SPH REIT's property, The Clementi Mall.SPH REIT's property, The Clementi Mall.

Singapore-listed retail real estate investment trust SPH REIT (SGX:SK6U) has announced a distribution per unit (DPU) of 1.39 Singapore cents for its 4Q FY14 , beating its IPO forecast of 1.31 Singapore cents by 6.1%.

The DPU comes on the back of a better-than-expected gross revenue and net property income (NPI) numbers for the quarter which reported in at SGD51 million and SGD38 million respectively. These beat IPO forecasts for the quarter by 1.4% and 3.7% correspondingly.

Management of SPH REIT has attributed the quarter’s results to strong rental reversions at its properties, Paragon and The Clementi Mall, which exceeded forecast by 3.1% and 0.8% respectively. Both properties also saw rental reversions of 10.5% and 5.5% respectively for the year-to-date and maintained full comitted occupancy for the year.

As at 31 August 2014, SPH REIT’s portfolio was valued at SGD3.16 billion by DTZ Debenham Tie Leung (SEA). This represented an increase of 3.4% from the IPO valuation of SGD3.05 billion. Consequently this has increased the REIT's net asset value per unit from SGD0.89 to SGD0.93 while reducing gearing from 27.3% to 26.0%.

In an official statement accompanying the results, Susan Leng, CEO for the manager of SPH REIT said that her team is pleased with the total return of 25.0% for the security's maiden year from 24 July 2013 to 31 August 2014. Leng has however cautioned that lingering uncertainties may manifest in the quarters ahead.

“On the outlook for FY2015, the near-term economic growth for Singapore is expected to remain modest, amidst uncertainties in the global environment and constraint of continuing manpower crunch on some domestic-oriented, labour-intensive sectors”, she said.

“Barring any unforeseen circumstances, SPH REIT’s two high quality and well-positioned retail properties in prime locations, are expected to remain resilient and turn in a steady performance”, she added.

The 4Q FY14 distribution will be paid to SPH REIT unitholders on 14 November 2014. Units of SPH REIT are currently listed on the Singapore Exchange at SGD1.06.

SPH REIT's property, The Clementi Mall, saw rental reversion of 5.5% for the year-to-date.
SPH REIT's property, The Clementi Mall, saw rental reversion of 5.5% for the year-to-date.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.