Dear Unitholders, FY2024 was a year marked by deep operational and financial difficulties for EC World REIT. A combination of unresolved sponsor-related issues, unauthorised mortgage matters, and weak leasing conditions in our key markets significantly affected our portfolio and income performance. While the situation remains profoundly demanding, the Board and management remain dedicated to taking measured and transparent actions to stabilise the REIT and protect the long-term interests of our stakeholders. Gross revenue declined 14.4% year-on-year to S$92.2 million, while net property income fell 18.1% to S$81.2 million. This was primarily due to the expiry and novation of master leases and related party leases, along with the weak leasing environment in China. The discontinuation of anchor tenant leases at Hengde Logistics further affected income. On a more positive note, occupancy improved to 86.3% as at 31 December 2024, supported by active leasing at Hengde Logistics and Wuhan Meiluote. As at 31 December 2024, the REIT’s portfolio valuation declined by 11.7% in RMB terms compared to the previous year, because of the deteriorating market conditions in China, oversupply of warehouse space and weaker economic sentiment both globally and in China locally. Although the novation of underlying leases and termination of master leases contributed to the valuation adjustments for all, however it was a crucial action to secure positive cashflow and replace nonperforming arrangements. The REIT’s capital structure continues to face significant pressure. As at 31 December 2024, aggregate leverage was maintained slightly lower at 56.5% after fully repayment of revolving loans in FY2024, compared to 57.9% a year earlier. Net asset value declined to S$0.04 per unit, reflecting the continued impact of portfolio revaluation and financing constraints. The Manager is actively exploring options to address these challenges. Distributions remain suspended for 2024 and it is highly likely that no distribution for the financial year 2025 will be declared either, in light of the financial challenges present and ahead. Meeting the Challenges Ahead Looking ahead, the Manager remains focused on addressing the structural and financial challenges facing the REIT through actively evaluating strategic options to strengthen the REIT’s capital position, refinancing and rigorously undertaking the asset divestments plan. KPMG has been appointed as financial adviser to assess viable restructuring pathways and reporting to lenders, while Savills and Cushman & Wakefield are supporting efforts to market selected assets for sale. The Pre-enforcement Notice issued by the offshore lenders provides the REIT with time until 31 May 2025 to divest a sufficient quantum of assets to fully repay the Offshore Facility. Concurrently, the Singapore Exchange has granted an extension for the REIT to submit its resumption proposal within the same timeframe. At this juncture, it is uncertain whether all lender-imposed milestones can be achieved within the current timeframe, and an extension may be required if circumstances necessitate. Notwithstanding these challenges, the Manager is making every reasonable effort to improve the REIT’s financial and operational position and remains fully committed to acting in the best interests of unitholders. Governance and Board Updates As part of Board renewal and succession planning, Mr Zhang Guobiao stepped down as Chairman of the Board on 2 August 2024 and resigned from Board on 14 April 2025. I was appointed Acting Chairman to ensure leadership continuity. Mr Chia Yew Boon replaced Dr David Wong See Hong as Chairman of the Audit and Risk Committee on 13 November 2024 while Dr. Wong remains as an Independent Non-Executive Director. In December 2024, unitholders approved the appointment of BDO LLP as the REIT’s external auditor at the Extraordinary General Meeting 2024. As the nine year term of appointment of the independent directors will terminate on 20 June 2025, we have been interviewing prospective independent directors for the approval by the Monetary Authority of Singapore. Future Outlook China’s economy grew by 5.0% in 2024, meeting official targets, but the recovery remains uneven1. Consumer demand has yet to show broadbased strength, property investment declined by 10.6% year-on-year, and business confidence remains fragile1. The World Bank projects China’s GDP to moderate to 4.5% in 2025, reflecting structural challenges in real estate and a cautious external environment2. The impact of the new trade policies of various countries has not been fully assessed at the current point of time but more adverse economic condition must be anticipated. ANNUAL REPORT 2024 07 LETTER TO UNITHOLDERS
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