SPH Reit will independently assess The Seletar Mall's sustainability and contribution to yield before looking to add the mall to its portfolio, said Dr Leong Horn Kee, chairman of the Reit manager.
He was responding yesterday to unit holders at the Reit's annual general meeting who renewed calls for the Reit to acquire the suburban mall from sponsor Singapore Press Holdings (SPH).
SPH Reit has the option to acquire The Seletar Mall from SPH under a right of first refusal.
"The question is when SPH is prepared to sell (the asset) to us, and at what price," said Dr Leong. "We will also need to do our own independent assessment of whether it is yield-accretive and worthwhile for us to acquire."
The Reit distributed 5.5 cents to unit holders in the 2016 financial year, up 0.5 per cent from last year. Net property income was $160.9 million, up 3.4 per cent from a year ago.
This was a "steady" showing amid the slowing economy and tough retail climate, said Dr Leong at yesterday's meeting, which was attended by about 150 unit holders.
Consumer sentiment is muted and retailers are also facing structural challenges, such as labour constraints and competition from e-commerce.
Still, Dr Leong said retail business models are evolving in response to these challenges - for instance, some retailers allow shoppers to buy online and collect in-store.
Responding to a unit holder's question on whether SPH Reit views e-commerce as a threat, Ms Susan Leng, the Reit manager's chief executive, said it can be seen as either a "disruptor" or "escalator".
"Retailers are going through a transition period and are trying to find models that suit them best," she said, adding that the "new normal" combines online and offline sales.
Unit holders also asked about the tenant mix and rentals at Paragon and The Clementi Mall - in particular, whether Metro's significant presence in Paragon gels with the mall's high-end image, and whether this maximises rental income.
In response, Ms Leng said leasing a large area to a single tenant comes with benefits and the "absolute lump sum we get is higher than if the space were subdivided".
She added that retailers each contribute to the mall's positioning in their own way and "to stand the test of competition, just getting the highest rent is not sustainable".
Tenants need to bring in sales and shoppers, and Metro is "constantly upgrading and evolving".
All the major cosmetic brands have a presence in the department store, and it has also brought in some luxury bag brands which do not have a presence in Paragon and hence complement the mall's offerings.
"It's about creating an entire lifestyle experience for affluent shoppers," said Ms Leng.