EC World REIT - Annual Report 2016

LETTER TO

UNITHOLDERS

EC World Real Estate Investment Trust ANNUAL REPORT 2016

China’s economy expanded by 6.7%

for the full year

in 2016 as consumers stepped up spending and the

property market rebounded. This GDP growth is in line

with the Chinese government’s target between 6.5% to

7%. At the same time, Hangzhou’s GDP rose by 9.5%

outperforming the national average, partly due to the fact

that Hangzhou’s economy was boosted by the 44.4%

growth in e-commerce in 2016. As ECW’s assets are

currently located in Hangzhou, they will benefit from the

robust economic growth of the Hangzhou area on an on-

going basis.

E-COMMERCE DEVELOPMENTS

In early 2015, the Chinese government announced the

development of a nationwide “Internet Plus” action plan

to encourage the development of e-commerce and

industrial networks, and Internet banking, as well as to

increase the international market presence of Chinese

Internet-based companies

According to China Internet Network Information

Centre, China registered its highest number of netizens

and mobile internet users in 2015, at approximately 688

million and 620 million respectively, while 413 million

netizens in China participated in online shopping. The

market size of China’s B2B, B2C / C2C e-commerce

have reached RMB10.7 trillion and RMB4.0 trillion

respectively

. ECW is uniquely positioned to benefit

from the rapid growth of the e-commerce industry in

China.

OPERATIONAL PERFORMANCE

Our portfolio assets were fully leased as at 31 December

2016, whereas the Weighted Average Lease Expiry (“WALE”)

was 4.0 years by gross rental income, thereby ensuring

stability and sustainability of the portfolio income and

distributable income to unitholders.

Total Net Lettable Area at end 2016 was 698,478 sqm,

and we were able to achieve an average positive rental

reversion rate of 6.4% during the last quarter of 2016

for the leases renewed. Furthermore, annual step-up

provisions in the existing leases will provide organic rental

growth in the coming years.

ACTIVE CAPITAL MANAGEMENT

Leveraging on our favourable credit profile and prudent

capital management policies, the average maturity of the

loan facilities totalling SGD409 million from a syndicate

of international banks at year end was approximately 2.6

years, which will provide the management with ample

time and flexibility to consider refinancing alternatives

before the financings are due for repayment.

OUTLOOK

The Chinese economy, and particularly the demand for

e-commerce logistic facilities, is expected to be supported

by burgeoning domestic demand, increasing investments

and government policies. The middle class, the mainstay

of e-commerce logistics activities, continues to grow in

number and with higher disposable income.

Weighted Average Lease Expiry

4.0

by gross rental income (years)

average positive rental

reversion rate (%)

6.4

Portfolio Committed

Occupancy (%)

100.0

net lettable

area (sqm)

698,478

National Bureau of Statistics of China

2 Hangzhou statistics

3 Analysys Consulting Ltd