ESR-LOGOS REIT (E-LOG) J91U has reported gross revenue of $97.7 million in the 1QFY2023 ended March, up 63.9% y-o-y.
The REIT’s net property income (NPI) rose by 78.2% y-o-y to $70.4 million.
The higher gross revenue and NPI were mainly due to contributions from ARA-LOGOS Logistics Trust (ALOG Trust) after the merger in April 2022.
During the 1QFY2023, net asset value (NAV) per unit, however, fell by 13.2% y-o-y to 34.8 cents, down from 40.1 cents as at 1QFY2022. This was attributable to the premium paid over ALOG Trust’s NAV and transaction costs that were incurred in relation to the merger being written off.
In the 1QFY2023, E-LOG saw positive rental reversion of 7.3%, up from the 3.1% in the year before. During the period, the REIT’s logistics segment continued demonstrating rental upside and the segment is expected to continue driving positive rental reversions on the back of positive sector demand and supply dynamics.
Its occupancy rate as at March 31 stood at 92.1%, up from the 91.5% in the previous year. Of its portfolio, 63.0% are new economy assets, up from the 42.2% in the 1QFY2022.
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E-LOG’s gearing as at March 31 stood at 41.6% though its gearing will be reduced to around 38.0% upon the completion of its equity fund raising where the REIT sought to raise gross proceeds of around $300.0 million in February. As at March 31, E-LOG’s fixed rate debt stood at 72.7%.
Looking ahead, the REIT notes that the ongoing macroeconomic headwinds such as high energy prices, interest rate hikes, geopolitical risks and others continue to pose threats in 2023 though some of these challenges look to be cushioned by signs of peaking inflation and plateauing interest rates.
In Singapore, it expects its logistics segment to remain strong for storage space in ramp-up warehouses, while demand for cargo lifts assets seem to be increasing for smaller occupiers with less demanding requirements in order to save cost.
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In its update, the REIT notes that logistics will continue to outperform despite the moderation in demand. Most leasing deals were driven by renewals across segments such as electronics, medical products and wholesale trade, it adds.
In Australia, the leasing market continues to be strong with vacancy rates decreasing over the year. FY2023 is also expected to be a record year for development completions with 3.6 million sqm, mainly in Brisbane and Melbourne.
In Japan, the REIT expects vacancy rates to rise above 9% in the following quarters though new supply coming on stream into the market in FY2024 will likely be absorbed by robust demand from logistics operators with committed contracts. That said, it notes that leasing momentum in the country is slow in general.
Units in E-LOG closed flat at 32.5 cents on April 25.
