EC World REIT 2QFY2025 Results: Financial Performance Analysis and Investor Guidance
EC World Real Estate Investment Trust (“EC World REIT”) released its 2QFY2025 financial results, highlighting significant challenges across revenue, income, and asset valuations. The following analysis presents a structured breakdown of the key metrics, portfolio updates, capital management, and the implications for current and prospective investors.
Key Financial Metrics and Comparative Performance
| Metric |
2QFY2025
(Current Quarter) |
1QFY2025
(Previous Quarter) |
2QFY2024
(Same Quarter Last Year) |
YoY Change |
QoQ Change |
| Gross Revenue (S\$’000) |
9,885 |
12,679 |
25,937 |
-61.9% |
-22.0% |
| Net Property Income (S\$’000) |
7,938 |
10,783 |
23,881 |
-66.8% |
-26.4% |
| Finance Costs (S\$’000) |
(10,378) |
(10,811) |
(11,155) |
-7.0% |
-4.0% |
| Income Tax Credit (S\$’000) |
25,084 |
(1,574) |
12,537 |
>100% |
N/M |
| Distribution per Unit (Singapore cents) |
0 |
0 |
0.767 |
N/M |
N/M |
The financials indicate a steep decline in both revenue and net property income due to the termination of master lease agreements (MLAs) upon expiry, lower underlying lease contributions, and only partial offset from new third-party leases. Importantly, EC World REIT has not declared any distribution for the quarter and signals high likelihood of no distributions for the entire financial year 2025.
Dividend and Distribution Trend
- No distributions were declared for 2H2023, FY2024, or 1H2025.
- The previously scheduled 1H2023 distribution remains deferred due to insufficient free cash.
- As per the offshore facility agreement, distributions cannot be made unless certain financial covenants are met, and the REIT can meet its liabilities as they fall due.
Balance Sheet and Capital Management Highlights
- Net Asset Value (NAV) per unit: Fell into negative territory at S\$-0.10 as at 30 June 2025 (from S\$0.04 as at 31 December 2024).
- Aggregate leverage: Rose sharply to 72.4% (from 56.5% six months ago), well above regulatory comfort levels.
- Weighted average debt maturity: Only 0.23 years, indicating a pressing refinancing risk.
- Interest coverage ratio: 1.05x (down from 1.64x), further reflecting constrained financial flexibility.
- Investment properties: Valued at S\$566.9 million as at 30 June 2025, down from S\$713.7 million at end-2024, due to fair value losses and a 16.9% drop in RMB terms.
- Borrowings: S\$468.5 million outstanding.
Portfolio Update and Lease Profile
- Committed Occupancy Rate: 86.6% as at 30 June 2025.
- Weighted Average Lease Expiry (WALE): 1.1 years by gross rental income, indicating near-term lease expiry concentration.
- Portfolio segments: Comprising port logistics, e-commerce logistics, and specialized logistics assets, with heavy exposure to e-commerce and port-related tenants.
- Asset revaluation: Significant downward revaluation conducted by JLL, contributing to negative NAV.
Capital Structure and Debt Risks
- Onshore facility (RMB 721.5 million) has been fully refinanced, but offshore bank loans (SGD 341 million) remain outstanding.
- Offshore lenders issued a pre-enforcement notice (timeline lapsed as of 31 May 2025), requiring asset divestments to repay debt. No acceleration has occurred yet, but negotiations are ongoing.
Events Affecting the Business and Outlook
- Major lease expiries and inability to renew on similar terms have severely impacted income.
- High leverage and negative NAV raise potential for regulatory scrutiny and possible breaches of loan covenants.
- Asset sale pressure from offshore lenders adds uncertainty to the portfolio’s future composition and income stability.
- No income available for distribution for 1H2025 and highly likely for the full year, removing yield as an investment rationale for the near term.
Conclusion and Investor Recommendations
Overall Assessment:
The financial performance and outlook for EC World REIT are decidedly weak. Revenues and net property income have collapsed due to lease terminations, finance costs remain high, asset values have dropped sharply, and the REIT is not able to make any distributions. With negative NAV, elevated leverage, and refinancing risks, the Trust faces significant headwinds.
-
If you are currently holding the stock:
Consider reducing or exiting your position. The REIT offers no distribution yield, is at risk of further asset sales or forced divestments, and faces a highly uncertain financial future. The negative NAV and high leverage indicate potential for further value erosion.
-
If you are not holding the stock:
It is prudent to avoid initiating a new position at this time. The risks of further asset impairment, lack of distributions, and refinancing challenges outweigh any speculative upside, especially in the absence of a clear turnaround plan or improved operating environment.
Disclaimer: This analysis is based solely on the latest available company report and does not constitute investment advice. Investors should consider their own financial circumstances and consult with a qualified financial advisor before making investment decisions.
View EC World Reit Historical chart here
