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EC World Real Estate Investment Trust ANNUAL REPORT 2016
ECW was established as a private trust on 5 August
2015. A total of six properties was acquired between
25 August 2015 and 6 November 2015 (both dates
inclusive). ECW was officially listed on 28 July 2016 on the
SGX-ST Mainboard, backed by Forchn Holdings Group
Co., Ltd. (“the Sponsor”). The Sponsor, established in 1992,
is a diversified enterprise focusing on the industrial and
commercial real estate sectors, hospitality, e-commerce
logistics and finance.
For the period from 28 July 2016 to 31 December 2016,
ECW achieved a gross revenue of S$41.2 million and net
property income (“NPI”) of S$36.8 million, exceeding its
IPO forecast by 4.8% and 2.9% respectively. The better
performance was mainly due to the additional rental
income generated from asset enhancement initiatives
at Chongxian Port Investment (i.e. construction of a
sheltered warehouse) from 1 October 2016 as well as
favorable exchange rate movements.
Based on the distribution per unit of 2.454 cents for the
period from 28 July 2016 to 31 December 2016, the
annualised distribution yield for ECW is approximately
7.06% based on the IPO price of S$0.81.
Borrowings and aggregate leverage
At the Listing Date, ECW obtained a RMB1,004.2 million
(equivalent to S$209.0 million) Onshore secured floating
rate term loan facility, and a S$200.0 million syndicated
Offshore secured floating rate term loan facility. The
facilities were fully drawn at the Listing Date to finance
the acquisition of the properties. As at 31 December 2016,
the weighted average debt to maturity was 2.6 years while
the gearing ratio stood at 27.6%, which falls within the
Monetary Authority of Singapore’s leverage limit of 45%.
The Manager adopts a disciplined and prudent capital
management approach to maintain a strong capital
structure and financial flexibility. The Manager is working
actively with various financial institutions to achieve a
favourable debt maturity profile.
Risk management
The Manager undertakes a dynamic approach to
minimise the impact of foreign exchange and interest rate
volatilities on distributable income.
For the financial year ended 31 December 2016 (“FY2016”),
100.0% of ECW’s distributable income was being hedged
into Singapore dollars. About 24.4% of ECW’s total debt
was hedged into fixed rates through interest rate swaps
as at 31 December 2016.
Where feasible, after taking into account cost, tax and
other considerations, the Manager will borrow in the
same currency as the underlying assets to provide some
natural hedge, or hedge through cross currency swaps
for its cross border cash flows.
The fair value of the hedge instruments at the end of
FY2016, which were included as derivative financial
instruments in Total Assets and Total Liabilities, were
S$417,000 and S$387,000 respectively. The net derivative
financial asset represented 0.004% of the net assets of
ECW Group as at 31 December 2016.