SPH REIT reported its 4QFY15 results which came in within our expectations. DPU was flat YoY at 1.39 S cents on the back of a mild 0.6% decline in gross revenue to S$50.8m, although the former was boosted by a distribution from income retained earlier in the financial year. Both Paragon and The Clementi Mall delivered positive gross revenue and NPI growth in FY15. Overall portfolio committed occupancy and rental reversion were solid at 100% and 8.6%, respectively. Rental reversions at Paragon stayed positive at 9.1% for FY15, but continued to moderate. The Clementi Mall’s rental reversion came in at -5.6% for the full-year, but was a big improvement from the -11.4% registered for 9MFY15, implying a robust performance in 4QFY15. We fine-tune our assumptions but maintain our HOLD rating and S$0.99 fair value estimate on SPH REIT as we see limited potential total returns ahead.
4QFY15 results met our expectations
SPH REIT reported its 4QFY15 results which came in within our expectations. DPU was flat YoY at 1.39 S cents on the back of a mild 0.6% decline in gross revenue to S$50.8m, although the former was boosted by a distribution of S$1.6m from its taxable income available for distribution which was retained in 9MFY15. For FY15, SPH REIT’s revenue came in at S$205.1m, which was 1.4% higher than FY14 (comparative period from 1 Sep 2013 to 31 Aug 2014); while DPU of 5.47 S cents represented an increase of 0.7%. These constituted 99.6% and 101.6% of our full-year projections, respectively.
Portfolio rental reversion of 8.6%; 100% committed occupancy
Both Paragon and The Clementi Mall delivered positive gross revenue and NPI growth in FY15. Overall portfolio committed occupancy and rental reversion were solid at 100% and 8.6%, respectively. Rental reversions at Paragon stayed positive at 9.1% for FY15, but continued to moderate (9MFY15: 9.8%, 1HFY15: 11.6%, 1QFY15: 12.5%), given the challenging retail scene. The Clementi Mall’s rental reversion came in at -5.6% for the full-year, but was a big improvement from the -11.4% registered for 9MFY15, implying a robust performance in 4QFY15. In terms of shopper traffic, Paragon and The Clementi Mall achieved positive growth of 2.0% and 4.7% to 18.8m and 30.8m, respectively, in FY15. Tenant sales for The Clementi Mall rose 3.6% to S$242m, but were down 3.2% to S$657m for Paragon, primarily due to fitting-out works as part of its tenancy revitalisation program.
Keeping our HOLD rating
SPH REIT’s gearing remained healthy at 25.7%, which we believe is the lowest within the S-REITs universe. 84.7% of its S$850m debt facility is on a fixed rate basis, thus mitigating its risk to interest rate fluctuations. We fine-tune our assumptions but maintain our HOLD rating and S$0.99 fair value estimate on SPH REIT as we see limited potential total returns ahead. The stock is trading at FY16F P/B ratio of 1.02x and distribution yield of 5.7%.
SPH REIT reported its 4QFY15 results which came in within our expectations. DPU was flat YoY at 1.39 S cents on the back of a mild 0.6% decline in gross revenue to S$50.8m, although the former was boosted by a distribution of S$1.6m from its taxable income available for distribution which was retained in 9MFY15. For FY15, SPH REIT’s revenue came in at S$205.1m, which was 1.4% higher than FY14 (comparative period from 1 Sep 2013 to 31 Aug 2014); while DPU of 5.47 S cents represented an increase of 0.7%. These constituted 99.6% and 101.6% of our full-year projections, respectively.
Portfolio rental reversion of 8.6%; 100% committed occupancy
Both Paragon and The Clementi Mall delivered positive gross revenue and NPI growth in FY15. Overall portfolio committed occupancy and rental reversion were solid at 100% and 8.6%, respectively. Rental reversions at Paragon stayed positive at 9.1% for FY15, but continued to moderate (9MFY15: 9.8%, 1HFY15: 11.6%, 1QFY15: 12.5%), given the challenging retail scene. The Clementi Mall’s rental reversion came in at -5.6% for the full-year, but was a big improvement from the -11.4% registered for 9MFY15, implying a robust performance in 4QFY15. In terms of shopper traffic, Paragon and The Clementi Mall achieved positive growth of 2.0% and 4.7% to 18.8m and 30.8m, respectively, in FY15. Tenant sales for The Clementi Mall rose 3.6% to S$242m, but were down 3.2% to S$657m for Paragon, primarily due to fitting-out works as part of its tenancy revitalisation program.
Keeping our HOLD rating
SPH REIT’s gearing remained healthy at 25.7%, which we believe is the lowest within the S-REITs universe. 84.7% of its S$850m debt facility is on a fixed rate basis, thus mitigating its risk to interest rate fluctuations. We fine-tune our assumptions but maintain our HOLD rating and S$0.99 fair value estimate on SPH REIT as we see limited potential total returns ahead. The stock is trading at FY16F P/B ratio of 1.02x and distribution yield of 5.7%.
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