Perennial Real Estate Holdings hit by $26.93m loss in Q1

The loss came as a result of higher net finance costs and the absence of a one-off gain.

Perennial Real Estate Holdings (PREH) began 2019 on a dismal note after recording a $26.93m profit loss in Q1 from the $5.14 gain recorded in 2018, an announcement revealed. However, revenue for the quarter climbed 66.3% YoY from $14.95m to $24.86m.

The weak profit performance was blamed on the absence of a one-off gain and higher net finance costs, which increased with the consolidation of Capitol’s debt and new loans to fund investments and higher interest rates. Additionally, interest expenses in respect of Perennial International Health and Medical Hub (PIHMH) previously capitalised were expensed off on completion.

Also read: Perennial Real Estate Holdings' profits slid 22.2% to $78.06m in 2018

Meanwhile, the main revenue contributors were said to be CHIJMES and Capitol in Singapore, as well as Perennial Jihua Mall, Foshan, Perennial Qingyang Mall and PIHMH, Chengdu in China. 

Singapore assets contributed revenue of approximately $9.2m, representing 37% of the group’s revenue, whilst the operational assets in China contributed 43.9% or $10.9m in revenue. The remaining 19.1% of the group’s revenue came from the fee-based management businesses.

During the quarter at 111 Somerset, with the improving office market sentiment, the strata-sale of the office units in Somerset Tower gained traction with over 10 units sold between $2,586 and $2,890 psf to-date. The total year-to-date gross strata sales amounted to $28.3m. In addition, the new two-storey retail podium on Levels 1 and 2 of the development have commenced operations progressively since end-March 2019.

Separately, Capitol Singapore registered a to-date total committed occupancy of 84% and expects to achieve over 90% by Q3 2019, PREH noted.

In line with the group’s capital recycling strategy, PREH divested its 50.64% effective interests in entities that own the retail mall and four strata office units in Chinatown Point based on an agreed property price of $520m, which translates to $2,450 per sqft on total net lettable area of Chinatown Point Mall.

Based on a total consideration of $225m, PREH’s proportionate stake of the net proceeds to be received is expected to be approximately $125.3m, and its share of the divestment gain is approximately $17.2m. 

In China, PIHMH registered an increase in committed occupancy to 92.8% as at 31 March 2019. Anchor tenant Gleneagles Chengdu Hospital has commenced fitting-out works and is expected to commence operations in H2 2019.

The firm further noted how the Urban Redevelopment Authority’s (URA) Draft Master Plan 2019 which allows for certain developments to enjoy an uplift in gross plot ratio (GPR) could benefit PREHl’s AXA Tower that could see a GPR increase by approximately 46.5% from 1.05 million sqft to 1.55 million sqft.