SPH REIT: 3QFY15 results were in line with expectations, with DPU at 1.35¢ taking 3QFY15 DPU to 4.08¢ (+1%). Gross revenue for the quarter was at $51.2m (+1.6%), led by higher rental income achieved by both Paragon and The Clementi Mall.
NPI advanced 4.3% to $39.3m, benefitting from savings in utilities, lower marketing and maintenance costs, partially offset by higher property taxes.
Portfolio occupancy was 99.8% as at 31 May ‘15, after an unexpected lease termination of an office unit in Paragon. However, Paragon is now fully committed. WALE by NLA of 2.1 years.
Aggregate leverage stood at 26%, with average debt term of 3.2 years and overall interest cost of 2.55%.
Going forward, the REIT guides that the retail environment remains challenging, with tourist arrivals dipping 5.4% during the first four months of 2015, although this is mitigated by its two high quality and well-positioned retail properties in prime locations. Paragon had remained resilient and turned in a steady performance through previous economic cycles.
At the current price, SPH REIT trades at 5.1% annualized yield and 1.1x P/B.
Latest broker ratings:
CIMB maintains Hold with TP of $1.07
Nomura maintains Neutral with TP of $1.06
OCBC maintains Hold with TP of $0.99 under review
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