EC World REIT expects non-renewal at Wuhan property as DPU slips

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EC World REIT has reported a distribution per unit (DPU) of 1.510 cents, a decline of 3.8% year-on-year.

The REIT’s gross revenue and net property income in RMB terms saw year-on-year growths of 17.4% and 19.5% to RMB134.5 million and RMB129.5 million respectively.

EC World REIT has attributed the growth mainly to embedded rental escalations, and income contribution from Fuzhou E-Commerce which was acquired in August 2019.

Portfolio valuation grew 20.6% to RMB8,118 million, also largely due to Fuzhou E-Commerce.

As of 31 December 2019, EC World REIT’s aggregate leverage was 38.7% with a blended running interest rate of 4.4%.

Due to COVID-19, the REIT expects demand for space in Wuhan to be muted.

EC World REIT has received notification from a tenant for the non-renewal of 24,929 square metres of space at Wuhan Meiluote in 2QFY20.

Wuhan Meiluote accounts for 1.6% of the REIT’s portfolio net property income in FY19.

Several landlords in China have committed to rental rebates, said the REIT.

As such, EC World REIT anticipates similar requests from its tenants.

EC World REIT will evaluate the request on a case-by-case basis, its manager said.

For FY2020, the REIT has 15.7% of its leases, by gross rental income, due for renewal.

As of 31 December 2019, EC World REIT portfolio comprises eight assets, of which seven are in Hangzhou and one in Wuhan.

Four out of the seven assets in Hangzhou are under master lease arrangements which provide for fixed rental with built-in escalation.

EC World REIT was last done on the Singapore Exchange at SGD0.725.

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