SPH REIT's net property income up 5.2% to $42.7m

Thanks to higher rental income for both Paragon and The Clementi Mall.

SPH REIT reported an improvement in gross revenue and net property income for the quarter ending in March, up 1.7% and 5.2%, respectively.

According to OCBC Investment Research, SPH REIT's net property income clocked in at $42.7m, underpinned by higher rental income for both Paragon and The Clementi Mall (TCM), coupled with lower utility expenses and a one-off provision for prior years’ property tax in 2Q16. Excluding this one-off effect, NPI still increased by 2.9%.

Meanwhile, distribution per unit (DPU) was flat at 1.40 Singapore cents, as $1.6m of taxable income available for distribution was retained during the quarter.

Here's more from OCBC Investment Research:

Both Paragon and TCM achieved 100% committed occupancy, whilst strong rental reversions of 4.3% and 8.3% were secured for leases expiring in 1HFY17, respectively.

The latter was all the more impressive considering that it was contributed by 23.1% of the property’s NLA. Overall portfolio rental uplift came in at 6.2%. Following the completion of TCM’s first renewal cycle in 2014, the mall had ~85.5% of its gross rental income (GRI) expiring in 2017 (leases are typically 3 years in tenure).

Management had renewed 74.1% of TCM’s GRI, as at end-2QFY17. From our understanding, further progress has been made, with the remaining leases now successfully renewed.

We believe this reflects management’s solid execution capabilities and TCM’s strong positioning. TCM achieved an estimated retention rate of 90% by NLA.