Paragon REIT SK6U , formerly SPH REIT, has reported a distribution per unit (DPU) of 1.72 cents for the 4MFY2022 ended Dec 31, 2022, unchanged y-o-y compared to the same period the year before. The DPU for the 4MFY2022 is expected to be paid on March 28.
The REIT changed its name in December 2022. Just five months before, the REIT changed its financial year-end to Dec 31, 2022, from Aug 31, 2022 previously. The change resulted in its current reporting period spanning 16 months from Sept 1, 2021, to Dec 31, 2022.
For the 16MFY2022, the REIT’s DPU stood at 7.24 cents, 34.1% higher than the DPU of 5.40 cents in the 12MFY2021. The 16MFY2022 DPU also represents an annualised yield of 6.03% based on the closing price of 90 cents per unit on Dec 30, 2022. The distributable income for the FY2021 includes $14.5 million, which was carried over from FY2022 under the Covid-19 relief measures. The $14.5 million is equivalent to around 0.52 cents per unit.
For the 4MFY2022, gross revenue increased by 2.1% y-o-y to $94.6 million mainly due to atrium income as atrium activities returned after the pandemic stabilised.
Net property income (NPI) increased by 2.6% y-o-y to $70.2 million.
Distributable income to unitholders fell by 3.4% y-o-y to $49.5 million.
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Distribution to unitholders, however, increased by 0.3% y-o-y to $48.3 million.
The total return for the 4MFY2022 fell by 42.3% y-o-y to $47.2 million mainly due to the fiar value gain on investment properties of $31.5 million in the 4MFY2021. There was also a fair value loss on the REIT’s Australian investment properties of $5.1 million in the 4MFY2022 almost that had no impact on the income available for distribution.
Revenue for the 16MFY2022 stood at $376.4 million, up by 35.8% over the 12MFY2021 due to the stronger performance of the REIT’s properties in Singapore.
NPI rose by 38.1% y-o-y to $279.9 million.
Distributable income to unitholders increased by 33.2% y-o-y to $210.2 million.
Distribution to unitholders rose by 35.3% y-o-y to $203.2 million.
During the 16MFY2022, the REIT reported a total return of $243.5 million, which includes the fair value gain on investment properties of $33.8 million. Investment properties recorded a fair value gain of S$34.9 million for Singapore and was offset by a $1.1 million loss mainly due to capital expenditure written down for investment properties in Australia. Again, the fair value gain/loss has no impact on the income available for distribution.
As at Dec 31, 2022, the REIT’s portfolio occupancy stood at 98.5%. It had a weighted average lease expiry (WALE) of 5.2 years by a net lettable area (NLA) of 2.7 million sq ft and 2.8 years by gross rental income (GRI).
During the period, the REIT’s portfolio negative rental reversion slowed down to -4.1%, compared to the -8.4% in the 12MFY2021.
For the period ended Dec 31, 2022, the REIT’s fixed debt percentage stood at 84% with an average cost of debt of 2.05%. As at Dec 31, 2022, its gearing stood at 29.8% with debt headroom flexibility.
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Tenant sales stood at near pre-Covid-19 levels with the easing of pandemic restrictions. In Singapore, tenant sales for the 16MFY2022 increased 24% over FY2021. For the 12MFY2022, tenant sales increased by 35% y-o-y over the 12MFY2021.
In Australia, tenant sales increased by 7% over the FY2021 from the 16MFY2022 and 9% y-o-y over a 12-month like-for-like basis.
As at Dec 31, 2022, cash and cash equivalents stood at $125.6 million.
In its outlook statement, the REIT manager cautioned that high inflation, continued geopolitical tensions, and economic headwinds could potentially weigh on consumer behaviour despite the REIT being a key beneficiary of the domestic retail recovery and the return of international visitors.
“Our assets displayed strong operational recovery, which is proof of the quality of our portfolio, and the effectiveness of our strategies. This is evident from the higher retail sales across our portfolio,” says Dr Leong Horn Kee, chairman of Paragon REIT. “Paragon REIT remains well-positioned to capture the rebound in retail sales, and we will strive to maintain our resilience against potential headwinds.”
“As we return to normalcy, our operating metrics in terms of tenant sales and footfall continue to improve. Over the festive season, we saw encouraging tenant sales at our assets. The stable asset valuation reflects our strategic positioning, as well as the strong demand for our assets. We will continue to proactively manage our assets and work closely with our stakeholders to ensure that we remain at the forefront of evolving retail and consumer trends,” says Susan Leng, CEO of Paragon REIT.
Units in Paragon REIT closed 0.5 cent higher or 0.52% up at 97 cents on Feb 13.
