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SPH Reit posts flat DPU of 1.34 Singapore cents for Q1 FY2019

NPI dips 1% year-on-year to S$41.79m, mainly due to lower revenue from Paragon

Singapore

RETAIL landlord SPH Reit, which posted a distribution per unit (DPU) of 1.34 Singapore cents for the first quarter ended Nov 30, 2018, expects to see the full contribution from its latest acquisition Figtree Grove Shopping Centre in the second half of the year.

First-quarter DPU - which is unchanged from a year ago - will be paid out to unitholders on Feb 15.

Net property income (NPI) dipped 1 per cent year-on-year to S$41.79 million, mainly due to lower revenue from Paragon shopping mall. NPI from Paragon was down 4 per cent to S$33.08 million for the quarter.

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Meanwhile, overall property operating expenses were higher by 6.5 per cent on the back of higher marketing expenses, while the real estate investment trust's (Reit) gross revenue edged up 0.6 per cent to S$53.81 million, owing to higher rental income from The Clementi Mall and contributions from The Rail Mall. Income available for distribution declined 1.9 per cent to S$35.86 million.

Paragon recorded a positive rental reversion of 10.1 per cent for new and renewed leases for Q1 2019, which translated to 8.4 per cent of its net lettable area. The overall portfolio saw a positive rental reversion of 9.7 per cent while SPH Reit's properties maintained an occupancy of 99.2 per cent as at Q1 2019.

Susan Leng, chief executive officer of SPH Reit Management, said that the full contribution from Figtree Grove Shopping Centre is expected in the second half of the year. In its first foray overseas, SPH Reit acquired an 85 per cent stake in Figtree Grove Shopping Centre for around A$175.1 million in December last year. Its joint venture partner, Moelis Australia, holds the remaining stake.

Ms Leng added: "The property is an established sub-regional shopping centre in Wollongong, New South Wales, Australia and is a strategic fit with SPH Reit's portfolio of quality assets. This acquisition provides SPH Reit with the opportunity to further create value and continue to deliver long term returns for unitholders."

New loans were taken up in December to finance the acquisition, lifting the Reit's gearing ratio post-acquisition to about 30 per cent, from 26.3 per cent as at Nov 30.

It registered an average cost of debt of 2.8 per cent per annum for Q1 2019, while the weighted average term to maturity stood at two years as at Nov 30.

Units of SPH Reit closed unchanged at S$1.01 on Friday.