SPH REIT (SGX: SK6U) is one of the cool companies in Singapore which shares webcasts of their quarterly earnings presentations (the link for SPH REIT is here). The real estate investment trust (REIT) is an owner of two retail malls in Singapore, namely Paragon and Clementi Mall. Its sponsor, manager, and majority owner is newspaper publisher Singapore Press Holdings Limited (SGX: T39). You can read more about SPH REIT in here and here. What’s the story? Below are four useful things I learned about SPH REIT from listening to its fiscal second-quarter earnings webcast: As mentioned in my earlier article, SPH REIT had reported a gearing ratio of…
The real estate investment trust (REIT) is an owner of two retail malls in Singapore, namely Paragon and Clementi Mall. Its sponsor, manager, and majority owner is newspaper publisher Singapore Press Holdings Limited (SGX: T39).
What’s the story?
Below are four useful things I learned about SPH REIT from listening to its fiscal second-quarter earnings webcast:
- As mentioned in my earlier article, SPH REIT had reported a gearing ratio of 26% for its latest quarter. SPH REIT’s low gearing ratio compares favorably to other retail REITS like CapitaMall Trust (SGX: 38U) and Starhill Global Real Estate Investment Trust (SGX: P40U) which sport gearing ratios of 33.8% and 28.7% respectively over the same period. SPH REIT’s low gearing ratio gives it headroom to take on more debt to expand its property portfolio in the future.
- Paragon, being a mature mall, has a well-staggered tenant lease expiry profile with expiries in each financial year making up no more than 35% of leases (by gross rental income). Clementi Mall on the other hand, has a little more than 85% of its tenant leases expiring in the financial year ending 31 September 2017 (FY 2017). On this, Susan Leng, Chief Executive Officer of SPH REIT’s manager, explained that Clementi Mall opened only in 2011 and thus had just completed its first tenant lease renewal cycle in FY2014. Leng added that it will take a few more cycles for the tenant lease profile to spread out for Clementi Mall. As Foolish investors, we may want to observe the mall’s tenant renewal rate for the years leading up to FY 2017 to get a sense of how attractive the mall is to retailers.
- SPH REIT has the first right of refusal to the Seletar Mall which just opened in 28 November 2014. The mall, which is the latest retail development by Singapore Press Holdings, opened with a 99.6% committed occupancy rate.
- SPH REIT has three asset enhancement initiatives (AEI) planned. The first one involves freeing up 5,000 square foot of prime space at Paragon and is expected to generate an additional $1 million in rental income when it is completed. Details on the other two AEIs will be shared in due course.
To buy and hold a company’s shares for the long term also means keeping up with developments in the firm.
The access to management teams via webcasts gives the Foolish investor a fair chance to judge on whether they would like to be invested alongside those teams. It also helps us put together a more complete thesis around a company and keep up with developments in its industry.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.