SPH REIT: Singapore fiscal 1Q occupancy improved on leasing strategy

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‘s occupancy for its Singapore properties improved to 99.8 percent in the fiscal first quarter ended 30 November from 98.9 percent in the fiscal fourth quarter, the REIT said Friday in a filing to SGX.

The REIT attributed the improvement to its strategy of maintaining high occupancy to sustain cash flow generation.

The quarterly update didn’t include the REIT’s rental reversion rates, but in its fiscal full year report, released in October 2021, rental reversion for the year was negative 8.4 percent.

In Singapore, tenant sales were resilient in the fiscal first quarter despite a six-week-long Covid-related restriction limiting dining-in to a maximum of two people, down from five people in the year-ago quarter, the REIT said. Sales for the quarter at the Paragon and The Clementi mall were at 97 percent of the year-ago period’ level, the filing said.

For the Paragon, located in Singapore’s tony Orchard Road shopping belt, occupancy was at 99.7 percent at end-November, up from 99.1 percent in the year-ago period. Tenant sales at the mall dropped 7 percent on-year in the quarter, impacted by the dine-in restrictions, the REIT said.

The Clementi Mall posted a 5 percent on-year rise in tenant sales for the quarter, recovering to nearly pre-Covid levels. The REIT attributed the increase to a stronger tenant mix, including new food and beverage concepts and the click-and-collect sports retailer Decathalon outlet.

Australia

In Australia, tenant sales at Westfield Marion Shopping Centre showed “dominance” in Adelaide, South Australia, with tenant sales for the quarter up 6 percent on-year, the filing said. Occupancy was at 98.2 percent as of end-November, the filing said.

The Figtree Grove Shopping Centre, located in Wollongong, New South Wales, faced a lockdown for around 3.5 months through 10 October 2021, but tenant sales recovered to nearly pre-Covid levels in November, after the lockdown, the filing said. Occupancy was at 99.1 percent, the REIT said.

The total portfolio occupancy was at 98.8 percent as of end-November, SPH REIT said.

Outlook

The REIT said it was “cautiously optimistic” despite the recent spread of the Omicron variant of Covid, noting the variant appears more transmissible, but less severe compared with the Delta variant.

For the distribution payout for the quarter, the REIT said it would appoint a financial adviser to report on distributions that may be made as SPH REIT is in an “offer period” after its sponsor SPH received two takeover bids.

The books closure date and distribution payment date for September-to-November period will be announced after the financial adviser and auditor have completed their reports, the filing said.

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.