EC WORLD Real Estate Investment Trust (EC World Reit) announced that its distribution per unit (DPU) fell 18.6 per cent to S$0.01671 for the first half ended Jun 30, from S$0.02053 in the corresponding period last year.
This was mainly due to lower revenue and higher operating expenses in the first half, said the Reit manager in a bourse filing on Wednesday (Aug 7), adding that there will be no distribution for the period due to insufficient funds.
This follows an 8 per cent drop in gross revenue to S$51.2 million in H1, from S$55.7 million a year ago. Net property income (NPI) was also down 8.9 per cent to S$47.2 million, from S$51.8 million the previous year.
The Reit manager attributed the lower revenue and NPI to the discontinuation of China Tobacco leases in relation to Hengde Logistics Phase 1 and lower rental income from Chongxian Port Logistics and higher operating expenses.
These were a result of the refund of land use tax in April 2023, which was mitigated partly by organic rental escalations and higher late-fee income, it said.
Meanwhile, finance costs rose 0.3 per cent year on year to S$22.9 million, primarily due to higher interest rates during the period. This was mitigated by a reduction in borrowings and extension fee incurred during the second quarter of FY2023.
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Earnings per share (EPS) stood at minus 6.07 Singapore cents for the half year, reversing the positive EPS of 1.40 Singapore cents in H1 FY2023.
As at end-June, the overall occupancy for EC World Reit’s portfolio stood at 80.2 per cent, while the weighted average lease expiry by net lettable area was 1.5 years.
Goh Toh Sim, the chief executive officer of the manager, said: “On a semi-annual basis, the revenue in renminbi terms was 5 per cent lower compared to H1 FY2023. EC World Group has insufficient funds to maintain operations due to delays in collecting related party rent receivables and the non-completion of the proposed divestment. The manager is negotiating a master offset agreement to address outstanding rental receivables and payables between EC World Group and the sponsor group.”
He added that the Reit manager had completed the novation process to take over underlying leases from the master leases and other related party leases, and as a result, the group’s operating cash flows improved in H1 FY2024 in conjunction with the completion of the novation process.
The manager also noted: “Highly likely that no distribution for the financial year 2024 will be declared in light of the financial challenges present and ahead.”
Trading in the units of EC World Reit has been suspended since Aug 31, 2023.
