SPH Reit keeps DPU 'modest' in preparation for tough months ahead

Singapore

SPH Reit on Wednesday announced that it would distribute just 0.30 Singapore cent per unit for its second quarter ended Feb 29, 2020.

This represents a 78.7 per cent year-on-year decline in its distribution per unit, from 1.41 cents a year ago.

The decline comes in spite of a 23.3 per cent increase in net property income (NPI), to S$56.5 million from S$45.9 million in the same period last year.

SPH Reit Management, the Reit manager, said the distribution was "modest considering the challenging circumstances arising from the Covid-19 situation for the months ahead".

In Q2 FY2019, SPH Reit had reported income available for distribution of S$37 million. It distributed S$36.4 million of this to unitholders.

For Q2 FY2020, income available for distribution increased 12.2 per cent to S$41.5 million. SPH Reit will distribute just S$8.3 million of this to unitholders.

The distribution will be paid out on May 13, after books closure on April 9.

The Reit's revenue improved in the quarter thanks to contributions from its Australian properties: Figtree Grove Shopping Centre and the newly acquired Westfield Marion Shopping Centre. Two Singapore properties - Paragon and The Clementi Mall - also recorded higher NPIs.

During the quarter, the Reit's portfolio maintained an occupancy rate of 98.9 per cent. The Singapore assets registered a 99.5 per cent occupancy rate. Figtree Grove's occupancy stayed strong at 99.2 per cent and Westfield Marion achieved an occupancy rate of 98.4 per cent.

But SPH Reit Management is clearly preparing for things to get tougher.

Susan Leng, chief executive of SPH Reit, said: "Covid-19 is an unprecedented crisis that has impacted all businesses across the globe. With this in mind, we have proactively employed various strategies to mitigate the impact of Covid-19 on our tenants' businesses."

As announced on Feb 27, SPH Reit has been rolling out a tenants' assistance scheme. In February and March, it granted rebates to its tenants of S$4.6 million.

It will now extend this scheme into the months of April and May, with rebates granted according to tenants' needs. Those severely affected will be granted rental rebates of up to 50 per cent of base rent.

Dr Leong Horn Kee, chairman of SPH Reit, said: "Given the continued challenges our tenants are facing with the tightened social distancing measures and enforced closures, SPH Reit will monitor the effects of Covid-19 closely and work with the tenants to overcome this difficult period."

SPH Reit is still evaluating the need for a support package to help tenants in its two Australian assets.

The Reit's units finished at 75 Singapore cents on Wednesday, down two cents or 2.6 per cent.

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