Fu Heng Warehouse, one of six properties in EC World REIT's initial portfolio. (Photo: EC World REIT)Fu Heng Warehouse, one of six properties in EC World REIT's initial portfolio. (Photo: EC World REIT)

China-focused industrial properties landlord EC World REIT announced on 28 October that it has recorded a DPU of 0.991 Singapore cents for the period spanning 28 July to 30 September 2016, missing the predicted 1.016 cents by 2.5%.

Gross revenue for the period was 0.9% better than expected at SGD16.4 million (USD11.7 million), while net property income came in 1.2% higher than forecast at SGD15 million.

However distributable income came in at SGD7.8 million, 2.3% lower than the SGD7.9 million predicted for the period.

Income from financing activities came in at SGD56,000, significantly lower than the SGD600,000 forecasted for the period due to the REIT’s decision to not invest its security deposits of RMB301.7 million (USD43 million) in Chinese corporate bonds as originally stated.

“In light of a potentially yield-accretive acquisition opportunity [in China], we concluded that it may be more beneficial to unitholders for EC World REIT to set aside the security deposits to partially finance this asset from an unrelated third party vendor”, said Peter Lai, CEO of the REIT’s manager.

The REIT’s aggregate leverage for the period was at 28.1% with all-in interest rate of 5.44%.

EC World REIT has however not given any details of the proposed acquisition, but indicated that it is optimistic for the quarters ahead.

“The expected strong growth in ecommerce in Hangzhou and across China will continue to drive demand for e-commerce warehouses”, it said.

Units of EC World REIT were last done on the Singapore Exchange at SGD0.76.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.