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10 Things to Know About SPH REIT’s First Quarter Earnings

Credit: SPH REIT Management Pte Ltd.

SPH REIT (SGX: SK6U) is a retail real estate investment trust (REIT) that has interests in Paragon and The Clementi Mall. The REIT’s sponsor is media giant, Singapore Press Holdings Limited (SGX: T39).

Last Friday, the REIT announced its financial results for the first quarter ended 30 November 2017. The reporting period was from 1 September 2017 to 30 November 2017.

Here are 10 things investors should know from the earnings announcement:

1. Quarterly gross revenue rose 1.7% year-on-year to S$53.5 million due to improvement in rental income.

2. Net property income (NPI) was S$42.2 million, a 1.9% increase as compared to last year. Both malls posted higher NPI for the quarter.

3. Income available for distribution to unitholders went up 0.5% to S$36.5 million while distribution to unitholders increased 0.6% to S$34.4 million.

4. Distribution per unit (DPU) for the latest quarter was flat at 1.34 Singapore cents.

5. The net asset value per unit stood at S$0.94 for the quarter, a fall from S$0.95 one year ago.

6. As at 30 November 2017, the retail REIT had a gearing ratio of 25.4%, unchanged from the end of August 2017.

7. The weighted average term to maturity was 1.8 years, and the average cost of debt came in at 2.84% per annum.

8. Paragon saw a rental reversion of -10.6% for new and renewed leases for the latest quarter. Meanwhile, The Clementi Mall, which had one tenancy change, recorded a 9.8% fall in rental rates. The overall portfolio rental reversion was a negative 10.6%.

9. The weighted average lease expiry by gross rental income was at two years, as at 30 November 2017.

10. Chief executive of the REIT’s manager, Susan Leng, commented on the REIT’s latest performance and its outlook:

“SPH REIT has continued to maintain its track record of 100% committed occupancy and delivered steady performance. The Singapore economic outlook has improved and retail sales have shown some signs of recovery since June 2017. If the recent growth momentum sustains, SPH REIT malls will be well-poised to benefit from it. We remain focused to seek opportunities to continually strengthen the quality and positioning of our properties and create value for unitholders.”

Currently, the REIT’s units are changing hands at S$1.08. This translates to a trailing distribution yield of 5% and a price-to-book ratio of 1.15.

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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 Sudhan P doesn’t own shares in any companies mentioned.