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

Judging from its latest set of results, China-focused industrial landlord EC World REIT seems poised for a stellar run in the quarters ahead.

The REIT reported a DPU of 1.541 Singapore cents for its 1Q 2017 on 11 May, beating forecast made during its IPO of 1.464 cents by 5.3%.

Gross revenue and net property income for the period came in at SGD23.6 million and SGD21.6 million, trumping expectations by 4.6% and 5.4% respectively, while distributable income beat forcast by 3.5% at SGD12 million.

EC World REIT has attributed the set of results to strong operating performance of its properties, and lower financing costs and other expenses.

Also playing a part in the results were favourable SGD - RMB exchange rates that bolstered the REIT’s net property income.

The REIT’s committed portfolio occupancy stands at 100% but the underlying end-tenant occupancy has increased from 94.4% at listing to 98.3% as at 31 March 2017.

Weighted average lease expiry (WALE) for the period was at 3.7 years, while gearing was at 28.6% - a relatively low figure in comparison to its peers.

Given that the counter is currently trading at about 17% discount, EC World REIT seems to present itself as an enticing proposition to value hunters, especially given that the Chinese e-commerce market is expected to grow to about three times the size of the US this year.

However there are a couple of important questions to ask before taking the plunge in what is to-date Singapore’s only China-focused industrial REIT.

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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.