THE manager of ESR-Logos Real Estate Investment Trust (ESR-Logos Reit) : J91U 0% on Friday (Apr 14) said that Ceva Logistics Singapore renewed its property&rsquo s lease for a three-year term, at an increased rate of 20 per cent.

 

The logistics company, the anchor tenant of the property located at 15 Greenwich Drive, occupies 31,230 square metres (sq m) &ndash three-quarters of the property by net lettable area. This is Ceva&rsquo s largest leased facility across its eight sites in Singapore.

 

The logistics company remains one of the top 20 tenants by effective gross rent in ESR-Logos Reit&rsquo s portfolio. 

 

&ldquo The strong positive rental reversion of 20 per cent from Ceva&rsquo s lease renewal demonstrates the continued resilience and growth in the logistics sector, reinforcing our strategy for ESR-Logos Reit to pivot towards new economy assets,&rdquo said Adrian Chui, chief executive and executive director of the Reit&rsquo s manager.

 

He added that the leasing market for new-economy assets remained robust during the first quarter of this year, and he expects the logistics and warehouse segment to continue driving positive rental reversion for the Reit&rsquo s portfolio.

 

The property at 15 Greenwich Drive is located in Tampines LogisPark. It is multi-tenanted, fully occupied and has a gross floor area of 42,307 sq m.

 

OCBC Investment Research has lowered its fair-value estimate on ESR-Logos real estate investment trust : J91U 0% (Reit) from S$0.42 to S$0.38, following the Reit&rsquo s enlarged share base following its equity fundraising exercise. The research team kept its &ldquo buy&rdquo call on the Reit unchanged in a note on Tuesday (Apr 11).

 

Analyst Chu Peng noted that the Reit completion of its private placement at an issue price of S$0.33 per unit, and that it had at the same time also announced a non-renounceable preferential offering at an issue price of S$0.325.

 

These form part of the Reit&rsquo s plans to raise S$300 million, which will be used to repay debt, finance redevelopments or asset-enhancement initiatives and further acquisitions.

 

Chu thus lowered her FY23-FY27 distribution per unit (DPU) forecasts by 8 to 10 per cent in view of the enlarged share base.

 

OCBC&rsquo s research team expects the Reit&rsquo s gearing to fall to 38 per cent from 41.8 per cent. &ldquo [The Reit] is exercising prudent capital management, in our view, to lower its gearing level below 40 per cent amid a higher interest environment,&rdquo she said.

 

While she believes that the Reit&rsquo s fundamentals are healthy, she advised investors to consider taking up the preferential offering to avoid dilution of shares.

 

The research team remains cognisant of the Reit&rsquo s potential downside risks of tenant defaults or asset conversions from master-leased to multi-tenanted.