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SPH Reit Q4 DPU up 0.7%

Reit manager CEO Susan Leng says plans underway to strengthen positioning of newly acquired The Rail Mall

Singapore

SPH Reit declared a distribution per unit (DPU) of 1.43 Singapore cents for the fourth quarter ended Aug 31, 2018, 0.7 per cent higher from 1.42 cents a year ago.

The Reit's management highlighted plans for its recently acquired The Rail Mall along Upper Bukit Timah Road, which was purchased in June.

SPH Reit Management chief executive officer Susan Leng noted the mall benefits from good catchment and there are plans in the works to initiate community programmes. "We want to draw more of this immediate catchment...not just for the shopping but activities," said Ms Leng, adding that there is a park next to the mall as well as some vacant land which will be used to host activities from November.

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She also sees opportunities for strengthening the mall's positioning, especially as some leases come up for renewal in 2019 and 2020.

For the quarter under review, net property income fell 1.9 per cent year-on-year to S$40.98 million as property operating expense rose at a faster pace than gross revenue. Gross revenue edged up 0.2 per cent to S$52.96 million on the back of higher rental income from The Clementi Mall and two months' contribution from The Rail Mall. SPH Reit will pay out the DPU to unitholders on Nov 21.

For the full year ended Aug 31, DPU clocked 5.54 cents, up 0.2 per cent from 5.53 cents in FY17. Net property income fell 1.2 per cent to S$166 million owing to lower revenue at Paragon mall, but this was partly offset by higher contributions from The Clementi Mall and The Rail Mall. Meanwhile, gross revenue dipped 0.4 per cent to S$211.8 million.

Paragon registered a negative rental reversion of 3.7 per cent for new and renewed leases for FY18 as earlier leases were committed during the retail sales downturn. The overall decline moderated during the financial year, the Reit explained, in tandem with the recovery in retail sales from the second half of 2017. Still, thanks to more tourists and improving consumer sentiment, Paragon recorded a 2.7 per cent increase in visitor traffic to 18.8 million, while tenant sales grew by 2.7 per cent to S$693 million.

Meanwhile, The Clementi Mall chalked up a positive rental reversion of 3 per cent in FY18 with a renewal of 5.9 per cent of the mall's net lettable area. Visitor traffic at The Clementi Mall was on a par with FY17 at 29.9 million, but tenant sales grew by 2.2 per cent to S$230 million.

The Reit highlighted that it is working together with its tenants to create unique experiences for shoppers to fend off the challenges from e-commerce.

At Paragon, a three-year asset enhancement initative has been completed and has created about 7,000 square feet of additional lettable area. This will contribute S$0.9 million in revenue annually.

SPH Reit's overall portfolio was close to full occupancy at 99.4 per cent, while its portfolio recorded a valuation of S$3.368 billion as at Aug 31, versus S$3.278 billion in FY17. Its gearing remained low at 26.3 per cent.

Net asset value per unit was maintained at S$0.95 as at Aug 31.

Units in SPH Reit closed at 98.5 Singapore cents, down 1.5 Singapore cents, on Thursday.