SPH REIT’s NPI edges up 0.9% YoY to $0.6m in Q2

Due to a one-off charge for prior year property tax.

SPH REIT closed the second quarter of FY16 with net property income (NPI) up 0.9% YoY to $0.6m mainly due to an exceptional provision for prior year property tax based on the assessment received.

According to a report by OCBC, excluding this one-off figure, SPH REIT’s NPI would have edged up 3.2% YoY.

Moreover, portfolio for SPH REIT remained firm as The Clementi Mall (TCM) was fully leased, while Paragon was also nearly fully occupied (99.9%) as at Feb 29 2016.

For TCM, rental reversions came in at 3.1% in 1HFY16.

Meanwhile, management continued to fine-tune its tenancy mix at Paragon—it added new tenants like Diesel, Dutch Baby Cafe and GOCCO. It bagged positive rental reversion of 4.3% for the entire portfolio in the first half of FY16. Paragon saw a rental uplift of 4.3%, which bodes well as it reflects a hefty 22.5% of the mall’s NLA. 

Moving forward, SPH REIT has limited leasing risks for the remainder of the financial year as it has only 1.2% and 0.4% of leases poised for renewal (as a percentage of gross rental income) for Paragon and TCM respectively.

“Management updated us that it has already started engaging its tenants on negotiations for leases expiring in FY17 (30.5% of gross rental income),” the report asserts.