With the bulk of ESR-REIT’s portfolio rebalancing strategy completed, we expect it to move into an organic growth phase and start reaping the benefits from an earlier pivot into higher quality and longer land-lease assets.
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Key catalysts for FY25
Key catalysts for FY25 include a full-year accretive DPU contributions from ESR Kisosaki DC in Japan and 20 Tuas South Avenue 14, completed asset enhancements, and higher revenue from increase in service charges (~65% of for REIT’s assets) to offset rising cost pressures.
Rent reversions (FY25) are expected to be in the 5-7% range (FY24: +10.3%) with flattish rent expectations for business parks and higher rents seen for other segments. Occupancy is expected to remain high at ~92%.
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Divestments of ~S$200m
Divestments of ~S$200m are likely expected to come mainly from Singapore assets. These include its non-core hotel asset in Changi Business Park (~S$115m valuation as at end Dec 2024), for which it is in an exclusive negotiation.
Divestments are likely to be at or above book value. Plans for divestment proceeds include a potential redemption of S$75m of the Series 006 perps that carry a coupon of 6.632%, with the rest likely used to repay its debt.
Redevelopment of 21B Senoko Loop
Read more at SGinvestors.io.
Above is an excerpt from a report by RHB Securities Research. Clients of RHB may be the first to access the full PDF report @ https://www.rhbtradesmart.com/.
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