ESR-REIT’s 3Q19 revenue and net property income increased 91.5% YoY and 101.1% YoY to S$62.0m and S$45.3m respectively, largely due to contribution from the acquisition of 15 Greenwich Drive and last year’s merger with Viva Industrial Trust, rental escalations from the existing property portfolio as well as the leasing of 30 Marsiling Industrial Estate Road 8 following the completion of its AEI in Jan 2019.

3QFY19 DPU fell 0.4% YoY to 1.00 S cents, mainly due to larger unit base following the placement of new units and longer-than expected completion for the acquisition of 49% interest in PTC Logistics Hub against the backdrop of trade war uncertainties. 3QFY19 DPU comes up to 25% of our initial full-year forecast and we consider this to be in-line with our expectations.

Occupancy remained stable at 91% and YTD rental reversion is +0.6% with improved tenant retention rate at 71.2%. Maintain BUY on ESR-REIT with fair value estimate of S$0.58.

Source: OCBC Research - 25 Oct 2019