China-based e-commerce and port logistics REIT in EC World REIT (SGX:BWCU) held its annual general meeting for the financial year ended 31 December 2021 (i.e. FY2021) earlier this morning, where I have attended as a unitholder.

The meeting was a relatively short one (it lasted slightly under 30 minutes), and I’m disappointed that there weren’t any live Q&A sessions available (this was, in fact, the only AGM I’ve attended this year so far where the option was not made available.) There weren’t any live voting available as well (which was surprising, as this was also the first AGM that I’ve attended this year which did not make the option available.)

In this post, you’ll find a quick summary on the CEO’s (Mr Goh Toh Sim) updates, results of the 3 resolutions put to vote during the meeting, and my thoughts about it:

CEO’s Presentation

FY2021 Highlights:

• Gross revenue and net property income increased by 14.1% and 12.7% to $125.5m (FY2021: $109.7m) and $113.0m (FY2021: $100.3m) respectively mainly due to absence of rental rebates given to tenants in FY2020.
• Distribution to unitholders, as a result of an improved net property income, grew 17.4% to $50.6m (FY2021: $43.1m), and distribution per unit rose 16.9% to 6.263 cents (FY2021: 5.359 cents).
• Portfolio occupancy remains stable at 99.2%, with weighted average lease expiry of 2.7 years (by gross rental income.)

Impact of China’s Zero Covid Policy on EC World REIT:

• Mr Goh shared that the lockdown in China (particularly in Shanghai) resulted in the disruption of supply chain. He added that lockdowns have also recently extended to Beijing, as well as to Hangzhou (where the REIT’s operations are) – to which he updated that the REIT is closely monitoring the situation (on possible impacts to the normal operations of the REIT’s properties.)

Updates on Refinancing Exercise:

• Mr Goh understood concerns many unitholders have on this, and updated that they have undergone intense discussions with the banks, and are very close to resolving the issue.
• In particular, he updated that the S$424.5m of offshore facility which will be expiring in end-May 2022 (comprising of 2 multi-currency term loan facilities up to S$402m, as well as SGD term loan up to S$22.5m) is expected to be resolved soon.

Compulsory Expropriation of Fu Zhou Industrial:

• With regard to the property (which handles mainly building materials) receiving a formal notice from the Hangzhou District Government on the compulsory expropriation, Mr Goh updated that the REIT is currently in the midst of negotiation on the compensation amount from the Government, as well as with its tenants (in terms of their relocation, and compensation.) He added that discussions with the latter are in its finalisation stages.

Results of 3 Resolutions Put to Vote during the AGM

• Resolution 1, which is to receive and adopt the Report of the Trustee, the Statement by the Manager, and the Audited Financial Statements of EC World REIT for the financial year ended 31 December 2021 together with the Auditors’ Report thereon, was passed with 99.98% of the votes for, and 0.02% of the votes against.
• Resolution 2, which is to re-appoint PricewaterhouseCoopers LLP as Auditors of EC World REIT and to hold office until the conclusion of the next AGM and to authorise the Manager to fix their renumeration, was passed with 99.98% of the votes for, and 0.02% of the votes against.
• Resolution 3, which was to authorise the Manager to issue new Units and to make or grant convertible instruments, was passed with 99.62% of the votes for, and 0.38% of the votes against.

Closing Thoughts

Overall, a very disappointing meeting in my opinion, with little updates provided by the REIT on the refinancing of debt. The lack of a live Q&A was also a bummer (as this is the third year the meeting have been conducted online but yet no improvements made.)

As a unitholder, I’m particularly concerned about the debt that is expiring in end-May 2022 (which is a little more than a month from now) and I really do hope the REIT can provide more updates soon instead of just saying that they are “very close to resolving the issue” without further details.

I will continue to keep tabs on this and post updates as and when I have them.

Related Documents

• CEO’s Presentation Slides
• Responses to Questions Submitted by Unitholders

Disclaimer: At the time of writing, I am a unitholder of EC World REIT.