Perennial Real Estate’s 2Q19 net profit dropped 75 percent

Perennial Real Estate Building in Singapore’s Chinatown area; taken September 2018.Perennial Real Estate Building in Singapore’s Chinatown area; taken September 2018.

Perennial Real Estate reported Wednesday its second quarter net profit dropped 74.9 percent on-year to S$2.17 million on higher finance costs.

Revenue for the quarter ended 30 June rose 52.4 percent on-year to S$27.63 million, the real estate and healthcare company said in a filing to SGX. That was mainly on the full-quarter contribution from the Capitol Singapore and Perennial International Health and Medical Hub (PIHMH) projects, and on higher fee income from the management businesses, the filing said.

“With Capitol Singapore and PIHMH securing over 90 percent committed occupancy to-date, their contributions to the revenue line are expected to grow as more tenants commence operations over time,” Perennial said.

Separately, CHIJMES and AXA Tower had committed occupancy levels of 98.9 percent and 96 percent, respectively, the filing said.

The share of results of associates and joint ventures, net of tax, was a profit of S$33.76 million, surging from S$5.0 million in the year-ago period, mainly on the divestment of Chinatown Point during the quarter, and as the 111 Somerset project and healthcare associates and joint ventures reported improved results, Perennial said.

Cost of sales surged 71.3 percent on-year to S$16.24 million on the inclusion of the Capitol Singapore and PIHMH operational costs, Perennial said.

Other income tumbled 98.8 percent on-year to S$476,000 due to a year-ago revaluation gain from PIHMH, the filing said.

Other operating expenses jumped 218 percent on-year to S$1.14 million due to an increase in the unrealized exchange gain, Perennial said.

Finance costs climbed 54.1 percent on-year to S$31.85 million on a higher interest rate and increased borrowing from additional loans to fund investments, the filing said. The interest expenses associated with PIHMH were also expensed as the project was completed, the filing said.

For the first half, Perennial reported a net loss of S$24.8 million, swinging from a year-ago net profit of S$13.8 million, on revenue of S$52.5 million, up 58.7 percent.

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