SPH Reit maintains second-quarter payout at 1.4 cents a unit

Net property income for the quarter slipped 1.1 per cent from a year ago to $42.3 million, due mainly to lower revenue from Paragon, a retail mall located in Orchard.
Net property income for the quarter slipped 1.1 per cent from a year ago to $42.3 million, due mainly to lower revenue from Paragon, a retail mall located in Orchard.PHOTO: ST FILE

SINGAPORE - SPH Reit has declared a distribution per unit (DPU) of 1.4 cents for the second quarter ended Feb 28, unchanged from a year ago.

Its net property income for the quarter slipped 1.1 per cent from a year ago to $42.3 million, due mainly to lower revenue from Paragon, a retail mall located in Orchard.

Gross revenue dipped 0.8 per cent year on year to $53.59 million during the period.

Negative rental reversions - which means lower average rents for renewed and new lease terms compared to that of preceding lease terms - were registered in the two shopping malls owned by the Reit.

For Paragon, it recorded a negative rental reversion of 7.1 per cent for new and renewed leases in the first half of fiscal 2018, mainly due to negotiations during the retail sales downturn since 2014.

Over at Clementi Mall, there were only three changes in tenancies that represented 1.4 per cent of the mall's net lettable area, which led to a 2.5 per cent negative rental reversion.

The overall portfolio rental reversion, computed based on the weighted average of all expiring leases, stood at a negative 7.1 per cent.

But the Reit manager said tenant sales in the malls have grown, in tandem with the recent recovery in retail sales since June 2017.

 
 
 

Both properties also continued their track record of full occupancy.

"In keeping with our philosophy of treating tenants as business partners, we will work closely with them to ride through both cyclical and structural challenges in the retail environment," said SPH Reit Management CEO Susan Leng.

"The tourist arrivals and spend for 2017 ended on a positive note and we believe Paragon would stand to benefit with this trend," she added.

"The forecasted GDP growth of 1.5 to 3.5 per cent bodes well for Singaporeans and The Clementi Mall is well poised in the suburban to continue to serve its immediate catchment."

The second-quarter DPU will be paid out on May 16.