Falling rental reversions hit SPH REIT Management’s income
SPH REIT Management has reported declining income for the third quarter after a decline in rental reversions.
Net property income from its assets, which include Paragon on Orchard Road and Clementi Mall, fell 3.8 per cent to S$40.6 million in the three months to May 31. The company said this was mainly due to a 6.2 per cent decline in rental reversion at Paragon for the year to date.
However the third-quarter decline was less than that of the first half year and the company noted the leases affected were committed about a year ago during the retail sales downturn.
“As part of our long-standing philosophy of partnering tenants for mutual sustainability, the rental negotiation with tenants took into consideration occupancy cost and we continue to work closely with them as they ride through cyclical and structural changes,” SPH REIT Management said in a statement.
The Clementi Mall recorded a positive rental reversion of 5.3 per cent during the same nine months, with the overall portfolio registering a rental reversion of minus 6 per cent.
“In tandem with the recovery in retail sales since June last year, tenant sales in the malls have continued to register growth, and the portfolio was close to full occupancy at 99.6 per cent.”
Susan Leng, CEO of SPH REIT Management, said tenant sales have continued to register growth.
“We remain focused on curating the right retail mix that will resonate with shoppers and are pleased to introduce a new shopping concept at Level 3, Paragon. This concept offers open store design for seamless interactions across brands, merchandise and shoppers, and also introduces carefully curated new-to-market concepts. The first phase was launched in June and when fully completed in December, will span across about 16,000sqft of more than 20 fashion, lifestyle and F&B tenants.” Paragon also welcomed MCM, its first flagship store in Southeast Asia at Level 1.
SPH REIT Management recently completed the acquisition of The Rail Mall, a cluster of shop units along Upper Bukit Timah Road, with an opportunity to further strengthen its current F&B mix and create a differentiated positioning for the asset.