ESR-REIT (EREIT) has reported a promising first half of 2025, with its distributable income slightly surpassing expectations, according to CGS International’s report. The REIT’s distribution per unit (DPU) for the first half of the year stood at 11.239 Singapore cents, accounting for over half of the full-year estimates. This performance was bolstered by a capital top-up of S$10.1 million and robust portfolio reversions of 9.7%, despite a slight dip in occupancy to 91.2%.
The REIT’s revenue and net property income (NPI) saw significant year-on-year growth, driven by new acquisitions such as the ESR Yatomi Kisosaki Distribution Centre and 20 Tuas South Avenue. These acquisitions contributed S$32.5 million to the NPI, with the overall revenue reaching S$222.9 million, a 23.2% increase from the previous year. The NPI margin also improved to approximately 75%, aided by reduced utility expenses and increased service charges.
Management remains optimistic about the second half of 2025, maintaining a full-year rental reversion guidance of 6-7%. They have completed most refinancing for the year and anticipate lower funding costs in 2026. Additionally, EREIT is considering divesting its hotel asset at Changi Business Park, potentially exceeding S$100 million, to reduce debt or facilitate unit buybacks.
Looking ahead, EREIT aims for stabilisation in its DPU and is targeting 50% occupancy at 16 Tai Seng by year-end. The REIT’s ongoing asset enhancement initiatives and strategic divestments are expected to support its financial stability and growth. However, challenges such as unfavourable exchange rates and lease non-renewals remain potential risks, said CGS International.
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