2Q19 revenue, net property income and distributable income roughly doubled YoY due to the merger with Viva Industrial Trust. 2Q19 DPU increased 0.3% YoY to 1.004 cents, which comes up to 26.5% of our initial full-year forecast. We consider this above expectations due to higher-thanexpected capital distributions. As at 30 Jun 2019, ESR-REIT’s gearing stands at 39.0% with ~89.2% of interest rate exposure is fixed for the next 2.9 years.

Recall that the manager launched an equity fund raising exercise in Jun to raise gross proceeds of up to S$150.0m comprising a Private Placement and a non-renounceable Preferential Offering to finance 1) the acquisition PTC Logistics Hub, 2) two AEIs at 7000 AMK and UE BizHub EAST, and 3) debt repayment.

On 18 June 2019, the Private Placement of S$100.0m was successfully placed at the issue price of S$0.515 per new unit. Details of the launch date and issue price of the Preferential Offering (gross proceeds up to S$50.0m) will be announced at a later date.

Pending further details, we maintain BUY but place our fair value of S$0.56 under review.

Source: OCBC Research - 23 Jul 2019