SPH Reit's Q2 DPU of 1.39 cts beats forecast

BOLSTERED by positive rental reversions and strong property income, SPH Reit achieved a distribution per unit (DPU) of 1.39 cents for the second quarter ended Feb 28, beating its forecast by 4.5 per cent.

This translates to an annualised dividend yield of 5.78 per cent for the Reit based on the closing price of units on Feb 28.

Income distributable to unitholders was $34.9 million for the quarter, which surpassed its forecast by 5.2 per cent.

"To sustain returns to unitholders, we will continue to strengthen the partnership with our tenants and pursue opportunities to enhance the premier positioning of the malls," said Susan Leng, CEO of the Reit's manager, SPH Reit Management Pte Ltd.

The Singapore Press Holdings-backed Reit recorded a net property income of $38.8 million, 4.6 per cent higher than its forecast.

It also recorded $51 million in gross revenues for the second quarter, exceeding its forecast by 1.4 per cent.

Listed last July, the Reit owns two retail malls Paragon and Clementi Mall, which enjoyed healthy rental reversions of 13.6 per cent and 5.1 per cent respectively. Both retail malls have a total net lettable area of about 900,000 sq ft and are fully leased.

The Clementi Mall has completed the first lease renewal cycle and more than 90 per cent of the tenants, by net lettable area, have committed for another lease term.

Both Paragon and Clementi Mall are "expected to turn in a steady performance", supported by positive macroeconomic conditions as reflected by sturdy retail sales and visitor arrivals as well as continued low unemployment rates, the Reit's manager said in the financial report.

The combined valuation of the two malls was $3.1 billion as at Feb 28, based on the average of two valuations by CBRE and DTZ.

According to the Reit manager, SPH Reit does not require refinancing until 2016. Its existing debt has a weighted average term to maturity of 4.5 years.

The Reit's gearing level was 26.9 per cent and average cost of debt was 2.33 per cent as at Feb 28. Some 54.7 per cent of the $850 million debt facility is on a fixed-rate basis.

The ex-date for the distribution is April 14.

Units of SPH Reit closed 0.5 cent lower at 98.5 cents yesterday.