Downturn at Paragon weighs down on SPH REIT’s income for 3Q 2018

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SPH REIT has reported a distribution per unit (DPU) of 1.37 Singapore cents for its 3Q 2018, unchanged from what was reported in the corresponding period of the previous financial year.

The REIT’s net property income for the period came in at SGD40.6 million (USD30 million), a decrease of 3.8% year-on-year from 3Q 2017, mainly due to lower revenue at its Paragon property.

Correspondingly, gross revenue slid by 2.9% year-on-year to SGD51.7 million while income available for distribution to unit holders fell by 1.7% to SGD35.1 million.

SPH REIT has cited operational performance, including a negative rental reversion of -6.2% for leases renewed at Paragon for the year-to-date, as a factor that has contributed to the results.

These leases were committed about a year ago during the retail sales downturn, but the decline has since moderated in 3Q compared to 1H 2018, said the REIT.

“As part of our long-standing philosophy of partnering tenants for mutual sustainability, the rental negotiation with tenants took into consideration occupancy cost and we continue to work closely with them as they ride through cyclical and structural changes”, the REIT added.

Although The Clementi Mall recorded a positive rental reversion of 5.3% in 3Q 2018, the REIT’s overall portfolio registered a rental reversion of -6.0% for the period.

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