Cambridge Industrial Trust (CIT) was listed on the Singapore Exchange (SGX) in July 2006.
It was the first independent industrial REIT in Singapore. And it had an initial portfolio of 27 properties.
Its IPO was valued at S$0.68 per unit at a market capitalization of ~S$340 million, at an estimated price to NAV ratio of 1.05x and distribution yield of ~7.7%.
Its IPO was mainly used to acquire the seed portfolio and reduce debt.
It wasn’t until 2017 when CIT rebranded to ESR-REIT when E-Shang Redwood acquired ~80% of the REIT.
Another merger occurred in 2022 with ARA LOGOS Logistics Trust via a trust scheme of arrangement.
Fast forward to today, ESR REIT is trading at ~S$2.81, with a price to NAV ratio that stayed flat at ~1x and a dividend yield of ~7.2%.
Here’s what you need to know about ESR REIT.
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1. ESR-REIT 1H 2025 strong performance
ESR-REITs portfolio is mainly focused on the “new economy,” holding interests in a diversified portfolio of logistics properties, high-specifications and general industrial properties, and business parks.
Its total assets are worth approximately ~S$5.9 billion with 50 assets in Singapore, 18 in Australia, and two in Japan.
However, in terms of concentration, ESR REIT’s properties are mainly located in Singapore (over 80%), with roughly 70% of its portfolio being logistics and high-specification industrial property types.
So how did ESR REIT perform in the first half of 2025? For the first half:
- Gross Revenue increased by 23.2% to S$222.9 million
- Net property income increased by 30.1% to S$166.3 million
- Distributions per unit rose by 0.2% to S$0.11239
- Rental reversions increased by 9.7%
- Occupancy rates stood at 91.2%, down by 0.2%
So this was a good quarter. The increase in revenue and net property income came on the back of higher rental reversions from lease renewals, contributions from:
- two properties acquired in November 2024, and
- contributions from two new properties with completed asset enhancement initiatives (AEIs).
However, distributions didn’t increase due to the higher financing costs for those same acquisitions mentioned above.
Furthermore, there were more total units outstanding which diluted unitholders and ESR REIT had higher tax expenses as well.
2. Healthy leasing and occupancy rate
For ESR REIT, it has a weighted average lease expiry (WALE) of 4.1 years, with a retention rate of 76%.
Furthermore, it also expects the positive rental reversions to continue as well, albeit at a slower pace. This is because the rents it charges are still around the lower range of the market.
Across all the geographic segments that ESR REIT operates in, it has also successfully maintained an occupancy rate greater than the market average.
For example, the occupancy rates for comparable property types in Australia are 97.2%, but ESR REIT has achieved a 100% occupancy rate.
3. ESR REIT’s debt profile and capital management
In terms of ESR REIT’s liabilities, it has approximately S$2.2 billion in total gross debt, with an aggregate leverage ratio of 42.6%, and interest coverage ratio of 2.4 times.
Therefore, ESR REIT has quite some headroom, as it is able to take on another ~S$800 million before reaching regulatory limits.
Its weighted average cost of debt is 3.47%, and on average expires every 2.6 years.
But there are two things I like about ESR REIT’s capital management.
Firstly, it takes on very little foreign exchange risk. Only 9% of ESR REIT’s total assets under management (AUM) are subject to FX fluctuations.
This is because ESR REIT borrows in AUD or JPY to fund its foreign investments.
Secondly, 80% of ESR REIT’s debt has fixed interest rates. This means that it’s not subject to excessive interest rate risk, and for the most part, its interest expenses should be well known.
And with a weighted average debt expiry of 2.6 years, ESR REIT will still benefit from the declining interest rates as it seems that ~52% of ESR REIT’s debt is expiring in the next two years.
4. ESR REIT’s latest corporate moves
Around March 2025, ESR REIT executed two non-core asset divestments as part of its “4R Strategy” (Rejuvenate, Recycle, Reallocate, Rebrand) to optimize its portfolio.
These sales involved older general industrial and logistics properties in Singapore, with proceeds recycled to reduce debt, fund asset enhancements, or support acquisitions.
The total proceeds from both divestments amounted to approximately S$16.65 million, aligning with the REIT’s focus on shifting toward higher-yielding “New Economy” assets.
Neither divestment had a material impact on ESR-REIT’s net asset value (NAV) or distribution per unit (DPU) for FY2025.
ESR REIT’s latest AEI and redevelopment projects
What’s also ongoing is ESR REIT’s asset enhancement initiatives (AEI) and redevelopments.
Management recognizes that the demands of the logistical sector are shifting, and therefore the properties need to keep up as well.
Therefore, ESR REIT is repurposing outdated assets (converting general industrial spaces to high-specification industrial facilities) or redeveloping them into modern and sustainable structures.
As it stands, ESR REIT has one AEI that was just recently completed, one in progress, and one in planning. In fact, one of the reasons behind ESR REIT’s NPI outperformance was due to two previously completed AEIs as well.
Therefore, it’s great to see management looking forward into the future to keep up with the changing landscape.
My final thoughts
At a price to NAV ratio of ~1.0x, ESR REIT does seem to be trading at the cheaper end against its comparable companies.
In comparison to the traditional office REIT, or retail REIT, ESR REIT’s portfolio being ~70% focused on the “new economy” gives it the best of both worlds.
It’s a stable investment but with some upside from the shifting landscape such as e-commerce.
