SPH REIT malls remain healthy at 98.8% occupancy rate
The Australia portfolio performed better than that of Singapore.
For Singapore assets, occupancy improved to 98.8%, whilst tenants' sales recovered to 97% of its first-quarter (Q1) financial year (FY) 2021 levels for Paragon and The Clementi Mall, SPH REIT announced on its Q1 2022 business update.
Compared to the pre-pandemic levels, tenants' sales improved to around 70% and over 90% for Paragon and The Clementi Mall, respectively. The performance of the Clementi Mall remained more resilient, benefitting from its suburban location, strengthened tenant mix from new food and beverage concepts and new sports retailer, Decathlon. Conversely, Paragon's recovery was slower due to its higher reliance on tourists. Whilst rising vaccination rates and the launch of Vaccinated Travel Lanes (VTL) should support recovery for Paragon, the daily quota for the VTL scheme remained significantly lower than pre-pandemic levels.
Moreover, the performance of its Australia portfolio was better than Singapore due to its strategic, suburban locations and tenant mix.
Westfield Marion continued to demonstrate its dominance in Adelaide, South Australia, with tenants' sales increasing 6% year-on-year, surpassing its pre-pandemic levels. Whilst Figtree Grove was impacted by the lockdown for around 1.5 months during Q1 FY22, its tenants' sales had recovered to close to pre-COVID levels in November 2021 after the lockdown was lifted in October 2021.
OCBC's equity research remarked SPH REIT's human capital development and management practices continue to trail its peers, notably in offering comprehensive benefits, staff engagement, and development opportunities. In addition, its corporate governance structure falls into the average scoring range, which is weaker than its global peers, most notably on executive compensation practices. However, the REIT ranks higher than the industry average in terms of environment score, with a higher proportion of green-certified buildings in its portfolio relative to peers.