they can somehow avoid being liquidated, and a big bonus if I can get back anything out of this investment which I made back in January 2020 (thankfully the REIT have only a 5% weightage in my overall portfolio; this strongly highlights the importance of diversification – particularly, one should not go ‘all in’ into one company).

Moving forward, for the benefit of fellow unitholders of EC World REIT, I will continue to provide material updates as and when they become available.

This brings me to the end of my post to highlight the key pointers to take note from EC World REIT’s latest annual report for FY2024. Especially for those who have investments in the REIT, I hope the contents in this post have helped you to stay updated on the latest.

Related Documents

• Annual Report 2024
• Notice of AGM
• Request Form
• Proxy Form

Disclaimer: At the time of writing, I am a unitholder of EC World REIT.

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