SPH REIT posts fiscal 2H21 net property income climbed around 25 percent as rental assistance fell

Four of the properties in SPH REIT -- Paragon mall, Clementi Mall, The Rail Mall and Figtree Grove Shopping Centre. Image credit: SPH REITFour of the properties in SPH REIT -- Paragon mall, Clementi Mall, The Rail Mall and Figtree Grove Shopping Centre. Image credit: SPH REIT

SPH REIT reported Monday its fiscal second half net property income increased 24.6 percent on-year to S$97.77 million as gross revenue increased amid lower rental assistance and as interest rates declined.

“Comparing 2H 2021 vs 2H 2020, the COVID-19 situation has continued to stabilise and with the gradual recovery of tenant sales, rental assistance granted to eligible tenants in 2021 was lower than in 2020,” SPH REIT said in a statement filed to SGX.

Gross revenue for the six months ended 31 August grew 27 percent on-year to S$137.22 million, the REIT said.

The distribution per unit (DPU) for the six-month period came in at 2.96 Singapore cents, nearly tripling from 1.04 Singapore cents in the year-ago period, the REIT said.

At end-August, SPH REIT had a high occupancy of 98.8 percent on a proactive leasing strategy, but soft retail leading sentiment impacted renewals and new leases, causing a negative portfolio rental reversion of 8.4 percent, the REIT said.

Cautiously optimistic outlook

Susan Leng, CEO of SPH REIT, issued a cautiously optimistic outlook.

“Notwithstanding the rollout of vaccinations, both in Singapore and globally, which will lead to the relaxation for international travel restrictions, full recovery for leisure travel will still take some time. We are cautiously optimistic, and will continue to engage with our stakeholders to proactively manage the disruptions brought about by Covid-19,” she said in the statement.

“We remain committed to maximising unitholder value and our recent inclusion into the FTSE EPRA Nareit Global Developed Index has further increased our visibility to global investors and broadened our investor base,” she added.

But the REIT noted that “given the risks and uncertainties of Covid-19,” the impact on the next 12 months’ financial performance can’t be determined, noting a resurgence of cases could dampen the recovery.

Full-year results

For the full fiscal year, SPH REIT reported net property income rose 11.4 percent on-year to S$202.63 million, while gross revenue increased 14.8 percent on-year to S$277.18 million. Performance for the full year was bolstered by the full-year contribution from the Westfield Marion property in South Australia, which was acquired the previous year, SPH REIT said.

The full-year DPU grew to 5.40 Singapore cents, nearly doubling from 2.72 Singapore cents in the previous year, the filing said. The full-year DPU figure included around 0.52 Singapore cent a unit which was deferred as allowed under Covid-19 relief measures, the filing said.

Footfall for the fiscal year fell 27 percent for Singapore assets amid a decline in tourist arrivals and on work-from-home arrangements, the REIT said. But it added tenant sales have stabilised, edging up 1 percent on-year.

For the full year, finance cost fell 27.1 percent on-year to S$24 million amid a lower interest rate environment and after re-financing loans due during the year with a lower rate, the REIT said.

At the Paragon mall, footfall fell 17 percent on-year, but tenant sales were stable, while at The Clementi Mall, footfall dropped 33 percent, but tenant sales increased 5 percent on-year, SPH REIT said.

The Australian assets have seen both footfall and tenant sales recover to near pre-Covid levels in the fiscal year, the REIT said, but noted an the lockdown imposed in New South Wales, expected to be eased in October, hit footfall and sales.

SPH REIT has a portfolio of five assets across Singapore and Australia. In Singapore, the REIT owns the Paragon mall, The Clementi Mall and The Rail Mall. In Australia, the REIT owns a 50 percent interest in Westfield Marion Shopping Centre in Adelaide, South Australia, and an 85 percent stake in Figtree Grove Shopping Centre in Wollongong, New South Wales.