ESR-REIT posted net property income of S$162.7 million for the six months ended Jun 30, 2026, down 2.2 per cent year-on-year, as the loss of earnings from divested non-core assets outweighed higher rents and occupancy. Gross revenue slipped 0.3 per cent to S$222.3 million, but core distribution per unit (DPU) rose 4.5 per cent to 11.250 Singapore cents, helped by positive rental reversions and leasing momentum.

The trust declared a total DPU of 11.510 Singapore cents, up 2.4 per cent YoY. The distribution will be paid on 11 September 2026 to unitholders on record as at 5 August 2026. Core DPU accounted for about 98 per cent of the total.

Logistics properties delivered rental reversions of 11.3 per cent while high-specifications industrial assets booked a 5.0 per cent uplift, supporting the overall portfolio reversion of 9.8 per cent. Portfolio occupancy stood at 91.9 per cent, with a weighted average lease expiry of 4.8 years. On a same-store basis, gross revenue grew 2.3 per cent and NPI edged 0.7 per cent higher.

Earnings were tempered by the sale of ten non-core properties with a weighted average remaining land lease of 21.9 years that fetched S$338.1 million, or 2 per cent above valuation. These disposals, coupled with the S$101 million sale of a hotel strata lot at ESR BizPark @ Changi, reduced short-lease exposure but curtailed rental income in the period.

The manager is redeploying proceeds into six freehold logistics assets in Melbourne for A$341.1 million (about S$305.4 million). Acquired at a 1.6 per cent discount to valuation, the portfolio is 92.3 per cent occupied and is expected to lift DPU by 5.1 per cent on a pro-forma basis while addressing the trust’s land-lease expiry profile.

Gearing was 41.4 per cent at end-June and is projected to fall to 39.9 per cent after redeeming S$125 million of notes maturing in August 2026. About 75.5 per cent of debt is fixed-rate, with an all-in cost of 3.52 per cent and a weighted average debt tenure of 2.1 years. The trust retains S$871.4 million of debt headroom and S$284 million in undrawn committed revolving facilities.

Chief executive officer Adrian Chui said the trust’s distribution growth reflected “healthy leasing momentum, positive rental reversions and continued contributions from higher-quality logistics and high-specifications industrial assets”. He noted that divestment proceeds are being recycled into modern Australian logistics properties to “minimise DPU drag” and mitigate land-lease decay. Chui added that constrained new supply in prime logistics, coupled with technology-led demand, should support further rental growth, while the manager’s focus on capital recycling and proactive debt management is aimed at sustaining income and total returns over the long term.