SPH Reit Q4 payout up 0.7% on higher rental income

Tenant sales at Paragon, one of SPH Reit's two properties, rose 2.1 per cent year on year to $675 million even as visitor traffic held steady at 18.3 million.
Tenant sales at Paragon, one of SPH Reit's two properties, rose 2.1 per cent year on year to $675 million even as visitor traffic held steady at 18.3 million.ST PHOTO: KUA CHEE SIONG

Retail properties continue their track record of full occupancy amid mounting competition

Fourth-quarter distribution per unit (DPU) at SPH Reit held steady despite a muted retail environment.

DPU for the quarter ended Aug 31 came in at 1.42 cents, inching up 0.7 per cent from 1.41 cents a year earlier, for the real estate investment trust sponsored by media group Singapore Press Holdings (SPH).

Both properties of the Reit continued their track record of full occupancy amid mounting competition, the Reit manager said yesterday.

The payout for the full year was 5.53 cents, up 0.5 per cent from a year earlier. The fourth-quarter distribution will be paid on Nov 16.

Gross revenue for the fourth quarter grew 1.3 per cent to $52.9 million, on the back of higher rental income from the Reit's two properties, Paragon and The Clementi Mall.

Gross revenue for the full year was up 1.5 per cent to $212.8 million.

Net property income for the fourth quarter was up 3.9 per cent year on year at $41.8 million, and ahead 4.5 per cent to $168.1 million for the 12 months.

  • AT A GLANCE

  • GROSS REVENUE: $52.9 million (+1.3%)

    NET PROPERTY INCOME: $41.8 million (+3.9%)

    DISTRIBUTION PER UNIT: 1.42 cents (+0.7%)

Net asset value per unit was 95 cents as at Aug 31, up marginally from 94 cents on the same date a year earlier.

Tenant sales at Paragon rose 2.1 per cent year on year to $675 million even as visitor traffic held steady at 18.3 million. The Clementi Mall recorded visitor traffic of 29.9 million, down 0.3 per cent from a year earlier, while tenant sales declined 5.8 per cent to $225 million.

 

Chief executive of the Reit manager Susan Leng said the economic outlook has improved but the retail scene remains muted.

Some segments - luxury watches and jewellery, for example - are beginning to show signs of recovery, while the property market is also picking up, she noted.

Despite these signs, however, consumer sentiment has yet to pick up decisively even as structural changes like the rise of e-commerce have forced retailers to relook their business models.

"There are some positive indicators but (the recovery) will take time to pan out," said Ms Leng.

"We will partner our tenants towards mutual success and to ride through both structural and cyclical retail trends."

She added that even with the rise of e-commerce, "bricks-and-mortar (outlets) are not going away". Instead, business models are evolving even as firms embrace omni-channel retail, making use of technology and doing "whatever it takes to sell".

"E-commerce is something we must embrace and be ahead of the game in, but in a meaningful way," she noted, adding that malls can be facilitators of e-commerce by, for instance, setting up centralised delivery systems for tenants to take advantage of economies of scale.

The Reit manager also said it will continue to invest in upgrading its malls. Paragon started the second phase of its Air Handling Unit decanting project in this financial year.

The project involves creating additional lettable area at higher-yielding retail space and is expected to be completed by the middle of next year.

Said Ms Leng: "Barring any unforeseen circumstances, SPH Reit's two high-quality and well-positioned retail properties in prime locations are expected to remain steady and resilient."

SPH Reit closed unchanged at $1.005 yesterday. The results were released after markets closed.

A version of this article appeared in the print edition of The Straits Times on October 10, 2017, with the headline 'SPH Reit Q4 payout up 0.7% on higher rental income'. Print Edition | Subscribe