EC World REIT (SGX: BWCU) has a financial year ended 31 December 2023, and supposed to hold its AGM (Annual General Meeting) by end-April 2024.
However, just like in the previous financial year, they have once again sought an extension to how its AGM, due to delays in the divestments in the 2 assets (in Stage 1 of Bei Gang Logistics, and Chongxian Port Logistics). Trading for the China-based REIT continues to remain suspended.
Last Friday (12 July), EC World REIT have published its annual report, and you will find key highlights about it in this post, along with questions I have submitted to the management for their response, and details of its upcoming AGM.
Let’s begin:
Brief Introduction to EC World REIT
For the uninitiated, when EC World REIT was listed on the Singapore Exchange in July 2016, it was the first specialised and e-commerce REIT.
The REIT invests in properties in China used primarily for e-commerce, supply-chain management, and 3rd party logistics purposes, as well as real estate assets.
Currently, its portfolio comprises of 7 properties located within the largest e-commerce sectors of Hangzhou in the Yangtze Ricer Delta and Wuhan.
Summary of EC World REIT’s Annual Report
Massive Challenges faced by the REIT:
Navigating Through the Challenges:
Sustainability Progresses:
Portfolio Occupancy Update:
Looking Ahead:
Details of EC World REIT’s Upcoming AGM
When? Monday, 29 July 2024
Where? Begonia Junior Ballroom 3011-2 & 3111-3 Level 3, Marina Bay Sands Expo and Convention Centre, 10 Bayfront Avenue Singapore 018956
Time? 10.00am
If your units of the REIT are held in your CDP account, no pre-registration is required. However, if your units are held in a custodian account, then you will need to get in touch with your brokerage to appoint you as a proxy to attend the meeting.
The upcoming AGM will be held in a wholly physical format, with no options available for unitholders to attend virtually.
In relation to the coming AGM, I have submitted the following questions to seek clarification from the management:
Question 1: On page 9 of the annual report, it is stated, “Our goal is to make steady progress in the coming year, gradually adapting to the economic rebound and returning to normalcy, ultimately providing sustainable value to all stakeholders.” Could the management provide further details on this, specifically regarding the key goals set for completion by the end of the financial year on 31 December 2024?
Question 2: On page 13 of the annual report, it is stated that the novation process, which involves taking over underlying leases from the master leases and other related party leases due to long overdue rent receivables, was completed on 30 June 2024. What are the subsequent actions planned by the REIT’s management following this completion, and are there any specific timeframes established for these actions?
Question 3: As a unitholder, I am happy to note that the REIT management has secured 15 new tenants for Hengde Logistics Phase 1. Could the management share the rental reversion of these leases?
Question 4: Given that distributions for unitholders have been suspended since FY2023 due to cash flow issues (which is quite disappointing, especially since it was stated during the AGM for FY2022 that unitholders should receive distributions for 1H FY2023), can the REIT’s management clarify whether the remuneration for the entire management and board of directors remains the same as in previous years, or if there has been a voluntary pay cut or suspension to align with unitholders? If not, could the management explain why this is the case?
Closing Thoughts
The China-based REIT continues to be faced with massive headwinds related to the inability to divest the 2 properties to repay borrowings. This is on top of the Sponsor’s inability to pay outstanding rent, which led to the REIT running into cash flow problems. Additionally, the oversupply of logistics properties in cities which EC World REIT has properties made matters worse, as they faced with difficulties to find new tenants to occupy the vacant property spaces.
In my opinion, for things to change, the overall situation in China have to improve – and its something I do not foresee to happen over the next 1-2 years, especially with the country currently engaged in a geopolitical tension between the United States and Europe, which, in my opinion, could impact its economic growth, as well as investors’ confidence.
And personally, as far as the REIT is concerned, I still maintain my opinion that it is heading towards liquidation, and my entire investment in it being written off. Any thing else I will consider as a ‘bonus’.
With that, I have come to the end of my summary of EC World REIT’s latest annual report, as well as my honest thoughts about it.
Related Documents
Disclaimer: At the time of writing, I am a unitholder of EC World REIT.
The post Key Highlights from EC World REIT's Annual Report for FY2023 first appeared on The Singaporean Investor.
Created by ljunyuan | Aug 12, 2024
Created by ljunyuan | Jul 18, 2024