SPH REIT reports fiscal 1H22 net property income nearly flat amid higher expenses

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 Friday its fiscal first half net property income edged up 0.4 percent on-year to S$105.27 million as a gradual market recovery was offset by a spike in electricity rates. 

Oil prices have risen sharply globally, pushing up prices of other types of energy as well, amid increased demand as economies ease Covid-related restrictions and as Russia’s invasion of Ukraine disrupted oil and gas markets.

Gross revenue for the six-month period ended 28 February inched up 1.2 percent on-year to S$141.64 million, the REIT said in a filing to SGX.

DPU rises

The distribution per unit (DPU) for the fiscal first half came in at 2.68 Singapore cents, up 9.8 percent from 2.44 Singapore cents in the year-ago period, the filing said.

The portfolio occupancy rate was at 98.4 percent at end-February, as the manager used a proactive leasing strategy of renewing or signing new leases in advance to mitigate vacancies, the REIT said.

Negative rental reversions

Rental reversions in Singapore were negative 6.4 percent, with the Paragon mall, located in Singapore’s tony Orchard Road shopping belt, which has been hard-hit as border closures kept out tourists, posting a negative 7.3 percent reversion rate, the filing said.

However, Paragon’s tenant sales recovered after the relaxation of dine-in restrictions to five from two people in late November, until a spike in Covid cases in February, SPH REIT said, noting the property’s fiscal first half tenant sales were up around 1 percent on-year. 

Tenant sales

Overall tenant sales for the Singapore assets increased 2 percent on-year in the fiscal first half, helped by the relaxation of dine-in restrictions to five from two people in late November, although a spike in Covid-19 cases in February disrupted the recovery in that month, the REIT said. 

At the Westfield Marion property in South Australia, fiscal first half tenant sales rose 1 percent on-year, after a hit in January amid a spike in Covid cases, the filing said. 

At the Figtree Grove property in New South Wales, Australia, tenant sales in the fiscal first half dropped 10 percent on-year, hurt by by a 16-week lockdown which ended in October, and by a spike in Covid cases from end-December, SPH REIT said. 

Outlook

SPH REIT issued a somewhat upbeat outlook, but noted the Covid recovery required patience.

“As travel restrictions around the world ease with quarantine free travel for the vaccinated, we expect visitor arrivals to Singapore and Australia to recover gradually. However, a meaningful recovery to pre-Covid levels is likely to take some time,” Susan Leng, CEO of SPH REIT, said in the statement.

“The impact of geopolitical tensions on oil prices and general market sentiment are likely to weigh on the Singapore economy,” she added.

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.

Read more details of SPH REIT’s fiscal first half results

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