SPH Reit posts Q2 DPU of 1.44 cents; H1 distributable income up 8.4%

AS retail sentiments improve, SPH Real Estate Investment Trust (Reit) on Friday (Apr 1) posted a distribution per unit (DPU) of 1.44 Singapore cent for the fiscal second quarter ended Feb 28, 2022, bringing total distributions for the first half of the year to 2.68 cents.

The Q2 distribution was 16.1 per cent higher than the previous quarter's, and brought the financial year's H1 distribution to a level that is 9.8 per cent higher than the year ago period.

This came on the back of a 8.4 per cent growth in distributable income to unitholders in the first half to S$82.6 million, up from S$76.2 million in the year ago period.

Gross revenue for the 6 months grew 1.2 per cent on the year to S$141.6 million, while net property income (NPI) grew 0.4 per cent to S$105.3 million.

In a bourse filing on Friday, the Reit's manager said the financial results were supported by gradual market recovery, although the NPI growth was partially dampened by an increase in property operating expenses, mainly from the spike in electricity rates.

The Reit's portfolio of properties in Singapore comprises Paragon, The Clementi Mall and The Rail Mall; in Australia, it owns a 50 per cent freehold interest in Westfield Marion Shopping Centre, the largest regional shopping centre in Adelaide in South Australia, and an 85 per cent interest in Figtree Grove Shopping Centre, a freehold sub-regional shopping centre in Wollongong, New South Wales.

SPH Reit chief executive officer Susan Leng said the group is sanguine about the pace of a full recovery to pre-Covid levels in the near term, although the economy is looking better.

Noting her expectation that visitor arrivals to Singapore and Australia would recover gradually as travel restrictions ease, she said a "meaningful recovery" to pre-Covid levels is likely to take some time, given that the impact of geopolitical tensions on oil prices and general market sentiment are likely to weigh on the Singapore economy.

Nevertheless, she said: "We are committed to maximising unitholder value and maintaining operational efficiency. Our proactive capital management strategy will put us in good stead for growth opportunities."

SPH Reit said it maintained a high portfolio occupancy of 98.4 per cent as at Feb 28 as a result of the manager's proactive leasing strategy to renew or sign new leases in advance.

Meanwhile, it reported that the portfolio weighted average lease expiry remained healthy at 5.5 years by net lettable area and 2.8 years by gross rental income.

It added that tenant sales at the Singapore assets have recovered steadily and exceeded FY2021 levels for both December 2021 and January 2022 following the relaxing of dine-in restrictions from two to five persons in late November 2021.

However, a rise in Covid-19 cases in February 2022 - to over 25,000 cases a day at its peak - disrupted this recovery, it noted, with tenant sales for the month ending lower on the year.

Notwithstanding the resurgence of Covid-19 cases, overall tenant sales for the Singapore assets increased 2 per cent year-on-year for the first half of FY2022, it added.

The Reit's cost of debt was at 1.66 per cent for the first half, with a weighted average term to maturity of 2.6 years. It described its debt maturity profile as well-staggered, without major concentration of debts maturing in any single year.

Its 30.1 per cent gearing as at Feb 28 provides debt headroom flexibility, it added.

SPH Reit said it will pay out its distribution for the second quarter to unitholders on May 20.

Trading of SPH Reit's units were halted on Thursday evening, pending another announcement. Prior to that, the units traded S$0.005 or 0.5 per cent lower at S$0.97.