SPH REIT

SPH REIT: SPH REIT recorded 2QFY14 of $34.9m and DPU of 1.39¢, 5.2% and 4.5% above IPO forecast. Gross revenue of $51m (+1.4%) and NPI of $38.8m (+4.6%) were driven by positive rental uplift across both malls and lower utilities expenses. Since listing (24 Jul 13), overall portfolio saw rental uplift of 10.8%, driven mainly by Paragon (+13.6%) and Clementi Mall (+5.1%). Shopper traffic grew 2.7% y/y at Clementi Mall and held steady at Paragon, while both malls remains fully occupied with weighted average lease expiry of 2.3 years by net lettable area. Gearing remains at 26.9% with overall cost of debt at 2.33% and 4.5 year average term to maturity. CS estimates that SPH REIT has a debt headroom of $400m assuming a 35% leverage ratio. The Trust has a right of first refusal on Seletar Mall, slated for completion in Dec this year. At $0.99, SPH REIT trades at annualized 2QFY14 yield of 5.6% and 1.1x P/B, compared to Singapore retail mall peers average of 5.9% and 1.0x P/B. Latest broker recommendations: CS maintains Neutral with $1.05 TP OCBC maintains Hold with $0.99 TP